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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 allYou risk IRS penalties, employee tax liabilities, and potential challenges to the legitimacy of your equity compensation program.
Investor valuations reflect potential future value, while 409A valuations reflect the fair market value of common stock today.
At least once every 12 months, and sooner if there are major business or funding events.
It ensures your stock options are priced at fair market value, protecting employees and the company from IRS penalties.
Both create dilution, but investors often prefer structures that are clearly documented and aligned with the company’s stage. RSAs may be easier at incorporation, while RSUs are common once valuation increases.
It depends on company stage. RSAs can be advantageous early on, while RSUs may be more predictable in later-stage or pre-IPO companies with higher valuations.
No. Only RSAs (and certain stock options) are eligible for the 83(b) election. RSUs are taxed when delivered, typically at ordinary income rates.
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.
The best approach is to consult with a tax advisor. They will assess your grant type, company valuation, and personal tax situation.
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.
Yes, but only if you receive early-exercised options or restricted stock. Standard vested options are taxed differently.
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.
Yes. Investors prefer simplicity and transparency. Complex or founder-heavy structures may deter investment unless clearly justified and carefully limited.
Most states require corporations to specify a par value in their certificate of incorporation, though the exact rules vary.
It could make early equity grants more expensive and limit flexibility in future financings. That’s why startups typically choose a very low number.
To allow founders and employees to receive stock at minimal cost while leaving room for significant increases in value during future fundraising rounds.