Portfolio Company Formation Process
Internal Approvals / Conflict Checks
New company approval processes consist of two parts:
1. GP Approval
OCV team prepares project summary and intended business plan (in the internal research doc) for GP review.Founder (CTO) compensation sign off proposal to the GP should include:
Founder Name (with LinkedIn profile)
Title
Cash Compensation (in USD equivalent; provide justification)
Equity (following framework from Founder Shares Guidelines and provide support around experience level)
Options Pool Size (and intended allocation reserves)
Start Date / Timeframe (if known)
Any additional offer details
2. GitLab Conflict Check
New companies need to pass a conflict check with GitLab prior to an offer being sent. The conflict check requires that an email be sent to the GitLab team with the following information:
The name of the OS project
A link to the project
A one sentence description of what the new company will do
Offers & Acceptance
Verbal Offer:
After internal approval, OCV team prepares a verbal offer (via email) to outline the following understanding:
Company Name (typically TBD; ideal company name is the same as the open source project name, pending name availability research)
Entity Structure: C-Corp or PBC
Title
Annual Compensation in local currency (and ~USD equivalent)
Equity: % and vesting details
Confirm whether founder would like to purchase common shares or receive options
OCV Funding detail with note around SAFE dilution:
Sample language: Please note that the SAFE will convert into future preferred shares and will dilute all existing shareholders upon conversion. To protect potential dilution prior to the next round of equity financing, we’re reserving a X% options pool (for CEO and other employees).
Options Pool size
Target Start Date
Confirm purchase of existing domain name(s) for USD 1 (if applicable).
In this email, we also request founder’s mailing address, phone number, date of birth (for certain registration and banking system setup requirements).Once a founder provides verbal acceptance of our offer, follow the process outlined below to draft and send out an indicative offer letter via DocuSign. Offer Letter: Founders will be employed by their company’s EOR provider. OCV sends out an indicative offer letter to document compensation, equity, and prior inventions (if any) in the ECIIAA.
Founders will receive an official offer letter through EOR provider once the company has been formed (see Company Formation), in the weeks following receipt of their indicative offer letter.
Also see Global Workforce Considerations for non-US based founders.
Basic offer letter fields:
Founder name
Company legal name
Country of employment
EOR provider (as formal employer)
Position - CTO, Founding Engineer, etc.
Start date
Home office location
Employment status:
Founders (CTOs and CEOs) are always hired as full-time employees. Salaried founders’ employment status should reflect their dedication to the company and help build investor confidence rather than adding unnecessary risk.
Fundraising is about telling a compelling story that convinces investors why they should back a company. If a founder is a contractor rather than a full-time employee, it adds an extra layer of explanation that takes time and energy away from the goal: securing investment. Instead of spending valuable time overcoming that concern, we eliminate the issue by requiring founders to be full-time employees.
Compensation:
Founder offer letters will need to include the following information:
Base salary amount in local currency (use proper 3-letter currency label before amount)
Payment schedule (monthly in arrears)
If the Company is purchasing any existing domain names from the founder, include:
“The Company will purchase the existing domain names related to [Open Source Project Name] for USD $1. These domain names will be transferred back to you in the event of a company wind down.”
The purchase of domains by the Company will be reflected as part of the Founder Common Stock Purchase Agreement (Exhibit B - Assignment Agreement).
Equity:
See Step 4: Issue equity to founders and advisors for OCV’s guidelines on founder equity. Equity section of the indicative offer letter must contain: “All equity grants are subject to dilution with each new funding round.”
As of May 2025, founder (CEO & CTO only) offer letters include terms for double-trigger accelerated vesting.
Intellectual Property:
OCV offer letters will include a standard Employee Confidential Information and Inventions Assignment Agreement (ECIIAA), which complies with the employee confidentiality and intellectual property rules established at the federal level by the Securities and Exchange Commission.
Prior intellectual property is typically something where the founder has existing IP protections such as a patent or trademark, this disclosure does not usually apply to the open source software a company.
In addition, OCV offer letters will also include a non-solicitation clause in order to avoid potential conflicts of interest.
O-1 Transfers
O-1 visas are for individuals who possess extraordinary ability in the sciences, arts, education, business, or athletics, etc. O-1 visas can be transferred, and the transfer process may be easier if the beneficiary (i.e., founder) has a copy of the complete O-1 filing. It is favorable if the beneficiary has already been approved for an O-1 visa. The new O-1 filing will be separately assessed by USCIS.
O-1 visa transfer process for founders:
A US legal entity must be established first before an employment-based petition can be filed with USCIS.
[To be confirmed with legal team]: founders can still purchase common shares during the company formation process.
After the legal entity has been established, the company's EOR acts as the official sponsor and handles the full visa and legal process. The EOR charges an additional monthly fee for this service on top of its standard monthly fee.
Timing: The standard EOR processing takes 14 weeks from start to finish, though premium processing (for an additional fee) reduces this to about 10 weeks. The timeline varies based on information gathering and government response times for the transfer petition. Since O-1 is one of the most complex visa types, having a copy of the prior petition can significantly speed up the preparation process. O-1 Timeline Overview is as follows:
Sign EOR engagement letter
Complete intakes
Attorney case kick-off call with case planning
Case Building (8 weeks or 4 weeks with fast-track)
Ship with premium processing (15 days)
Approval or request for evidence
Estimated Cost: $15,000 to $18,000
Incorporation Process
OCV moves to company formation process below after receiving signed founder offer letter. Steps 1 and 2 may be discussed as part of the verbal acceptance process.
📄Step 1: Choose the company name
📄Step 2: Choose a legal entity structure
📄Step 3: File incorporation paperwork
📄Step 4: Issue equity to founders and advisors
📄Step 5: Establish the company’s options pool
📄Step 6: Banking systems set up
In cases where a company is unable to secure Seed Round funding, OCV will follow wind down procedures below:
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