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Insights
Types of Investors in Startups: Choosing the Right Financial Partners
Securing funding is one of the most important steps in building a startup. But capital is only part of the equation - different investor types bring distinct benefits such as mentorship, networks, and operational expertise. Understanding the funding landscape helps founders target the right partners at the right time.
Understanding the Funding Journey: A Guide to Startup Capital Rounds
We want to provide clarity on the progression of funding stages that successful startups typically navigate. While funding round terminology can vary across different entrepreneurial ecosystems, understanding the general framework will help you properly position your company for each capital-raising milestone.
Navigating Startup Funding: The Venture Capital Question
We want to share important considerations regarding funding options for emerging businesses, particularly focusing on venture capital as a potential path. Despite its prominent coverage in business media, venture capital may not be suitable for every entrepreneurial venture.
Unvested Shares Demystified: Understanding Equity Compensation in Startups
When a company grants stock, it doesn’t mean employees immediately own it outright. Instead, the equity is tied to a vesting schedule - a structured process that gradually transfers ownership over time. Unvested shares are those that an employee has been granted but are still subject to the company’s right to repurchase if the employee leaves early.
FAQs
Open allCan distribution agreements be terminated early?
Yes, but only if termination rights are included. Contracts should cover notice periods, treatment of unsold inventory, and customer transition plans.
How do distribution agreements handle intellectual property?
They should state that your startup retains ownership of all IP, while the distributor only gets limited rights to sell your product.
Should startups grant exclusivity to distributors?
Exclusivity can motivate strong performance but is risky if the distributor underdelivers. Consider tying exclusivity to sales targets.
What’s the difference between a reseller agreement and a distribution agreement?
A reseller agreement usually involves buying and reselling at a markup, while a distribution agreement often grants broader rights to market, sell, and support products in a defined territory.
Can I switch manufacturers if I’m unhappy with the current one?
Yes, but only if your agreement allows it. Ensure your contract includes termination rights and addresses ownership of tooling and designs so you can move production.
How can startups protect their IP when working with manufacturers abroad?
Include strict IP ownership and confidentiality clauses, use dual-language contracts, and consider arbitration in neutral jurisdictions to enforce rights.
What happens if a manufacturer delivers defective goods?
Your agreement should outline inspection rights, rejection procedures, and remedies such as refunds, replacements, or penalties.
Why do startups need manufacturing agreements?
They protect your startup by setting clear standards for quality, ownership, liability, and delivery. Without one, you risk disputes, defects, and loss of control over your product.
What risks do vendor agreements help reduce?
They protect your startup from disputes over scope, missed deadlines, unexpected costs, confidentiality breaches, and liability for vendor mistakes.
Who should own the intellectual property created by a vendor?
In most cases, your startup should own the IP produced under the contract. Otherwise, you may only receive a license, limiting your rights.
Can I just use the vendor’s standard contract?
You can, but vendor-provided contracts usually favor their interests. It’s important to review and negotiate terms that protect your business.
What happens if we violate a BAA?
Covered Entities can terminate the agreement, and regulators can impose significant fines for HIPAA violations. Startups risk both legal penalties and reputational damage.
Do subcontractors also need BAAs?
Yes. If you use vendors like cloud hosts, analytics firms, or development shops that access PHI, they may need Sub-BAAs to flow down HIPAA obligations.
Does signing a BAA make my startup HIPAA-compliant?
No. A BAA is only part of compliance. You must also implement security, privacy, and breach response programs that meet HIPAA standards.
Who needs a Business Associate Agreement?
Any business that handles Protected Health Information (PHI) on behalf of a healthcare provider, insurer, or related entity is required to have a BAA.