ECON 172Economic and Legal Issues for Startups

Enrollment by consent of instructor. Introduction to economic and legal issues to consider when starting a business. Consideration of economic issues that arise from ideation until the first term sheet is presented to, and negotiated with, initial investors. Includes negotiation simulations to teach negotiation skills and uniqueness of valuing different terms. Review of fact patterns of successful companies that had some initial setbacks. Examination of different agreements, filings, and steps one can take to protect economic interests of an early stage venture. Addresses potential issues arising from adverse selection, moral hazard, and hold-up problems. Recognizing these economic foundations allows students to move beyond reading contracts as collections of legal terms and instead understand them as carefully designed mechanisms that enable mutually beneficial exchange in the presence of informational and contractual frictions.

P/NP or letter grading.