Resources for insight and
inspiration
Guides
Insights
Drag-Along Rights in Startup Financing: Streamlining Exits While Balancing Stakeholder Interests
When negotiating startup financing, founders often focus on valuation, equity splits, and immediate ownership. But long-term provisions in term sheets can be just as important, especially when it comes to company exits. One of the most impactful is the drag-along right.
Anti-Dilution Rights in Startup Funding: The Price Protection Mechanisms That Safeguard Investor Value
When structuring venture capital deals, founders often focus on valuation, investment size, and ownership splits. But within preferred stock agreements are provisions that can significantly reshape economics if future fundraising happens at lower valuations. Chief among these are anti-dilution protections.
Liquidation Preferences in Startup Funding: Critical Terms That Shape Exit Outcomes
When negotiating startup financing rounds, founders often focus on valuation, investment size, and ownership percentages. However, hidden within term sheets are provisions that can dramatically impact how exit proceeds are distributed. One of the most important of these provisions is the liquidation preference.
SAFEs: Streamlining Early-Stage Startup Investments
In today’s fast-moving startup ecosystem, the Simple Agreement for Future Equity (SAFE) has reshaped how early-stage companies raise capital. Introduced by Y Combinator in 2013, SAFEs were created to simplify fundraising while balancing the needs of both founders and investors.
FAQs
Open allBecause without them, your startup may not legally own its core technology - a major risk in funding, acquisitions, or IPOs.
Generally yes, but enforceability can depend on state law. Some states restrict how broadly employers can claim ownership, so tailoring language matters.
Yes. Contractors often create code, designs, or strategies, and without an agreement, they may legally own the IP.
They serve the same function - assigning inventions to the company and protecting confidentiality. The terminology varies by company or industry.
Yes. Pair NDAs with confidentiality and IP assignment agreements to ensure ownership of work product and protection of sensitive data.
Yes, but courts often scrutinize them. NDAs that are too broad or vague are harder to enforce.
Two to five years is standard. Trade secrets may be protected indefinitely if defined clearly.
Most venture capitalists won’t sign NDAs at the pitch stage. However, some strategic investors or partners may sign if sensitive technical information is involved.
Yes. Even a short policy clarifying what licenses are acceptable and requiring license checks before use can protect your company from major risks.
It depends. Copyleft licenses like AGPL may apply even if you don’t distribute your code. Always check terms before using them in your backend.
You could face legal action, be forced to release your proprietary code, or lose investor confidence. Compliance is critical.
Yes, but it depends on the license. Permissive licenses (like MIT or Apache 2.0) allow it, while copyleft licenses (like GPL) may require you to open source your own code.
Be transparent, respond quickly to user requests, and show that you protect data. Investors and customers reward startups that treat privacy as a priority, not an afterthought.
Not always. Consent is required for marketing emails, cookies, and sensitive data. Other legal bases, like contracts or legitimate interest, may apply.
Start with a clear Privacy Policy and limit the data you collect. These two actions cover many compliance basics and set a strong foundation.
Yes. If you collect data from EU or California residents, you’re subject to their rules—even as a small or pre-revenue startup.
Yes. Early compliance avoids costly fixes later and signals professionalism to investors and customers.
Not always. You can rely on other legal bases like contracts or legitimate interest. But consent is required for marketing emails and cookies.
Fines can reach up to €20 million or 4% of annual global revenue, whichever is higher. Even small startups have been fined for violations.
Yes. If you have users in the EU or monitor EU residents online, GDPR applies regardless of where your company is based.