Legal resources

I was at ProductCamp in Dublin last week, a free event which I highly recommend to anyone responsible for managing technology products. During a talk by John Gleeson of AccessLegal, I learned about some great free legal resources that are available to Irish tech startups.

Employment Contracts

The issue that was emphasised most during John’s talk was Employment Contracts. Forget patent-trolls and ip infringements, apparently not having proper contracts of employment is the single most likely reason for a tech startup to end up with legal issues!

Also on the subject of employment law, the Irish Software Association seems to offer a good service to their members on employment issues. If you need professional advice on employment issues.

Shareholder Agreements

An awkward but necessary conversation to have when you are co-founding a business is the shareholder’s agreement. Like the employment contract, this seems to be something that is better to get right from the start. The contract should cover issues like :
What’s the equity split between the founders?
John mentioned a tool called the Equity Investment Simulation which helps founder’s work out the value of their shares through several rounds of funding.
What happens if a founder leaves the company within a year, 2 years or even 4 years?
Should they still get all, some or none of their shares if they leave early? This issue is called founder vesting and here’s a nice article on vesting by a US VC.

Term Sheets
A term sheet sets out the terms of a VCs investment offer to a tech startup. At a recent event on scaling technology companies hosted by Arthur Cox, I learned that for tech startups who are raising money, the term sheet is THE crucial commercial document for the startup to review and negotiate as much as possible.

However, what can sometimes happen is that founders are so cash-starved that they agree to an investor’s term sheet without fully negotiating the contract or realizing the consequences of some of the conditions of the term sheet. A good tip for startups: Arthur Cox are often happy to review draft term sheets for their clients without raising a fee.

Some useful sample term sheets available online are:

• Enterprise Ireland’s Competitive Start Fund term sheet
• Kernal Capital’s Sample Term Sheet

Background reading on term sheets includes:

• Brad Feld’s Term Sheet series

Good blogs on legal issues for Startups in Ireland include

• Venturelaw

Any questions? Feel free to contact us.
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