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The early days of startups can be the riskiest in the venture lifecycle. Company founders make decisions during this time that will influence whether their companies ultimately succeed or fail. Among these decisions are how to handle the legal procedures that are required to negotiate governmental requirements, stakeholder relationships (e.g., customers, suppliers, users, employees, and the public), and relationships between company founders. New business owners will need to:
- Draw up a founders’ agreement
- Choose a legal entity structure
- File associated documents with the chosen entity structure
- Secure outside investment funding
- Create and negotiate investment contracts and agreements
- Draft and file other required legal documents (e.g., privacy policies, incentive agreements, employee agreements, etc.)
Competent, responsive, and experienced legal counsel can be essential to startup and early-stage companies. Not only can experienced business counsel help founders meet the legal requirements for entity choice, business formation, and drafting and negotiating contracts and agreements, they also can assist with attracting and structuring investment relationships and planning for business growth.
Startup & Early-Stage Company Contracts & Agreements
Several different contracts and agreements should be drawn up at the start of a business venture. Founders also will need to choose the best business entity for their venture and file the necessary business formation documents. The documents in this initial batch of contracts and agreements may include stakeholder relationship contracts, vendor contracts, leases, employment agreements, privacy policies, equity incentive plans, and debt agreements.
Entrepreneurs should draw up a founders’ agreement before meeting with any investors. A founders’ agreement establishes ownership roles and responsibilities for business founders. It also outlines procedures for dispute resolution, gives direction for contract termination and dissolution, and may protect minority shareholders. In addition to the foregoing, a founders’ agreement can underscore the seriousness of the business venture to potential investors.
Startup & Early-Stage Companies: Securing Funding
The most popular method for new business ventures to raise money is through venture capital. These arrangements require certain information to be provided to entities that regulate private equities, including the Securities and Exchange Commission (SEC), banks, and other individuals, depending upon the details of the business plan. To navigate this process successfully, founders will interact with venture capitalists, board members, financial operators, operational advisors, and other financial services providers. Enlisting the services of these experienced contributors can help founders grow and manage the funds needed to make a startup successful.
Startup & Early-Stage Companies: How We Can Help
The business attorneys at Payne & Fears have years of experience representing business founders throughout the formative stages of business ventures. We regularly help entrepreneurs navigate the many legal requirements involved in the early days of founding and scaling a startup. From the beginning of our relationship, our attorneys offer trustworthy counseling on entry strategies, how to manage company growth, and potential exit mechanisms. We counsel clients on the merits and drawbacks of their choices for business formation, and structure relationships for founders, customers, employees, and investors by drafting effective contracts and agreements.
Further down the line, our business transaction attorneys can help startups establish and evaluate funding sources. We partner with clients to determine the best financing arrangements, working to balance the founders’ needs and the growth needs of the company. We also can help founders manage the sale of the business to the satisfaction of everyone involved. Throughout the startup lifecycle, our attorneys are committed to helping founders create a successful and lasting business.
For more information on our startup and early-stage companies work, please contact Richard K. Zepfel.