The Top Legal Tips for Tech Startups

Let’s face facts; the global technology market is a vast and diverse entity, and one that’s predicted to be worth a staggering $3.2 trillion by the end of this year.

Not only is technology spending rising year-on-year across the globe, but it’s also fair to surmise that startups are becoming increasingly influential in this space. In London alone, the number of tech startups increased by 14% in 2018, with these companies benefitting from significant and ongoing investment.

In this post, we’ll appraise the top three legal tips for tech startups, whilst asking how they can be overcome.


1. Defining Your Business Structure 

We’ll start with the basics, as your business structure has a significant impact on everything from your tax requirements and funding needs to your bottom line profitability.

In general terms, you’ll need to select a business structure that suits your long-term development plan and growth strategy. Arguably, most high-growth tech startups will need to register as a C-Corporation, as this minimises the owners’ responsibilities for debt and any future liabilities.

Whilst this model is also the preferred entity of investors, however, it does create issues in terms of double taxation.

This is why most start-ups prefer to register as a Limited Liability Corporation whilst raising funds, before converting into a C-Corporation once they’ve begun to trade.


2. Protect Your Intellectual Property 

Most tech startups have a unique business premise that relies on at least some form of intellectual property, which needs to be secured and protected before you become a public entity.

The term ‘intellectual property’ is also broad in its scope, as it may include any digital asset that holds value within your business (think of logos, softwares and anything else that’s unique to your startup.

Not only do these protections safeguard the long-term integrity of your startup, but they also enhance its commercial value in the eyes of investors.

To secure your firm’s intellectual property, you’ll need to liaise with a legal expert such as Withers, who can educate you on the assets that you need to protect and help you to achieve this objective.


3. Organise Non-Disclosure Agreements 

The final legal hurdle we’ll discuss pertains to non-disclosure agreements, which may also tie in to your intellectual property and provide another, much-needed layer of protection.

These agreements may also protect a wide range of entities, from your business’ growth strategy and client information to any unique algorithms that drive the venture.

The key consideration lies in the details of the agreements, which should also stipulate how the confidential information is handled and who it belongs to.

Some non-disclosure agreements may also cover a specific timeframe, but the key is to seek legal council and create detailed documents that protect every aspect of your business and your customer’s data.



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