Ownershield’s Post

A Founders' Agreement is crucial not just for safeguarding the rights of the Founders but also for clearly defining their roles and responsibilities, ensuring each Founder remains dedicated to the Company. A well-drafted Founders' Agreement plays a pivotal role in protecting these rights and promoting the smooth operation of the Company. Recently, I had the chance to help a Founder bring on a Co-Founder by working on the Founders Agreement that outlined their respective roles and responsibilities. Here are some key elements to consider: -      Clearly defining the shareholding structure is essential to avoid future disputes and misunderstandings among founders. A well defiend shareholding arrangement establishes ownership stakes, which directly influence decision-making authority and control within the Company. -      Determining the roles and responsibilities of each Founder is crucial for ensuring smooth operations within the Company. Clearly defined roles help to avoid confusion and overlap, allowing each Founder to focus on their specific tasks and areas of expertise. When roles are well-defined, it minimizes the risk of conflicts arising from misunderstandings about who is responsible for what. -      The ownership status of the intellectual property can be determined by including a clause that specifies the owner of the intellectual property rights to be used by the Company. To protect a Founder's intellectual property, it is crucial to include a clause stating that the IP shall remain the exclusive property of the Founder. An IP Assignment Agreement allows the Company to utilize the IP while safeguarding the Founder's rights. -      Incorporating transfer restrictions on Founders' shares is crucial for ensuring long-term commitment and stability within the Company. Key mechanisms include: Founders Lock-In Period: This prohibits Co-Founders from transferring or selling their shares for a specified period, fostering loyalty to the Company’s success. Right of First Refusal (ROFR): If a Co-Founder intends to sell their shares, they must first offer them to the Founder on the same terms as any third-party offer, protecting the Founder's interests. Right of First Offer (ROFO): If the Founder does not exercise their ROFR, the Co-Founder can offer their shares to a third party, but the Founder has the right to match that offer. Additional transfer restrictions can include Tag-Along Rights, allowing minority shareholders to join in on a sale, and Drag-Along Rights, enabling majority shareholders to force a sale if a third party makes an offer for the entire Company. -      Incorporate a vesting schedule to ensure that Founders earn their equity over time, which encourages long-term commitment. Additionally, include Good Leaver and Bad Leaver clauses to define the terms under which a Founder can leave the Company and the consequences of such departure.

🌟 Onward and upward! Skribe.ai just leveled up with a cool new extension to keep revolutionizing the legal scene for #litigation attorneys and their firms. If you are ready to change the way you handle depositions or other legal media, check us out. We'd love to have you onboard. 🚀 #legaltech #AI #startup

I did something no one else had been able to do for 32 years AND got offered an alternate position on the board. Last Thursday, we had a general assembly at my apartment building. A moment I had anticipated for 6 months. You see, I've wanted a dog for as long as I can remember🐶 Growing up, it was never an option, but now that I have my own place, who’s to tell me no? Well, until last Thursday, the rules of my apartment building could. Dogs weren't allowed where I live, so I decided to find out how to change that. First step: I did my basic research on other apartment buildings that were allowed to hold dogs. - What rules do they have? - What does the law say about holding dogs? 🐕 Second step: What worries people in my building? - So, I posted in our Facebook group asking people what their thoughts were on the matter 💬 Third step: What frameworks and rules need to be created to get people on board with this? 📋 I did my research, prepared the most thorough proposition that you can possibly imagine, and sent it in. Now, it was a numbers game. I needed to convince people to show up and vote for my proposition 🗳️ I had a month from when the proposal was sent until the assembly was scheduled⏳ And finally, the day came. Almost everybody up until that day told me not to expect anything as it had been voted against every single time for the past 32 years. So naturally, I was nervous. I was hoping for the best but expecting the worst 🙏 In this case, the worst would be no change in the rules. But the best would mean I could finally adopt a dog! So I took my chance. I had solutions to every single question and kept my cool when people got snarly. It became time to vote, and believe it or not - I won👏 Even the people who had told me they’d be voting against my suggestion told me it was the best proposal they’d ever seen. I received a standing ovation, and people were very impressed by the work I had put into the proposal. Afterward, I was offered an alternate position with the board because they thought I’d do well there. My point with this story is that if you want something, whether it is to change the rules, get that job, ace an exam, nail that sales pitch, make a difference in your community, or start a business, you have to go for it. Put in the effort and make it happen 💪 Not to toot my own horn, but I’m 23, and I; - Moved into my own apartment last year - I’m studying at CBS - Started my own business - I've been headhunted for an alternate position on the board until I’m ready to occupy an official seat there. You can move mountains if you work hard for it. The only one stopping you is you.

We get a lot of questions asking us what the differences are between what Songtrust does and what SoundExchange does. It's understandable... both companies do collect royalties. The difference becomes clear when you realize that Songtrust and SoundExchange collect royalties for different parts of a song and for different rightsholders. Dive deeper with us on the Songtrust Blog: https://songtr.st/3v4WI7p

❓ The law of New York v the law of Scotland. Which one applies in a choice-of-law dispute between shareholders of a betting firm? 🏈 That is the question the New York court had to answer when a claim was brought by the founders and over 100 common shareholders of Hubdub, a fantasy sports setting company founded in Scotland in 2007. 🏉 A successive company, FanDuel expanded into the American fantasy sports market and established headquarters in New York in 2011. ⚽ The claimants pleaded a cause of action under New York law, alleging a breach of fiduciary duties against directors of the company and some of the preferred shareholders. ⚾ But the defendants argued that under the internal affairs doctrine of choice of law, the law of Scotland applied to the claim, which arose from the relationship between and among the directors and shareholders of an entity incorporated in Scotland. 🗨 The New York Court of Appeals judge said that the law of Scotland was the correct law and that FanDuel had considerable contacts with Scotland and that the company had been registered under the Companies Act. ⚽ 🏀 🏈 For more on the case, check out the article below. I will link the case in the comments: https://lnkd.in/e2-sZQfG

👇 Founders, to be "investable" in a Seed or Series A round, you must avoid these 5 Key Legal Mistakes early on: 1. Type of Legal Entity High growth startups need to be C-Corporations. A few reasons: Many institutional investors cannot (legally) invest in LLCs, sophisticated investors want to take advantage of QSBS tax benefits and the governance structure of C-corps (shareholders ---> board of directors ---> officers) aligns better for outside investors, etc. Don't worry about "double-taxation". You'll be re-investing profits back into the company anyway. Dividends may come later on (which means your successful and shouldn't worry about this). Pro Tip: use an online service (e.g., Harvard Business Services) to file for the C-Corp. registration...lawyer fees should not be used for this. 2. Clear and Protect Use of Brand Names, Logos and Domain Names Founders need to determine early on whether their brand will infringe on another company's trademarks. Also, founders need to create a brand-moat to ensure others don't infringe on the brand they create. Pro Tip: the USPTO takes FOREVER to process trademark applications...the sooner you get them in the better. 3. Clearly Agree On and Document Founders' Roles and Responsibilities Founder disputes are a top 3 litigation risk for startups. Especially if the company is gaining traction, getting investment and TechCrunch articles written about it. Founders need to ensure the cap table is correct, ensure co-founder's equity grants are subject to vesting, and each founder's expectations are clearly documented. Pro Tip: create a Roles and Responsibilities Matrix detailing main functions and roles needed for the company early on, then assign a percentage of responsibility on each founder for such role. 4. Ensure the Startup Has and Retains Essential IP Rights Your co-founder who typed that line of code owns that code unless he/she has assigned it to the company. Do you think investors want 19 year old pimple-faced Jimmy to own the company's code? Any founder, employee, contractor or advisor touching or developing IP for the company needs to sign an agreement assigning all IP developed to the company so that the company owns the IP rights, not pimple-faced Jimmy. Pro Tip: IP assignments can happen in a separate technology assignment agreement ("CIIAA", "PIIA", etc.), or can be embedded in other agreements (e.g., NDA, Offer Letter, Independent Contractor Agreement, etc.). 5. Properly Document Customer, Supplier and Other Key Third-Party Relationships Oral arrangements with customers, suppliers and employees won't hold up. Startups need bona fide agreements with key business relationships to satisfy investors. This is easier said than done, and many founders attempt to execute non-binding LOIs, MOUs, or Term Sheets to validate traction. Not terrible, but can be better. Pro Tip: enter into a hybrid MOU/Contract where the other party has some skin in the game.

The UK Intellectual Property Office ("IPO") is an executive agency of the Department of Science, Innovation and Technology with the mission of  helping "people grow the UK economy by providing an IP system that encourages investment in creativity and innovation." On 2 May 2024, the IPO published its three-pillar strategy for accomplishing that mission between  2024 and 2027. Those pillars are: - High-quality, efficient and accessible services - A policy of supporting innovation and the economy - Delivery by a high-performing organization with skilled people connected by a shared purpose. Its first pillar will be accomplished by continuing existing services and developing new ones including a new customer account which will make it easier to register and renew IPRs. The second pillar is to ensure that the present IP legislation fulfils industry's needs. Where change is needed the IPO will propose it, It will facilitate enforcement nationally and internationally and educate the public to recognize and reject counterfeit and pirated goods. The final pillar promises changes in the IPO's organization seeking to improve leadership opportunities and the working conditions throughout the IPO's estate. https://lnkd.in/ehWTAsxa

Mildly interesting: US listed Lee Enterprises Inc. has adopted a rights plan, to counter a potential takeover by Quint Digital Ltd, which recently quickly acquired ~12% of Lee Enterprises. Such a rights plan is commonly called a 'poison pill' and allows existing shareholders to launch a cheap rights issue if a large shareholder crosses a threshold. The triggering person cannot participate in the rights plan, thereby getting diluted. #HostileTakeover #PoisonPill #AntiTakeover #TakeoverDefenses

The sale of the remaining The Topps Company assets to Ziff Davis, following prior sales of Topps assets to Fanatics and Apax, is the best outcome for all, including Michael Eisner and Madison Dearborn Partners, LLC. Eisner and MDP dodged a bullet by not going public via a SPAC, as that has been a challenging path for most. For Founders and the leaders of VC and PE portfolio companies, have an ideal path in mind, but also be flexible that there are many paths to an exit and more than one right answer. #capitalmarkets #privatemarkets #privateequity #venturecapital #ipo #transformation #iporeadiness #mergersandacquisitions

Founders usually have an idea about what they're doing, even if their business is struggling. There is logic behind their pricing, or what they're doing. Sometimes, going against the "founder's wishes" can break the company. This is what happened to movie-ticket subscription company MoviePass. This company went out of business after a company acquired a large stake in it, dropped its subscription price and then decided to keep that silly low subscription fee. Here's what stuck out: "At one point, the company had more than 3 million subscribers. Lots of people were using it, all the time, way more than Helios and Matheson had bargained for. So it collapsed, crushed by its own impossible promise. In 2018, Helios and Matheson reported a net loss of nearly $400 million. Spikes got pushed out. In 2019 MoviePass ceased operations, and in 2020 Helios and Matheson filed for bankruptcy." Read the full story in "MoviePass Has Stumbled Repeatedly. Why Does It Still Have Fans?" via WIRED #amreading #research #business #finance #founders