Investors will require you to incorporate prior to investing in your startup.

Investors at every stage of your startup, from angels to venture capitalists, will invest in your company in exchange for some corporate interest (usually stock or the option to buy it at a discounted rate later on). Although you are an integral part of your company, any investor is most interested in their return on investment in your company. To this end, and for other legal and tax reasons, any investor funds you receive should NOT be deposited in or co-mingled with your personal funds.

You will need to incorporate or set up another form of legal entity so that you can open a bank account in the company’s name and proceed to receive investments and maintain the corporation’s financial statements.

Your corporation should own your venture’s intellectual property.

When you, your team, and your contractors continue to turn your idea into reality, whether its an iPhone app or a e-commerce site, you are taking the first steps in building your company’s intellectual property (IP) portfolio. Your IP will include things like patents, copyrights, trademarks, and trade secrets. Your company’s IP is what investors, partners, acquirers, other team members, and your users will perceive as valuable. The value in your company’s IP is often what will increases the company’s valuation as a whole. If you invest in IP protection and a strategy for building a solid IP portfolio, then your company’s valuation will also increase accordingly. If you develop your IP prior to incorporation without taking the necessary steps to assign the IP to the corporation, then the company may not end up owning the IP in full, which may result in a break in the chain of title. This will negatively affect future investments, partnerships, and acquisitions at the due diligence stages. Remember to consider seeking protection for your IP in the company’s name as early as possible so that the chain of IP rights and title are not broken.

Take action for the future of your business. Let Pukena help you today.
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