A Co-Founder Agreement allows you to set out the equity ownership, initial investments and responsibilities of each Co-Founder. The purpose of the agreement is to make the understanding the co-founders have regarding the functioning of their company and relationship and obligation between co-founders legally binding through a formally written agreement.

The formation of such an agreement requires an open discussion between the partners regarding their apprehensions, fears, outlook, aspirations and all arrangements involving the start up. The objective of the agreement is to minimize the possibility of debilitating surprises in the future when the company is functional in terms of inter co-founder relationship.

In India, one can choose from five different types of legal entities to conduct business. These include Sole Proprietorship, Partnership Firm, Limited Liability Partnership, Private Limited Company and Public Limited Company. The choice of the business entity is dependent on various factors such as taxation, owner liability, compliance burden, investment and funding and exit strategy.

Trademarks are at the crux of any business: from the name of your enterprise to the names of specific products, services and logos- any particular term or design that is unique to your business can be understood as a part of its trademark. These characteristics are key to building your brand identity and carving a unique niche for your business. And so, legally protecting these aspects of your business identity and making sure nobody else misappropriates them is intrinsic to running a successful business.

A term sheet, or letter of intent, is a statement of the proposed terms and conditions in connection with a proposed investment. It generally runs about one to five pages in length. In the case of angel investments, the term sheet can be prepared by the start-up or the angels. Most of the terms are non-binding, with the exception of certain confidentiality provisions and, if applicable, exclusivity right

One of the toughest challenges for founders of a young company is deciding how to split the equity among the founders and early hires. This is especially complex when cofounders are inexperienced or have a friendship as well as business partnership. Putting value on each partner’s role can get personal and it is best done not in one late-night session, but more methodically, over a period of time, and with advice.

The start-ups which are in the early stages of their businesses lack the ability to pay competitive and high salaries to their employees which established businesses or large corporations can afford to pay, although the former requires good share of human capital because of them facing resource constraints, and unstable cash flow. Start-ups and other established companies often require motivated employees who can over-perform and exceed their expectations. Therefore, with an aim to retain and incentivise employees, companies come up with rewarding performance bonuses, revenue shares, stock options or a stake in the company.

Legal mistakes can be incredibly costly for startups. Some of the mistakes that the Startup make are: -

1. Not negotiating a co-founder’s agreement;

2. Not starting the business as company;

3. Not evaluating regulatory issues in your business;

4. Not considering intellectual property related issues;

5. Not having a privacy policy and effective terms of use; and

6. Not choosing the right legal counsel.      

It is essential for every Software Developer/Companies to have a firm grasp of intellectual property rights and how they apply to the Software Industry. Software developers/Companies need a solid understanding of their rights to develop and protect a brand, ensure exclusive ownership of their creations, and keep their work confidential to create and maintain an advantage in this competitive market.

Many startups do not recognize that having a privacy policy is mandated by the law if they are collecting sensitive personal information. This video elaborates on the need for a privacy policy and briefly discusses the need for comprehensive website terms, specifically in the context of intermediaries.

Are you syndicating your angel investment round with ten or fifteen or more investors? Is it a good idea? This video answers the question and suggests how such a round should be structured. 

This video discusses the value of good legal counsel for your startup, and how to identify one.