hcmc august 27 - startup legal and ip: christian schaefer
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BUILDING A LEGAL AND IPSTRATEGY FOR START UPS
CHRISTIAN SCHAEFER & MINH DUONG
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READY TO JUMP?
WHAT DO YOU NEED
! Legal and IP Strategy for Startups
! Legal Issues for Receiving Investment
! Basic Business Laws
! Setup New Company
! Copyrights/Trademarks/Patents
! Avoid Common Legal Mistakes
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WHERE’S THE VALUE IN LAW?
! Compliance
! Protection
! Recognition
! Governance
=
Value
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YOUR OBJECTIVES DETERMINE YOUR(LEGAL) STRATEGY
! Purpose
! Funding
! Co-Founder Issues
! Operations
! Exit
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PURPOSE
IF YOU WANT TO DREAM, GO TO SLEEP
! Not so much a legal issue,but…
! Legal issues when looking atdifferent sectors (regulated vs.
unregulated)
! What are core legalrequirements that impact onthe business (licenses,restrictions etc.)
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FUNDING
! Funding requirements for your business
! Funding sources (retained earnings, friends &family vs. institutional, classical lenders/banks)
!
Debt vs Equity! Expectations of different investors
! Rewards and Returns!
Control and security!
Dilution!
Management participation!
Priority (e.g. on liquidation)
!
Contractual side of things!
Loan (e.g. convertible or participating)! Shareholders Agreements
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FUNDING- EXAMPLE
Sample Term Sheet / Investment Proposal:
! 10% equity plus 10-20% convertible loan atoriginal valuation / pre-money valuation
!
Convertible loan: 15-20% interest p.a.
! Put option for equity interest (on company orfounder) at certain multiple after 3 years ifcertain milestones are not met (e.g. IPO ornew financing series)
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CO-FOUNDER ISSUES
! Founder agreements
! Typical issues
!
Commitment and
contributions
!
The money question
!
The objectives (purpose
vs financial reward)
! Exit/ Separation
!
Unexpected events
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OPERATIONS
! Value of templates and contract forms(e.g. service contracts, customercontracts, labour contracts etc.)
! Standard terms of business
! In-house lawyer vs external lawyers
! Monitoring legal compliance
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EXIT
! Often overlooked
! Separation of the business(clients, assets, IP, …)
!
How long are founderslocked up?
! Buy-out clauses
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COPYRIGHTS/ TRADEMARKS/ PATENTS
IT’S ALL ABOUT PROTECTION
! Value of IP protection
! Terms and definitions
!
Costs and benefits
! How to register / protect a copyright/trademark/ patent
! Territoriality
!
Enforcement
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COMMON LEGAL MISTAKES
! Naming without prior research
! Failure to document my relationships with co-founders (in particular: founders’ agreement)
!
Employees and contractors
! Failure to protect my IP
! Lack of mandatory filings
! The company’s domain name (e.g. whoregisters the domain?)
! Tax issues