tech-company, intellectual-property, legalI, and three other folks, have been working on a project for over a year that will culminate in a startup.
However I’m a bit worried because I’ve seen stories about startup betrayal which happened for the most unpredictable reasons … but they do happen.
To be safe and to equally protect my comrades, how one can guarantee its participation in the business in the eyes of law. How can the intellectual property be safe between us (in case one of us tries to run away with the project). How can we divide the project shares (profits and costs) in a fair way with each other. In case someone quits, how much of the project should that person end with, etc.
I don’t know anything about laws and stuff. Where can I start (even before getting to see a lawyer, since they are quite expensive)?
A simple solution would be to just incorporate a legal vehicle for this entire project - incorporation can be fairly inexpensive if you do it yourself, for instance.
Then, decide upfront about equity structure, vesting.. and assign IP to the company.
There is almost no good reason to be working on a startup without formalising it as a business - in the UK, a dormant Limited Company costs way less than 100GBP/y to just exist, have shares and contracts.
In the worst case scenario (if you did not enter into any contracts), you’ll just liquidate it. In the best case scenario, you have a legal person that is one year old, evidence to prove that the founders did not break up and continued on it.
In today’s world, future investors will want to know that your company possesses intellectual property rights (and does not use and code for which you do not have rights to use). One of the best ways to do this is to form a corporate entity, and have each person assign their rights to the company (you can work out the splits for company equity or other agreement for how folks will get paid if your project is successful).
###Get advice from a lawyer####
For the sake of a small amount of money spent today on having this properly sorted, you will save yourselves from future headaches and animosity that might otherwise come from resolving ambiguities.
###Spell out your agreement###
Whilst it’s impossible to indicate exactly what the lawyer might advise (for one thing, you haven’t stated your legal jurisdiction), it will probably involve putting into writing the exact nature of what it is that you have agreed between you; it may also involve transferring your rights to a company in which you are all shareholders.
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