Lock Down all the IP

One of the most important things founders of a startup have to do is make sure that everyone, and I repeat everyone, that has performed services, or provided goods, ideas, etc. to and for the company  signs an assignment form transferring any and all such interests to the company.  This can be done in connection with a subscription agreement or stock purchase agreement where the founders are receiving shares, or in connection with an employment/contractor agreement for previous and/or current employees or contractors.

The nightmare situation, and one that does still occur, is that a few years after a company begins to make substantial revenue, a person will claim that they are entitled to a portion of the ownership of the company based on what they performed prior to the company being formed (whether it be a design, software programming, idea, etc.).  The company is in the position of either having to give up some ownership of the company, thereby diluting the current owners interests, or the company has to take a stand, hire a litigator and defend any action in court.   This issue has been on the front of people’s minds due to the recent Zuckerberg portrayal.

It’s easy to prevent this.  Get those assignments signed and lock down all of the intellectual property as soon as you form your business entity.