common mistakes start ups make
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Common MistakesStart-ups Make
By Michael Moradzadeh
Presented at Stanford University on March 4, 2013
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No Agreements in Writing
– Contracts memorialize understandings, and act as evidence
– Contracts force parties to think through possibilities
– Contracts ensure both sides understand each other
– What happens if contract is broken?
– Define terms!
– Contracts with founders, employees, investors, customers, vendors
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Bad (or no) Employment and/or Independent Contractor (“IC”)
Agreements.
– Difference between employee and IC
– Intellectual Property issues
– Employee benefits
– Defaults without agreement• Term is at will• Expectations undefined• Who pays taxes?
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Giving equity without vesting.
– Importance of vesting versus unrestricted stock
– Option plans and 83(b) filing
– Restricted Stock Agreements
– Warrants
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Not protecting confidential information.
– Non-disclosure Agreement/Clause
– Non-competition Agreement/Clause
– Non-solicitation Agreement/Clause
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Other considerations.
– Right to use other’s IP (trademark, patent, copyright, etc.)
– Remember business considerations – don’t hurt the relationship