Representing Startups: Choice of Entity, Protection of IP, Employment Agreements, Equity Compensation, and More
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Corporate Law
- event Date
Thursday, August 31, 2023
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will provide counsel with an understanding of the critical issues a startup must address before commencing business. The panel will discuss compensation and exit strategy for the founders, the importance of entity type and structure, protection of trade secrets and intellectual property, employment agreements and equity compensation, issues with third-party contractors, and more.
Ms. Makadia concentrates her practice on corporate and securities law. She works with companies in a range of areas, including corporate formation, private securities offerings, and merger and acquisition transactions. Previously, she practiced at Hogan & Hartson LLP in Washington, D.C., where she represented both public and private companies in a broad-based transactional practice encompassing mergers and acquisitions, securities transactions, corporate governance, and company formation and where she represented clients in their initial public offerings and in other public company work. She also previously practiced at Kramer Levin Naftalis & Frankel, LLP in New York doing corporate and transaction work for public and private companies.
Mr. Rubens has worked with businesses and investors on transactions and intellectual property issues since the early 1990s. He represents investors and private companies in new venture formation, equity financings, mergers and acquisitions, commercial loan transactions, data security and privacy issues, IP protection, and a variety of strategic transactions. He frequently acts as outside general counsel to privately held businesses and provides U.S. representation to non-U.S. public and private companies. Over the years, Mr. Rubens has worked with many entrepreneurs and investors involved with technology startups and early stage companies. He has set up angel investment funds and venture accelerators, advised on corporate and LLC structuring for new technology and online media businesses, drafted founder and adviser agreements, executive employment agreements and incentive compensation plans, and he has helped his clients close many investment rounds, from seed stage through late equity.
Entrepreneurs and existing companies start hundreds of thousands of new businesses annually, encountering similar challenges. The birth of a business presents the best chance to address issues, which, if done early, can avoid costly litigation later.
The founders' roles, equity ownership, and compensation must be clearly defined. There should usually be an agreement on how to transfer equity and how the business will proceed if any founder leaves the company. Equity may be a necessary component of hiring key employees, but it must be structured not to impair future capital raises.
The startup must immediately position itself to finance its operations, hire employees and contractors, and transact business with third parties. Intellectual property rights are vital: IP must become a corporate asset. If not, the individual claiming ownership may try to leave the company with the IP or seek to extract a premium when the business is sold.
The startup's structure should limit liability, accommodate future growth, and consider tax law. It must also have template contracts and procedures in place that enable it to sell to and service its customers, and it usually must do so for a limited legal budget. All of these tasks require the involvement of corporate counsel.
Listen as our authoritative panel discusses how to document the management roles, equity ownership, and compensation for the founders in a startup venture. They will also discuss entity selection, employment and contractor agreements, equity compensation, protection of intellectual property and trade secrets, and other matters to resolve before moving forward with a new business.
- Selection of business entity: tax, finance, and other considerations
- Equity structure and compensation of founders and employees
- Equity structure options
- Equity compensation for founders and future employees
- Protecting IP
- Confidentiality/NDA agreements for employees and contractors
- Protecting company IP and branding
- Financing business operations
- Determining the source of capital: debt and equity
- Positioning company for raising capital
The panel will review these and other key issues:
- How should equity ownership, management responsibilities, and compensation be documented between the initial founders?
- When are trademarks, copyrights, and patents needed, and how does existing IP get assigned to the new company?
- What steps should employees and independent contractors take to protect trade secrets?
- What are the pitfalls to avoid when deciding on equity compensation for employees?
- How can choice of entity, state of formation, and entity structure impact future capital raising and tax liability?
