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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 allYes. Many startups issue ISOs to employees and NSOs to contractors, advisors, or employees exceeding ISO limits.
Not entirely. While ISOs aren’t subject to ordinary income tax at exercise, they can trigger Alternative Minimum Tax (AMT).
NSOs provide flexibility, fewer restrictions, and tax deductions for the company. They’re also the only option for contractors, advisors, directors, and international hires.
ISOs qualify for favorable tax treatment but can only be granted to employees, while NSOs are more flexible and can be granted to a broader range of contributors.
An 83(b) election allows employees with early-exercised options to pay taxes at grant, potentially reducing future tax liability if the stock increases in value.
Yes, but typically only within 90 days unless your company offers an extended exercise window. Check your grant agreement.
No. Stock options only create value if the company’s market value exceeds the strike price. Many startup options expire worthless.
ISOs offer potential tax advantages but are only for employees, while NSOs are more flexible but taxed as ordinary income at exercise.
Most warrants have terms ranging from 1–10 years, depending on whether they’re tied to debt financing, partnerships, or strategic transactions.
Warrants allow companies to attract investors or lenders by offering future upside without immediate ownership transfer or dilution.
Yes. If exercised, warrants increase the total number of outstanding shares, which dilutes existing shareholders’ ownership percentages.
Warrants are typically issued to investors or lenders as part of financing deals, while stock options are usually granted to employees as compensation.
Preferred stock often includes conversion rights, especially during IPOs or acquisitions, allowing investors to switch to common stock if it provides better returns.
In most startups, founders hold common stock. However, in some cases founders may negotiate preferred terms to align with early investors.
Preferred stock reduces investor risk by guaranteeing certain returns and giving them priority over common stockholders in liquidation or acquisition events.
Common stock represents basic ownership with voting rights but no guarantees, while preferred stock provides investors with priority in dividends and liquidation.
Dilution is part of the growth journey. A smaller slice of a much bigger company can be worth far more than a larger slice of a small company.
Yes. Employee stockholders are diluted just like founders and investors when new shares are issued.
By carefully planning equity allocations, using vesting schedules, and reviewing the cap table regularly, founders can manage dilution strategically.
No. While ownership percentages decrease, the value of your shares may grow if the company’s valuation increases after a funding round.