This is the stuff nobody wants to do. Fixing it later costs 10x more than doing it now.
Legal setup isn’t exciting. But founders who skip it end up paying far more in time, money, and stress when things go wrong. And things always go wrong eventually. A co-founder leaves. An investor asks for documents you don’t have. Someone questions who owns the code. Get the basics in place early and you’ll avoid the most common and expensive mistakes.
If you have co-founders, this is non-negotiable. It covers what happens if someone leaves, how decisions get made, what each founder owns, and how disputes are resolved. Do this before anything goes wrong, not after. A shareholders agreement is a binding contract that protects everyone.
Everything built for the company needs to be owned by the company. If a founder wrote code before incorporation, or a contractor built your MVP (minimum viable product, the earliest working version of your idea), the default legal position is that they own the IP (intellectual property, the code, designs, and content they created), not the company. An IP assignment agreement fixes this. Without it, your SEIS/EIS (government tax relief schemes for investors) status could be jeopardised, and investors will flag it in due diligence (the process where investors verify everything about your business before writing a cheque). If you need help understanding or protecting your IP position, Enginuity AI specialises in helping startups get this right.
Founders’ shares should vest over time, typically four years with a one-year cliff. This means if a co-founder leaves after three months, they don’t walk away with 50% of the company. Vesting protects everyone, including you.
Every director and key employee should have a written agreement. It covers responsibilities, compensation, notice periods, and restrictive covenants.
If you have a website that collects any data (even just email addresses), you need a privacy policy. GDPR applies.
What good looks like: A founder who has a shareholder agreement, IP assignment, and vesting schedule in place before their first investor conversation. None of these need to cost thousands. Platforms like SeedLegals offer templated versions at reasonable cost.
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This is general information, not financial or legal advice. Always do your own research and seek independent professional advice.