Legal steps necessary before financing round?


I am one of three co-founders in a software startup. We are developing smart CAD applications for large-scale engineering. We have been working on our first finished product for a couple of months, with funding from an EU incubator program. To launch our next financing round, we would need to register a limited corporation and probably take a couple of other legal steps. What would be the "must do" and what kind of legal issues are important, but can be dealt with after the financing round?

Answers: 1 public & 0 private


Investors will require your business and its intellectual property to all be in order. Watch dragons den and you will notice it is one of the first questions always asked. You have already mentioned forming a limited company. Once that is done you must address the issue of IP ownership. Who owns the Intellectual Property in the business? Many investors will want the vehicle they are investing in to hold all of the valuable IP. Therefore you must complete an assignment of all of your past, present and future IP rights into the limited company. Conversely you and your fellow creators must exclusively licence the same to the business. No investor worth their salt will invest in the business unless there is a clear line of title to the IP in the business. Second you must ensure that there is no gaps in your IP title chain. If any third party has worked on the business who is not already a director/employee again you must ensure their rights are assigned into the company.

As you product is software from an IP point of view there are no strictly registered IP rights to protect the software. After the financing round you must build layers of protection make the proposition attractive to an investor. This can be done through the registering of trade marks and other registered rights. If you need any further help feel free to drop me a line.

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