Representing Startups: Choice of Entity, Protection of IP, Employment Agreements, Equity Compensation, and More

Entrepreneurs and existing companies start hundreds of thousands of new businesses annually, which all encounter similar challenges. The birth of a business presents the best chance to address issues, which, if done early, can avoid costly litigation later.

The roles, equity ownership, and compensation of the founders 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 so as 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 may seek to extract a premium at the time 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, form contracts necessary for transacting business, and other matters to resolve before moving forward with a new business.