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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 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.