Tech startups have unique legal needs. A lawyer with experience in the tech world can be a valuable business asset and resource to help you create a solid framework from which to grow your business. Here are Perley-Robertson,
Hill & McDougall LLP/s.r.l.’s top legal tips for startups:
1) Know what you need and create budget
Legal advice does not have to be expensive. By educating yourself and clearly setting out what your legal needs are, getting quality and effective legal advice will be in your budget. Make sure your lawyer understands your business and what you plan on doing with it. If you have an exit strategy, share it with your lawyer. This information is invaluable to ensure you receive the advice you need.
2) Get incorporated
By incorporating you can easily split ownership in your startup among your founders and investors. You also protect your personal assets from liability.
3) Keep the cap table simple
If you plan on doing an angel or venture round of financing, your investors will want to see a clean, simple cap table. Complicated share structures are often tax driven and for a new startup with little revenue, not a top priority. Spend your money and time planning elsewhere and keep it simple.
4) Sign a founders’ agreement
A shareholders’ agreement helps co-founders plan for the worst. If the working relationship breaks down between shareholders running a company, the shareholders’ agreement sets out the steps necessary to end the working relationship amicably without the expense and hassle of negotiation or litigation.
5) Vest equity over time
Vesting ownership over time is a fair way to make sure the people who put their time and energy into growing your startup reap the rewards of that growth.
If you’re a startup that needs legal advice, contact Conor Cronin at Perley’s Business Law Group. He can be reached at ccronin@perlaw.ca.
