6 ms·

And what is the correct way to transfer IP from the founders to the startup?

• gfodor 17y ago
  The founder can contractually assign the IP to the company for a purchase price of usually $1.00.
• grellas 17y ago
  There are two pieces to this: first, for all IP-related work done prior to formation, the founders will typically assign their IP to the company for a nominal valuation, usually in connection with paying a token dollar amount for their stock; second, if the founders continue to do IP-related work following formation and issuance of their initial stock to them, they need either to be employees or contractors in relation to their company and, in either case, need to have in place some mechanism that ensures capture of their continuing IP-related work product for the company (this is usually a work-for-hire agreement if they are contractors or an employee invention assignment agreement if they are employees). Those are the basics. Beyond this, you need to ensure that proper "consideration" is given to the founders to make the IP transfers legally binding. For the pre-formation IP transferred in connection with the stock grants, this is not an issue. For post-formation work, this takes the form of continued vesting of stock (if vesting is in place), often coupled with some form of very modest deferred compensation that is needed to minimize tax risks to the founders. Some of the technical rules are explained in more detail here: http://grellas.com/faq_business_startup_015a.html http://grellas.com/faq_business_startup_015a.html.