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Trademarks vs. Copyrights vs. Patents: A Startup Guide to IP Protection
Startups thrive on ideas - but ideas only create value if they’re protected. Intellectual property (IP) safeguards your brand, your creative work, and your innovations. From your logo to your code to your inventions, knowing which type of IP applies is essential to protecting your edge and building long-term value.
Non-Solicitation Clauses Explained
When an employee leaves your startup, there’s always a risk they’ll try to take your people or customers with them. That’s where non-solicitation clauses come in - they’re a powerful, often enforceable tool to protect your business after key team members depart.
Should Startups Use Non-Compete Clauses? Here’s What Founders Need to Know
In the fast-moving startup world, it’s natural to want protection against former employees joining a competitor. That’s why non-compete clauses have been popular for years. But the legal landscape is changing - raising real questions about whether they’re enforceable, useful, or even worth including.
FAQs
Open allWhen should a startup use RSAs instead of RSUs?
RSAs are generally more effective for very early-stage startups with low valuations, since they allow employees and founders to lock in minimal tax liability through an 83(b) election.
How do I know if I should file an 83(b)?
The best approach is to consult with a tax advisor. They will assess your grant type, company valuation, and personal tax situation.
Is the 83(b) election always beneficial?
Not always. It only makes sense if the stock is likely to increase in value. If the company fails, you cannot recoup the taxes you paid upfront.
Does an 83(b) election apply to stock options?
Yes, but only if you receive early-exercised options or restricted stock. Standard vested options are taxed differently.
What happens if I miss the 30-day 83(b) deadline?
You lose the ability to elect early taxation and will be taxed on the value of your equity as it vests, potentially resulting in higher taxes.
Do unusual stock structures affect fundraising?
Yes. Investors prefer simplicity and transparency. Complex or founder-heavy structures may deter investment unless clearly justified and carefully limited.
Is par value required in every state?
Most states require corporations to specify a par value in their certificate of incorporation, though the exact rules vary.
What happens if my company sets par value too high?
It could make early equity grants more expensive and limit flexibility in future financings. That’s why startups typically choose a very low number.
Why do most startups set such a low par value?
To allow founders and employees to receive stock at minimal cost while leaving room for significant increases in value during future fundraising rounds.
What happens if founders disagree about equity distribution?
Open communication, clear documentation, and the guidance of legal or financial advisors can help resolve disputes. In many cases, accelerators or mentors recommend starting with an equal split and adjusting only when necessary.
How do investors view founder equity splits?
Investors prefer balanced and fair structures that reflect commitment and discourage disputes. Unequal or poorly documented splits can raise red flags.