For ambitious tech startups, turning bold ingenuity into a commercially viable business can be a risky proposition. To help you hit the ground running with confidence, we’ve outlined below five crucial legal documents that no startup should be without.
1. Incorporation agreement
You want to start a business, but you don't want to lose your house and car over it. Protect yourself and incorporate your business properly right off the bat — and save yourself a lot of trouble down the line. Trust us on this one: many companies do this poorly and end up paying for it in the end.
2. Shareholders' agreement
Being good friends doesn't mean you'll be good business partners. You need to plan for what will happen if one of you wants to leave or sell. A shareholders' agreement will set everything in stone and define how your company handles money in, money out, shareholders' exits and management controls.
3. Employment agreement
When your growth demands that you hire employees, it's imperative that you have an air-tight employment agreement at the ready. Among other things, an employment agreement should make clear whether the contract is fixed-term or indeterminate (i.e., no expiry date), and outline how and/or when the employment relationship can be terminated.
4. Proprietary rights/IP assignment agreement
Make sure your ideas and inventions stay in the business — instead of walking out the door with your employees. A proprietary rights/IP assignment agreement will help you do just that, ensuring that all of the concepts and inventions your employees create at work remain the property of your company.
5. Non-disclosure agreement
Keep your secrets safe and out of the back pockets of your competitors and other third parties, such as potential business partners, customers and suppliers. A non-disclosure agreement will help ensure that confidential information stays that way.
We know launching a startup can be a challenging undertaking, but we're here to help. Please contact any member of our Tech Group to learn more about growing your business while protecting yourself from potential risks and liabilities.