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What documents should stakeholders of a startup sign before the development start?

Chris Barsness, startup, finance, law, and tech nerd

This answer assumes from your question you are one of the original founders of the company or are coming in early on and are helping with development in something along an early employee role.

In some cases, it depends upon the type of company and/or development.  In the majority of startups out there these days, they are technology or internet based.  IP or Intellectual Property protection is generally the biggest legal issue in those types of startups.  Think "how do I protect my own ideas and developments to be sure I own them and how does the company protect what ideas or developments are developed by the company and it's employees?"

Some of those initial documents may be technology transfer or assignment agreements, non-disclosure/confidentiality agreements, employee proprietary information and inventions agreements.  To boil it down to the basics, any document that clearly defines what inventions, patents, patent applications, or developments you came into the company with that are yours, what you may be contributing to the deal (could be cash, time, or your ideas, designs, patents, etc.), what happens to developments made during the course of working with the company or possibly developed by you outside of the company, and what happens if you leave the company.

Obviously, you generally need to form a legal entity that will be the basis of the company (such as C corp, S corp, LLC, etc.).  If it is a corporation, there are usually founder stock purchase agreements or something similar with a stock certificate to represent your ownership interest in the company.  There may be shareholder agreements, buy-sell agreements, investor representation agreement/letter of accredited status, resolutions approving the issuance of stock to you and many other documents that could possibly be involved.  The stock issuance probably also requires a Form D filing or state blue sky filing to show compliance with state and federal securities laws.

I know it sounds like a lot, but there are a lot of things that need to be done in the early stages to avoid a lot of clean up or dealing with lawsuits down the road.

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