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A startup is a newly created company that is under development and is building its business on the basis of innovative ideas or new technologies. The most famous examples of successful startups are Facebook, Google, Uber.

By and large, the success of startups is due to their mobility in the implementation of new ideas. It is difficult for large companies and corporations to conduct new developments in their own slowness and slowness. However, a startup depends on many factors: an innovative and at the same time in demand concept, a friendly team, passionate about the idea, and, of course, financing. In addition, all of the above factors should be additionally covered by legal support.

Since the essence of a startup project is that the business is focused on a new idea or technology, it is reasonable that it is based on the use of results of intellectual activity, the value of which is determined by the level of implementation of the idea in practice. That is why the priority in the legal support of a startup is the protection of intellectual property rights.

Consider the main types of transactions that are concluded immediately before the startup, in which the participation of a professional lawyer is required.

In general, there are three main types of documents that are concluded at this stage: the agreement between the founders (founders agreement), the agreement on the distribution of shares (shareholders agreement) and the agreement on the Vesting (vesting agreement).

Such agreements are necessary so that if one of the developers and founders of the project decides to leave, the development of the project is insured against possible risks. Therefore, it is extremely important to fix the agreement on the distribution of responsibilities between the founders of the company.

Quite often, startups fail through internal problems, the lack of normal regulation of relations and the distribution of intellectual rights, not thought out advance exit strategies and methods for their implementation in practice. Obviously, the success of the project depends on cohesion and the level of trust in the team, and internal relations between the founders of the company are legally framed – the key to a structured and effective work.

Equally important is legal assistance in formalizing relations with investors. Here the main point that needs to be clarified from a legal position is the distribution of intellectual rights. Mostly investors follow a more direct and radical path, acquiring part of a business project, and as a result of which they gain profit and profit, or lose invested capital. 

The difficulty of protecting intellectual property in a startup is that the lawyer should not evaluate the idea or concept itself, but the rights to the results that will arise as a result of its implementation, because, in fact, the idea has not been realized cannot have any assessment.

If you want to protect your own startup project, please contact Prikhodko & Partners Law Firm, we will be happy to help you.

Author: Ivan Ischuk

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