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Why do I need legal guidance on my startup business?
At any point in the lifecycle of a startup business, a startup lawyer will bring value. Here are a few instances where you’ll find an immediate and long-term benefit of legal counsel.
If your startup business either operates on or has a unique intellectual property (IP) such as trademarks, patents, copyrights, and trade secrets, then it is important to protect that IP. You do not have to register trademarks or copyrights to protect them, however, it does afford you more rights. If your startup has a patent, then it is a must to register it. With the right startup lawyer to guide you in this process you will not have to be concerned with legally owning your IP. If a registered IP were to come into question or was stolen/copied, a lawyer can assist in perusing legal action in this instance. On the other side, should your company receive a cease and desist in regard to your business’ IP or lack thereof, it will most likely be necessary to obtain legal counsel.
The finance technology (FinTech) industry has completely disrupted the ways businesses are funded, run, sold, and bought. FinTech like crypto and blockchain technology is constantly evolving. As this industry evolves much of it is decentralized and unregulated while there are other instances where companies need to follow SEC regulations. At Blake Harris Law, we specialize in blockchain and cryptocurrency regulations. Contact us if there is any compliance uncertainty when operating your business. If your startup is in the realm of any other type of business disruption, you’ll want to contact a startup lawyer to understand what laws, policies, and tax regulations you need to follow.
In some instances, you may not need legal advice when you create your startup business but if your startup has founders and investors, it is advisable to have equity rights outlined legally. Additionally, a lawyer could guide you on the best strategy depending on the startup corporate structure and/or place of corporation.
Whether your startup is receiving funding from a venture capitalist, angel investor, or financial institution, it is vital that your business stay financially sound, and you maintain a level of equity you are comfortable with. Investors have a different agenda than you have for your startup business. It’s important to ensure each party is benefiting from the investment.
Additionally, if you are receiving funding from investors in exchange for securities (convertible notes, stocks, stock options, etc.) then you must comply with securities laws and regulations. Those securities must be registered with the Securities and Exchange Commission (SEC) unless exempt. A skilled lawyer who specializes in securities can assist with this very complicated and time-consuming registration process.
Complying with Securities Law
When you begin the process of funding a startup, if you are receiving funding from any other source but a personal loan or bank, you will mostly likely have to comply with securities laws. By issuing securities (stocks, stock options, convertible notes, etc.) to investors then you must comply with securities laws. Those securities must be registered with the Securities and Exchange Commission (SEC) unless exempt. Securities laws exist at the federal and state level to govern the sale of issuances of securities, which in turn protects investors because it requires companies to disclose information about the financial wellbeing of the company. Registering with the SEC takes time and can be expensive and therefore many private startup companies will file for an exemption. This process is complicated and burdensome and requires legal expertise to ensure compliance. Should a startup neglect or inadvertently not comply with securities laws it can have an adverse effect on the business. By not complying, startups can be subject to criminal or civil lawsuits, loss of investment due to legal risk, personal liability, company liability, and enactment of recession rights in which investors cancel investments or request money back.
Startup Law Services
There are a number of aspects to startup law and at Blake Harris Law we can assist your business in the following areas:
- Angel financing
- Capital-raising strategy and management
- Commercial contracts
- Corporate formation (e.g., Sole Proprietorship, Partnership (Limited Partnership (LP) and Limited Liability Partnership (LLP), Limited Liability Company (LLC), Corporation (C Corporation, S Corporation, B Corporation, Close Corporation, Nonprofit Corporation), and Cooperative)
- Corporate governance
- Crypto and blockchain investment and funding
- Equity financing
- Fund formation
- Initial Public Offering (IPO)
- Joint Ventures
- Licensing agreements
- Mergers and Acquisitions (M&A)
- Mitigating risk
- Protecting intellectual property (IP) (e.g., trademarks, patents, copyrights, trade secrets)
- Seed financing
- Tax regulations
- Venture capital and financing