Legal Considerations for a Startup

1 ᱜᱚᱲᱚ- ᱛᱷᱟᱯᱚᱱᱤᱡᱟᱜ ᱵᱚᱱᱚᱛᱷ ᱨᱮᱭᱟᱜ ᱢᱩᱞ ᱱᱤᱭᱚᱢ ᱠᱚ

ᱢᱤᱫ ᱜᱚᱲᱚ-ᱛᱷᱟᱯᱚᱱ ᱵᱚᱱᱚᱛ ᱟᱢ ᱤᱠᱣᱤᱴᱤ ᱢᱟᱞᱤᱠ, ᱮᱛᱚᱦᱚᱵ ᱱᱤᱣᱮᱥ ᱟᱨ ᱡᱚᱛᱚ ᱜᱚᱲᱚ-ᱛᱷᱟᱯᱚᱱ ᱠᱚᱣᱟᱜ ᱫᱟᱭ ᱠᱚ ᱥᱮᱴ ᱞᱟᱹᱜᱤᱫ ᱵᱟᱛᱟᱣᱟᱢᱟ. ᱵᱚᱱᱚᱛ ᱨᱮᱭᱟᱜ ᱩᱫᱮᱥ ᱜᱚᱲᱚ ᱛᱷᱟᱯᱚᱱ ᱠᱚ ᱟᱠᱣᱟᱜ ᱠᱚᱢᱯᱟᱱᱤ ᱨᱮᱭᱟᱜ ᱠᱟᱹᱢᱤ ᱠᱚ ᱟᱨ ᱥᱚᱢᱵᱚᱸᱫᱷ ᱟᱨ ᱩᱯᱪᱟᱨᱤᱠ ᱞᱮᱠᱟᱛᱮ ᱚᱞᱵᱚᱱᱚᱛ ᱨᱮᱭᱟᱜ ᱢᱟᱫᱷᱭᱟᱢ ᱛᱮ ᱜᱚᱲᱚ ᱛᱷᱟᱯᱚᱱ ᱠᱚ ᱛᱟᱞᱟ ᱥᱚᱢᱵᱚᱸᱫᱷ ᱟᱨ ᱫᱟᱤᱠᱟ ᱥᱚᱢᱵᱚᱸᱫᱷ ᱨᱮ ᱵᱩᱡᱷᱟᱣ ᱛᱮᱭᱟᱨ.

ᱱᱚᱣᱟ ᱞᱮᱠᱟᱱ ᱵᱚᱱᱚᱛ ᱨᱮᱭᱟᱜ ᱛᱮᱭᱟᱨ ᱞᱟᱹᱜᱤᱫ ᱵᱷᱟᱹᱜᱟᱹᱨᱤ ᱛᱟᱞᱟ ᱟᱠᱚᱣᱟᱜ ᱦᱤᱫᱤᱜ ᱠᱚ, ᱵᱚᱛᱚᱨ, ᱵᱟᱦᱨᱮ ᱧᱮᱸᱞ, ᱯᱨᱚᱵᱷᱟᱣ ᱦᱚᱪᱚ ᱟᱨ ᱮᱥᱴᱟᱨᱟᱯ ᱠᱷᱚᱱ ᱥᱚᱢᱵᱚᱸᱫᱷᱤᱛ ᱡᱚᱛᱚ ᱵᱮᱵᱥᱟ ᱠᱚ ᱨᱮᱭᱟᱜ ᱛᱟᱞᱟ ᱢᱤᱫ ᱡᱷᱤᱡ ᱪᱟᱨᱪᱟ ᱨᱮᱭᱟᱜ ᱞᱟᱹᱠᱛᱤ ᱦᱩᱭᱩᱜ ᱟ. ᱥᱚᱢᱡᱷᱳᱛᱟ ᱨᱮᱭᱟᱜ ᱩᱫᱮᱥ ᱫᱚ ᱵᱷᱟᱣᱤᱥ ᱨᱮ ᱢᱩᱥᱠᱤᱞ ᱨᱮᱭᱟᱜ ᱥᱚᱢᱵᱷᱟᱣᱱᱟ ᱠᱚᱢ ᱞᱟᱹᱜᱤᱫ ᱠᱟᱱᱟᱭᱟᱭ ᱡᱚᱠᱷᱚᱱ ᱠᱚᱢᱯᱟᱱᱤ ᱚᱱᱛᱚᱨ ᱥᱟᱦᱟᱭᱚᱠ-ᱥᱟᱸᱥᱛᱷᱟᱯᱚᱠ ᱵᱟᱠᱷᱨᱟ ᱠᱩ ᱨᱮᱭᱟᱜ ᱢᱟᱢᱞᱟ ᱨᱮ ᱠᱟᱹᱢᱤᱦᱚᱨᱟ ᱢᱮᱱᱟᱜ-ᱟ.

 

2 ᱢᱤᱛ ᱮᱥᱴᱟᱨᱴᱚᱯ ᱞᱟᱹᱜᱤᱫ ᱤᱠᱟᱤ ᱨᱮ ᱠᱷᱩᱥᱤᱭᱟᱜ - ᱠᱚᱢᱯᱟᱱᱤ, ᱡᱩᱲᱤᱫᱟᱨ ᱟᱨᱵᱟᱝᱠᱷᱟᱱ ᱯᱨᱳᱯᱨᱤᱮᱴᱚᱨᱥᱤᱯ?

ᱵᱷᱟᱨᱚᱛ ᱨᱮ, ᱟᱰᱤ ᱜᱟᱱ ᱵᱤᱡᱱᱚᱥ ᱪᱟᱞᱩ ᱞᱟᱹᱜᱤᱫ ᱯᱚᱬᱮ ᱜᱚᱴᱮᱜ ᱜᱟᱱ ᱨᱚᱠᱚᱢ ᱠᱟᱱᱩᱱ ᱥᱟᱸᱥᱛᱷᱟ ᱠᱩᱢ ᱵᱟᱪᱷᱟᱣ ᱫᱟᱲᱤᱭᱟᱜ-ᱟ. ᱱᱚᱣᱟ ᱨᱮ ᱟᱠᱮᱱ ᱥᱳᱞ ᱯᱨᱳᱯᱨᱤᱮᱴᱚᱨᱥᱤᱯ, ᱡᱩᱲᱤᱫᱟᱨ ᱯᱷᱹᱟᱨᱢ, ᱞᱤᱢᱤᱴᱮᱫ ᱞᱟᱭᱵᱤᱞᱤᱴᱤ ᱯᱟᱨᱴᱱᱚᱨ, ᱯᱨᱟᱭᱣᱮᱴ ᱞᱤᱢᱤᱴᱮᱫ ᱠᱚᱢᱯᱟᱱᱤ ᱟᱨ ᱯᱚᱵᱞᱤᱠ ᱞᱤᱢᱤᱴᱮᱰ ᱠᱚᱢᱯᱟᱱᱤ ᱥᱮᱞᱮᱫ ᱢᱮᱱᱟᱜ-ᱟ. ᱵᱤᱡᱱᱚᱥ ᱤᱠᱟᱤ ᱨᱮ ᱠᱷᱩᱥᱤᱭᱟᱜ ᱴᱮᱠᱥᱮᱥᱚᱱ, ᱢᱟᱞᱤᱠᱜ-ᱟ ᱫᱟᱭᱤᱠᱛᱚ, ᱚᱱᱩᱯᱟᱞᱚᱱ ᱵᱳᱡᱷ, ᱱᱤᱣᱮᱥ ᱟᱨ ᱫᱷᱚᱱ ᱟᱨ ᱨᱚᱱᱤᱛᱤ ᱩᱰᱩᱠ ᱞᱮᱠᱟᱱᱟᱜ ᱟᱰᱤ ᱜᱟᱱ ᱠᱟᱨᱚᱠ ᱠᱩ ᱨᱮᱭ ᱱᱤᱨᱵᱷᱚᱨᱟ.

 

3 ᱟᱢᱟᱜ ᱥᱴᱟᱨᱴᱟᱯ ᱵᱨᱟᱸᱰ-ᱴᱨᱮᱰᱢᱟᱨᱠ ᱠᱟᱛᱷᱟ ᱠᱚ ᱟᱹᱰ ᱭᱮᱫ ᱟ

ᱴᱨᱮᱰᱢᱟᱨᱠ ᱫᱚ ᱡᱟᱦᱟᱸ ᱜᱮ ᱵᱮᱵᱥᱟ ᱨᱮᱭᱟᱜ ᱪᱮᱛᱟᱱ ᱨᱮ ᱦᱩᱭᱩᱜ ᱟᱺ ᱟᱢᱟᱜ ᱩᱫᱷᱚᱜ ᱨᱮᱭᱟᱜ ᱧᱩᱛᱩᱢ ᱴᱷᱮᱱ ᱠᱷᱚᱱ ᱤᱫᱤ ᱠᱟᱛᱮ ᱣᱤᱥᱮᱥ ᱟᱨᱡᱟᱣ ᱚᱰᱚᱠ, ᱥᱮᱣᱟ ᱠᱚ ᱟᱨ ᱦᱚᱲ ᱠᱚᱣᱟᱜ ᱧᱩᱛᱩᱢ ᱦᱟᱹᱣᱤᱪ ᱡᱟᱦᱟᱸ ᱜᱮ ᱵᱤᱥᱮᱥ ᱥᱟᱵᱟᱫ ᱟᱨ ᱵᱟᱝ ᱡᱚᱦ ᱛᱮᱭᱟᱨ ᱚᱠᱟ ᱟᱢᱟᱜ ᱵᱮᱵᱥᱟ ᱞᱟᱹᱜᱤᱫ ᱵᱤᱥᱮᱥ ᱢᱮᱱᱟᱜ ᱟ, ᱩᱱᱤᱭᱟᱜ ᱴᱨᱮᱰᱢᱟᱨᱠ ᱨᱮᱭᱟᱜ ᱢᱤᱫ ᱦᱤᱸᱥ ᱞᱮᱠᱟ ᱛᱮ ᱵᱩᱡᱷᱟᱹᱣ ᱫᱟᱲᱮᱭᱟᱜ ᱟ. These characteristics are key to building your brand identity and carving a unique niche for your business. ᱟᱨ ᱚᱱᱟ ᱛᱮ, ᱟᱤᱱ ᱞᱮᱠᱟᱛᱮ ᱟᱢᱟᱜ ᱵᱮᱵᱥᱟ ᱪᱤᱱᱦᱟᱹᱣ ᱨᱮᱭᱟᱜ ᱱᱚᱣᱟ ᱯᱦᱞᱩ ᱨᱮᱭᱟᱜ ᱟᱹᱰ ᱦᱚᱪᱚ ᱟᱨ ᱱᱤᱥᱴᱟ ᱦᱚᱪᱚ ᱡᱮ ᱡᱟᱦᱟᱸᱭ ᱩᱱᱤ ᱵᱟᱲᱤᱡ ᱞᱮᱠᱟᱛᱮ ᱟᱞᱚᱭ ᱩᱫᱩᱜ, ᱢᱤᱫ ᱨᱟᱹᱥ ᱛᱮ ᱯᱟᱨᱚᱢ ᱵᱮᱵᱥᱟ ᱪᱟᱞᱟᱣ ᱞᱟᱹᱜᱤᱫ ᱵᱷᱤᱛᱤᱨ ᱨᱮᱭᱟᱜ ᱠᱟᱱᱟ.

 

4 Getting Angel Investments Termsheets Right

ᱢᱤᱛ ᱴᱚᱨᱢ ᱥᱤᱴ, ᱟᱨᱵᱟᱝᱠᱷᱟᱱ ᱟᱥᱚᱭ ᱪᱤᱴᱤ, ᱱᱤᱣᱮᱥ ᱯᱨᱟᱥᱛᱟᱣ ᱵᱟᱠᱷᱨᱟ ᱨᱮ ᱯᱨᱟᱥᱛᱟᱣᱤᱛ ᱱᱤᱭᱚᱢ ᱟᱨ ᱥᱚᱨᱛ ᱠᱩ ᱨᱮᱭᱟᱜ ᱢᱤᱛ ᱵᱟᱭᱟᱱ ᱠᱟᱱᱟ. ᱱᱚᱣᱟ ᱫᱚ ᱡᱟᱣ ᱜᱮ ᱡᱷᱮᱞ ᱨᱮ ᱫᱚ ᱢᱤᱛ ᱠᱷᱚᱱ ᱯᱚᱬᱮ ᱥᱟᱠᱟᱢ ᱦᱟᱵᱤᱜ ᱪᱟᱞᱟᱜ-ᱟ. ᱮᱱᱜᱮᱞ ᱱᱤᱣᱮᱥ ᱨᱮᱭᱟᱜ ᱢᱟᱢᱞᱟ ᱨᱮ, ᱴᱚᱨᱢ ᱥᱤᱴ ᱮᱥᱴᱟᱨᱴ-ᱚᱯ ᱟᱨᱵᱟᱝᱠᱷᱟᱱ ᱮᱱᱡᱮᱞ ᱫᱟᱨᱟᱭ ᱛᱮ ᱥᱟᱯᱲᱟᱣ ᱫᱟᱲᱤᱭᱟᱜ-ᱟ. ᱵᱟᱲᱛᱤᱭᱟᱜ ᱱᱤᱭᱚᱢ ᱠᱚ ᱵᱮᱜᱮᱨ ᱵᱫᱷᱚ ᱟ ᱠᱟᱱᱟ, ᱛᱤᱱᱟᱜ ᱜᱟᱱ ᱫᱟᱱᱟᱝᱟᱜ ᱯᱨᱟᱣᱫᱷᱟᱱ ᱠᱚ ᱨᱮᱭᱟᱜ ᱪᱪᱷᱟᱹᱰ ᱥᱟᱸᱣ, ᱡᱩᱫᱤ ᱵᱟᱦᱟᱞᱚᱜ ᱟ, ᱮᱱᱠᱷᱟᱱ ᱵᱤᱥᱮᱥ ᱥᱩᱦᱤ ᱠᱟᱱᱟ

5 Splitting Equity Between Co-Founders

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. ᱢᱤ~ᱢᱤᱛ ᱵᱷᱟᱜᱤᱫᱟᱨ ᱨᱮᱭᱟᱜ ᱵᱷᱩᱢᱤᱠᱟ ᱨᱮ ᱜᱚᱱᱚᱝ ᱟᱫᱮᱨ ᱦᱚᱲ ᱦᱚᱭ ᱫᱟᱲᱤᱭᱟᱜ-ᱟ ᱟᱨ ᱱᱚᱣᱟ ᱫᱚ ᱡᱚᱛᱚ ᱠᱷᱚᱱ ᱵᱮᱥ ᱢᱤᱛ ᱧᱤᱫᱮ ᱨᱮᱭᱟᱜ ᱚᱠᱛᱚ ᱨᱮ ᱫᱚ ᱵᱟᱝ ᱦᱩᱭᱩᱜ-ᱟ, ᱢᱮᱱᱠᱷᱟᱱ ᱵᱟᱲᱛᱤ ᱵᱤᱫᱷᱤᱯᱩᱨᱣᱚᱨᱠ, ᱚᱠᱛᱚ ᱨᱮᱭᱟᱜ ᱚᱣᱫᱷᱤ ᱨᱮ, ᱟᱨ ᱨᱮᱭ ᱥᱚᱛᱮᱜ.

 

6 Understanding ESOP and Sweat Equity

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. ᱮᱥᱴᱟᱨᱴ-ᱚᱯ ᱟᱨ ᱮᱴᱟᱜ ᱵᱟᱦᱟᱹᱞ ᱟᱠᱟᱱ ᱠᱚᱢᱯᱟᱱᱤ ᱠᱩ ᱡᱟᱣ ᱜᱮ ᱯᱨᱮᱨᱤᱛ ᱠᱟᱨᱢᱪᱟᱨᱤ ᱠᱩᱣᱟᱜ ᱞᱟᱜᱛᱤ ᱦᱩᱭᱩᱜ-ᱟ ᱡᱟᱦᱟᱱ ᱫᱚ ᱯᱟᱱᱟᱨ ᱚᱯᱮᱠᱪᱷᱟ ᱠᱩ ᱠᱷᱚᱱ ᱵᱟᱲᱛᱤ ᱯᱚᱨᱫᱚᱨᱥᱚᱱ ᱦᱩᱭ ᱫᱟᱲᱤᱭᱟᱜ-ᱟ. ᱚᱱᱟᱛᱮ, ᱠᱟᱹᱢᱤᱭᱟᱹ ᱠᱚ ᱛᱮᱭᱟᱨ ᱫᱚᱦᱚ ᱟᱨ ᱩᱥᱠᱟᱣ ᱦᱚᱪᱚ ᱨᱮᱭᱟᱜ ᱩᱫᱮᱥ ᱛᱮ, ᱠᱚᱢᱯᱟᱱᱤ ᱠᱚ ᱥᱤᱨᱯᱷᱟᱹ ᱮᱢ ᱫᱮᱠᱷᱟᱣ ᱩᱫᱩᱜ ᱵᱚᱱᱟᱥ, ᱨᱟᱡᱭᱥᱭ ᱥᱮᱭᱟᱨ, ᱥᱴᱟᱠ ᱮᱯᱮᱴᱟᱜ ᱟᱨ ᱵᱟᱝ ᱠᱚᱢᱯᱟᱱᱤ ᱨᱮ ᱦᱤᱸᱥ ᱦᱟᱛᱟᱣ ᱥᱟᱸᱣ ᱦᱤᱡᱩᱜ ᱟ.

 

7 Legal Mistakes that Hurt Startups

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. ᱟᱢᱟᱜ ᱵᱤᱡᱱᱚᱥ ᱨᱮᱭᱟᱜ ᱱᱤᱭᱟᱢᱚᱠ ᱢᱟᱢᱞᱟ ᱠᱩ ᱨᱮᱭᱟᱜ ᱢᱩᱞᱭᱟᱸᱠᱟᱱ ᱫᱚ ᱵᱟᱱᱩᱜ-ᱟ;

4. ᱵᱳᱫᱷᱤᱠ ᱥᱚᱢᱯᱟᱛᱤ ᱠᱷᱚᱱ ᱥᱟᱜᱮᱭ ᱢᱮᱱᱟᱜ ᱢᱟᱢᱞᱟ ᱠᱩ ᱨᱮ ᱵᱤᱪᱮᱨ ᱫᱚ ᱵᱟᱝ ᱦᱩᱭᱩᱜ-ᱟ;

5. ᱩᱠᱩ ᱱᱤᱛᱤ ᱟᱨ ᱵᱮᱵᱷᱟᱨ ᱨᱮ ᱯᱨᱟᱵᱷᱟᱣ ᱨᱮᱭᱟᱜ ᱥᱚᱨᱛ ᱫᱚ ᱵᱟᱝ ᱠᱟᱱᱟ; ᱟᱨ

6. Not choosing the right legal counsel.      

 

8 Protecting Intellectual Property in Software

ᱡᱚᱛᱚ ᱥᱚᱯᱷᱴᱣᱮᱭᱟᱨ ᱰᱮᱵᱞᱟᱵ ᱟᱨ / ᱠᱚᱢᱯᱟᱱᱤ ᱞᱟᱹᱜᱤᱫ ᱞᱟᱹᱠᱛᱤᱭᱟ ᱡᱮ ᱵᱩᱫᱷ ᱥᱚᱢᱯᱚᱛᱤ ᱨᱮᱭᱟᱜ ᱦᱚᱠ ᱨᱮᱭᱟᱜ ᱠᱮᱴᱮᱡ ᱥᱟᱵ ᱫᱚᱦᱚ ᱟᱨ ᱩᱱᱤ ᱥᱚᱯᱷᱴᱣᱮᱭᱟᱨ ᱩᱫᱷᱚᱜ ᱨᱮ ᱪᱮᱫ ᱞᱮᱠᱟ ᱵᱟᱦᱟᱞ. ᱥᱚᱯᱷᱴᱣᱮᱨ ᱰᱮᱯᱞᱮᱯᱨᱥ / ᱠᱜᱚᱢᱯᱟᱱᱤ ᱢᱤᱫ ᱵᱨᱟᱸᱰ ᱨᱮᱭᱟᱜ ᱞᱟᱦᱟ ᱟᱨ ᱡᱟᱹᱯᱛᱤ ᱞᱟᱹᱜᱤᱫ ᱟᱡᱟᱜ ᱦᱚᱠ ᱠᱚ ᱠᱮᱴᱮᱡ ᱵᱩᱡᱷᱟᱣ ᱨᱮᱭᱟᱜ ᱞᱟᱹᱠᱛᱤ ᱦᱩᱭᱩᱜ ᱟ, ᱟᱡᱟᱜ ᱠᱟᱹᱢᱤ ᱠᱚ ᱨᱮᱭᱟᱜ ᱵᱤᱥᱮᱥ ᱢᱟᱹᱞᱤᱠᱚᱜ ᱜᱚᱴᱟ ᱦᱚᱪᱚ ᱟᱨ ᱱᱚᱣᱟ ᱦᱮᱯᱨᱟᱣ ᱵᱟᱡᱟᱨ ᱨᱮ ᱢᱤᱫ ᱞᱟᱵ ᱛᱮᱭᱟᱨ ᱟᱨ ᱛᱮᱭᱟᱨ ᱫᱚᱦᱚ ᱞᱟᱹᱜᱤᱫ ᱟᱡᱟᱜ ᱠᱟᱹᱢᱤ ᱫᱟᱱᱟᱝ ᱫᱚᱦᱚᱭᱟ.

 

9 Privacy Policy and Website Terms

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.

 

10 ᱪᱮᱫ ᱟᱰᱩ ᱜᱟᱱ ᱮᱱᱡᱮᱞ ᱱᱤᱣᱮᱥᱚᱠᱟᱜ ᱵᱟᱲᱤᱜ ᱵᱤᱪᱮᱨ ᱠᱟᱱᱟ?

Are you syndicating your angel investment round with ten or fifteen or more investors? ᱪᱮᱫ ᱱᱚᱣᱟ ᱫᱚ ᱵᱮᱥ ᱵᱤᱪᱮᱨ ᱠᱟᱱᱟ? This video answers the question and suggests how such a round should be structured. 

 

11 Choosing the right Legal Counsel

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