TECH ENTREPRENEURS
As a founder of a technology company, it’s critical to build your business on a solid foundation, positioned to manage the trajectory of startup to fast growth. Early engagement of attorneys who have traveled the terrain many times before will enable you to avoid costly missteps while preparing for what is around the next corner. TrenamTech has the know-how and passion to serve tech entrepreneurs from startup to exit. We can’t wait to learn about your vision and help you bring it to life. Contact TrenamTech#@trenam.com to get started.
LAUNCH
In the early stages of your technology business, your legal needs will fall into these categories:
- Entity selection, formation, and governance
- Equity grants to founders
- Founders’ agreements (shareholder, buy-sell, and operating agreements)
- Tax elections, planning, and compliance
- Business licenses and regulatory compliance
- Intellectual property protection
- Confidentiality (non-disclosure) agreements
- Trademark search and registration
- Copyright
- Patent
- Intellectual property assignment and work-for-hire agreements
- Licensing agreements
- Fictitious name registrations
Many of the legal needs of the Grow stage will also happen in this start phase, especially if you are a solo founder aiming to attract a team through equity grants.
SCALE
Once you have a minimum viable product (MVP) and you’re ready for BETA users or a full-scale launch, you have reached your growth stage. Your legal needs are sure to escalate as you navigate more complex decisions and require growth capital. Among the common legal needs of this stage are:
- Entity reorganizations, including conversions of LLCs to C corporations
- Employee and independent contractor agreements, including restrictive covenant agreements
- Equity compensation plans and grant agreements for employees to attract and retain talent (restricted stock units, stock options, profits interests)
- Advisory board development and advisor agreements, including equity grants
- Suite of contracts for your company, including a SaaS/PaaS service agreements, master services agreement/scope of work, terms of use, privacy policies
- Contract review (vendors, suppliers, and channel partner agreements)
- Risk management (insurance, limiting liability through contracts, dispute resolution)
- Office space (lease or purchase of commercial space)
- Funding your startup with traditional business loans
- Raising capital from angel investors or venture capital (SAFE, convertible debt, priced rounds) and associated compliance with securities laws
- Receiving investment from a private equity firm
SELL
Not every technology company is built to sell in three to seven years, and some will continue to operate under the same ownership group as when founded. However, it is common for tech companies – especially those funded by venture capitalists looking for an exit with a large multiple – to pursue an exit event where the founders, employees, and investors are rewarded. Knowing your plan will help direct whether you pursue fast growth over profit or sacrifice some growth to make the company profitable earlier on. Either way, you should build your business using best practices that a buyer will value so that when you are ready to sell – or a buyer comes knocking with an offer you cannot refuse – the company has not only curb appeal, but a solid foundation and beautiful interior operations.
The sale stage includes the following legal needs:
- Identifying and selecting an M&A Advisor (investment banker or business broker)
- Preparing for a buyer’s due diligence – a legal and financial audit
- Setting up a virtual data room
- Assessing valuation and the flow of funds to all stakeholders upon sale
- Evaluating rollover equity and employee compensation packages offered by the acquirer
- Advising on tax implications
- Evaluating, negotiating, and drafting transaction documents
- Post-closing guidance to ensure compliance with transactions documents
INVEST
Often successful entrepreneurs evolve into investors in early-stage companies.
