Startups have some of the most sensitive legal issues of any business venture. Properly addressing these issues can set the stage for success or failure. Various major decisions have to be made each having a strong legal component-- agreements with clients, agreements with vendors, structuring the entity to take in investment, or structuring the entity to reflect the relationship between the partners, just to name a few. An attorney that is knowledgeable about how to pragmatically address these is an essential member of any startup team.
Entity Formation and Consulting
There is no one size fits all strategy to choosing a business entity. Numerous considerations have to be analyzed before choosing a form from the alphabet soup of possibilities (LLC, C or S Corporation, LLP, etc.). Having counsel that can see the long term roadmap for your venture is critical to avoiding choices that will complicate your ability to navigate that road.
These and other questions not only should be asked but they should be presented to counselors that can answer them with an eye to your venture's unique needs.
Founders Agreements / Partnership Agreements
Every business venture's success depends on a clear understanding between the partners/founders. While that understanding is often unspoken and unwritten, having founders agreements that provide an objective framework for the manifold scenarios that can come up is a fundamental for any serious business. Some of these issues include:
Investment/Venture Capital (Private Offerings, Convertible Notes, etc.)
Many companies face immediate funding hurdles and need to enter financing contracts as early as the startup phase. Convertible notes, private and series offerings, equity purchases, and a host of other vehicles, structures, and strategies await the founders. Counsel that understands the long term impact of each of these strategies on the company’s management structure and its ability to raise additional funds can assure the venture’s ongoing viability.
