One of the most common mistakes startups make is chucking legal documentation, paperwork and processes into the “I’ll do it later” basket. Before you know it, your business is accelerating…and so is your risk profile. Protect your business with these essentials:
Non-Disclosure Agreement (NDA)
If your business is in “stealth mode” get everyone you deal with to sign one, whether they are potential hires, suppliers or investors to prevent them from sharing or using your confidential information.
Even if your business idea is public, your key information (financials, strategy, client agreements etc.) is not, so it’s still important you cover yourself against any potential risks when letting people peek under your petticoats!
“I don’t need one of those. We’re all friends!”
Wrong. Contracts are about more than anticipating the worst case – one of the main benefits is prompting open conversations, guided by an expert, to ensure you’re all on the same page. You need to have answers for questions like: Who can you sell your shares to? How can you exit the business? What the hell is a Drag Right?
Our Premium Founders Agreement guides you through all of these issues step by step, with top tips, explanations and sanity checks, so you are in great hands. At just $500 it is a steal, and if you need some extra advice or customisation, just book some LawyerTime to speak to our team of experts!
Intellectual Property Assignment
“Er, come again?”
If you are launching any kind of business one of the first things you are likely to pay for is a website. If you are doing e-commerce or a SAAS platform that is going to be an even bigger deal because that is your core product. But guess what happens?? Founders and developers fall out, and the developers run off with the source code, license it or even sell it to competitors. Either way, you end up with nothing but a hole in your wallet and a headache. An IPA ensures that whatever the developers create from your ideas and instructions belongs to you.
You will also find that often co-founders and/or investors will ask all founders to sign these, to make sure that the ideas and innovations the funders bring to the table at the start are owned by the company, and not by the founders individually. That way if a founder leaves, they don’t take the idea with them.
“That boring bit no-one reads?”
Almost all businesses have a website nowadays and to limit your liability for common risks like users posting inappropriate content, you need to include basic terms & conditions. It doesn’t mean everyone will read them, but the important thing is that you are covered.
If you are a regular business then a simple template should be fine, but if you are an online business such as a content platform or other SAAS business it’s worth getting a bespoke agreement drafted to take into account the specific risks to your business.
“Is that data… GDP… something or other?”
If you have any users or store any data on people living in the EU then the relevant rules are the GDPR. We know al about it so reach out and our crack legal team can create bespoke GDPR policies for you.
“Sounds scary. Do I have to pay CPF? What is market? Argh!”
As soon as you hire someone, they need a contract. If they are junior, it is a legal obligation to provide them with “Key Employment Terms”. If they are senior it is a key piece of risk management for the business – you will want to ensure they can’t poach clients or set up a competing business, that any innovation they make is owned by the company not the employee, and that they can’t quit without giving you enough time to replace them!
If you want to hire good employees and keep them you should also make sure you meet, or exceed, market norms, like 14 days paid leave, 14 days medical leave, and a 13th month salary for any junior / low-paid staff. Don’t worry, our online employment agreement has it all there for you, so you can choose the market approach, or something else if you prefer – it’s up to you.
Simple Investment Document (GYFT – Get Your Funding Together)
“Show. Me. The Money!”
You’ve started building your product, or your website, and you have your first employee, but now you have overheads you need to pay, so you might want to get some investment. Most people’s first port of call is friends and family, or maybe even a couple of angels, but if you are only raising $100,000 you don’t want to spend $20k on legal fees, amiright?
Upstart’s own special GYFT to you is this template, included in our $20 p/m subscription, which is a highly simplified convertible loan, similar to the SAFE (Y Combinator) and the KISS (500 Startups), but even easier to use and understand. It allows you to get cash from investors, and give them the same rights as a shareholder would have, but they don’t have any voting rights. What that means for you is much simpler admin when it comes to holding shareholder meetings or passing votes. What it means for them is that since it starts its life as a loan, if the worst happens and the project doesnlt work out, they will get repaid first from any cash or assets left in the business.