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Licensing Agreements for Startups: Turning Your IP into Revenue
Licensing your intellectual property - whether it’s code, brand, or content - can be a smart way to scale without manufacturing or selling yourself. But founders need to tread carefully: Licensing Agreements involve handing over rights to your most valuable asset.
Expanding Your Reach: What Startup Founders Should Know About Distribution Agreements
If your startup sells physical products or software, you may eventually need help reaching customers in new markets. A distribution agreement can be a powerful way to expand without building a large internal sales team.
Manufacturing Agreements for Startups: Legal Basics Behind the Build
If your startup builds physical products - hardware, wearables, or consumer goods - you need more than a handshake with your manufacturer. A well-drafted manufacturing agreement is essential to protect your product, control quality, and limit liability.
Getting Vendor Agreements Right: A Legal Checklist for Startup Founders
As your startup grows, so does your list of vendors - design agencies, cloud providers, contractors, and SaaS platforms. Every one of those relationships should be backed by a Vendor or Service Agreement that protects your interests and sets expectations.
FAQs
Open allNot always, but they are common. Some early-stage investors accept uncapped SAFEs if they have strong conviction in the company.
A cap sets the maximum valuation for conversion, while a discount lowers the share price relative to the next round’s investors. Many instruments include both, and investors convert using whichever is more favorable.
Typically 30–60 days, though shorter timelines may be negotiated to avoid deal delays.
A ROFR (Right of First Refusal) allows the company or investors to match a third-party offer. A ROFO (Right of First Offer) requires the shareholder to offer their shares internally before seeking outside buyers.
Yes. Founders often negotiate for higher approval thresholds, equal treatment provisions, and liability caps to ensure fairness.
Most agreements require majority or supermajority consent (often 60 - 70%) from preferred shareholders, though this can vary by deal.
Yes, they typically bind all shareholders—including founders, employees, and option holders - unless carve-outs are negotiated.
Investors use drag-along rights to ensure that all shareholders participate in a sale, avoiding minority holdouts that could block or delay an exit.
Yes. Founders can push for broad-based weighted average terms, carve-outs for employee equity, or even conditional waivers to maintain alignment with investors.
Because it resets the conversion price to the lowest new share price, which can drastically dilute founders and employees even if only a small down round occurs.
The broad-based weighted average formula is the market standard, striking a balance between investor protection and founder dilution.
Issuing new equity at a lower price than earlier rounds (a “down round”) typically triggers the adjustment.
If an investor declines, the company can allocate those shares to other investors or new entrants, sometimes through overallotment provisions.
Yes. In later rounds, rights can often be sold or assigned, especially if the original investor lacks capital reserves.
Yes, most institutional investors request them, especially at seed and Series A. The scope and duration, however, are negotiable.
Founders with equity typically don’t need them, but sometimes advisors, accelerators, or insiders may negotiate for them.
In big exits (10x+ invested capital), liquidation preferences usually have little impact since all parties receive strong returns, but they can still influence exact distributions.
Yes. Founders can negotiate for 1x preferences, caps on participation, or paripassu treatment across rounds to maintain balance.