I recently read a good post on Venturebeat.com about 6 common legal mistakes startups make. Some of these have been covered elsewhere on this blog – some not. Here is the cliff notes version- check out the post itself for more details:
- IP Ownership – make sure it can be transferred to the startup.
- Choice of Entity – choose carefully. They recommend a corporation instead of an LLC. I disagree on a certain level, as I have stated before on the blog and my Indiana Law Practice Blog.
- Place of Incorporation – they say Delaware. Again, I disagree to an extent (see this post).
- Vesting Restrictions – make sure founders stock vest over time, otherwise you run the risk of a founder leaving early on and keeping all of his /her stock.
- Securities Law Compliance – beware of not complying when issuing any securities to anyone, no matter who they are.
- Legalzoom – avoid like the plague. Hire an attorney!
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- Does Your Startup Need a Lawyer? (readwriteweb.com)
- Founder Agreements – Vesting, Vesting and more Vesting (simeonov.com)
- 5 legal mistakes startups make while raising capital (entrepreneur.venturebeat.com)
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