The NEST Framework

Sometimes, we build a NEST.

When there’s an urgent need and neither party has time for deep diligence, we use a NEST, or New Entity for Startup Transition. We created the NEST framework as a way to move quickly to help startups, without getting bogged-down by legal overhead and legacy cap table issues. Simply put, a NEST is a new LLC that operates independently, but has a hand in managing a startup’s business.

What does a NEST do?

The exact charter of a NEST depends on the type of help that your startup needs. Sometimes the NEST is a reseller of your product. Sometimes it is a licensee of your product and contracts, giving it the ability to manage your operations while relieving pressure on your balance sheet.

Who owns the NEST?

OpsAssembly LLC will be the sole owner of the NEST. The OpsAssembly operators that work on your startup will have “phantom equity” in the NEST that triggers with liquidity. We use this structure, versus outright shared ownership, to simplify reporting.

What are the NEST’s rights to my startup?

In a word, limited. One of the advantages of a NEST versus other capital-light frameworks (like sharing revenue or equity) is that you can be very specific about the NEST’s purview. Your startup and the NEST are separate entities, linked only by a licensing agreement. This enables the NEST and your startup to keep their liabilities separate so the entities can be quickly untangled when the NEST no longer serves a purpose.

Why not just use a vendor contract?

A NEST provides more optionality than a vendor contract. Options such as merging your startup into the NEST, or acquiring the NEST outright can come in handy in a situation with a lot of future unknowns. A NEST can also ease continuity of service should your startup run into liquidity issues.

Example NEST (Word)

Example NEST (PDF)

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