Seedcamp has teamed up with JAG Shaw Baker (a technology focused law firm based in London) to produce a series of short articles highlighting some of the key intellectual property (IP) issues that affect startups. By underlining some of the common issues and providing practical advice, this Understanding Intellectual Property series will touch upon the protection of IP, ownership, data protection and privacy, infringement and web / domain name issues.

This article, the first in the Understanding Intellectual Property series, highlights probably the most important (but frequently misunderstood) issue: ownership. Ensuring that your company fully owns and controls all of its IP is of fundamental significance; failure to get this right is often not just a costly mistake but can also seriously jeopardise the company’s success.

Ownership issues often only come to light during an investment round or acquisition, by which time it may be too late. The risks can, however, be minimised by making yourself aware of the common issues and following the practical steps outlined in this article.

1. Who owns ‘your’ IP?

The first point to understand is that your company will not necessarily own the IP that has been developed just because it has paid for, or instructed, the work to be created. In fact, the legal position differs vastly depending on who created the work. For example:

Founders: typically, founders create, develop and register IP rights (or other similar rights) before the incorporation of their company. They might, for instance, coin brand names, formulate algorithms, register domain names, develop the website, etc. Any IP created by the founder(s) prior to the incorporation of the company will be owned by the founders, not the company. Founders also tend not to enter into employment or consultancy agreements with the company for their services. As a consequence, IP developed by founders during the performance of their services after incorporation of the company will not ordinarily be owned by the company.

Employees: the basic rule is that the company will own the IP that its employees develop, provided it is created in the course of his/her employment. Exceptions exist, however, and employment agreements should always contain comprehensive provisions to ensure that IP is owned by the company.

Consultants (also known as independent contractors): unless there is a written contract in place that transfers ownership, the consultant will almost always own the IP that he/she/it creates. This is a very common issue and often requires the consultant to enter into a written contract to transfer ownership of the rights if such an agreement does not already exist.

Third parties: startup and early stage companies will inevitably contract with third party companies to help develop their product or services (for example, a web-development company, product design specialist, software development provider, etc.). Even though your company has paid for the services, the third party will own the IP unless there is a contract which provides otherwise.

2. Moral rights

In addition to IP rights, ‘moral rights’ might also exist. Moral rights are separate legal rights that arise automatically in favour of the author(s) of a work (i.e. a founder, employee, consultant, etc.) and may prevent your company from exploiting its IP as it wishes, even if it is the sole legal owner.

Unless there is a contract which provides otherwise, moral rights remain with the author even after he/she has transferred the IP to your company. This can be problematic and it would not be wise to proceed without the security of moral rights waivers from all relevant parties. Although waivers are best obtained before the creation of a work, they can be obtained at any time thereafter.

3. What happens if your company does not own / control all of its IP?

The potential consequences can be profound: at best, your company may be held to ransom; at worst, your company may be prevented from carrying out its business. Four of the most common direct consequences include:

a) the company is forced to pay over-the-odds for IP that it should have owned in the first place. This typically occurs where a disgruntled consultant leaves and is unwilling to transfer the IP, except for a hefty fee;

b) the company is sued and/or prevented from exploiting certain rights as doing so will infringe the IP owned by the commissioned party / consultant;

c) the company is unable to prevent competitors or counterfeiters from using IP rights that it does not own; or

d) one of the founders leaves the company and sets up a competing business that makes use of the IP that the founder created.

It is also important to appreciate that potential investors / acquirers will expect your company to have full and unencumbered ownership and control over the IP that it requires to conduct its business. In fact, potential investors / acquirers will likely spend a significant amount in legal fees to ‘due diligence’ your company’s IP ownership. If a potential investor / acquirer discovers that a company does not own the IP that it should, typical consequences include:

a) your company may suddenly become a lot less attractive and substantially more risky. Potential investors / acquirers might not be interested or walk away early on;

b) the transaction may collapse, particularly if the issue is serious or is not capable of remedy. This happens more frequently than you may expect, even after a term-sheet has been signed and the deal has been agreed in principle;

c) if the deal does not collapse there will be an unavoidable delay to the transaction until the issue is resolved. This can be particularly troublesome if the company is in desperate need of financing and also increases costs, fees and expenses; or

d) the potential investor / acquirer may dramatically lower its valuation of the company and seek to renegotiate the terms of the deal.

The position may be worse still if an investor / acquirer discovers an issue after the completion of the transaction as the founders will typically have provided warranties and indemnities in their personal capacity that the company has full IP ownership. You may therefore find yourself the subject of a legal claim for the investors’ / acquirer’s damages.

4. How to ensure your company (as opposed to its founders or workers) owns its IP.

It can be extremely difficult for your company to claw-back the IP that it needs, particularly if you allow a lengthy period of time to pass. Needless to say, getting your ducks in a row early on is essential to minimise the risks. Dealing with the issues as soon as possible will also help.

The following practical steps will also help to identify the issues:

a) keep a written record of who created or helped create the IP important to the company’s business and ensure that suitable contracts are in place with each of them;

b) enter into written IP assignments with each of the founders to transfer ownership of all past IP to the company (visit the Seedsummit website for a free IP Assignment Agreement template);

c) check that the company has entered into written employment agreements / consultancy agreements with each of the founders to ensure all future IP developed is transferred to the company. If not, enter into such agreements;

d) ensure that all employees have signed an employment contract that: (i) assigns all IP to the company immediately on creation; and (ii) waives all moral rights to the fullest extent permitted by law. If not, enter into written employment agreements;

e) ensure that all consultants have signed a consultancy agreement that: (i) assigns all IP to the company (ideally with “full title guarantee”); and (ii) waives all moral rights to the fullest extent permitted by law. If not, enter into a written IP assignment or moral rights waiver with the consultant;

f) check that all third party companies that have developed products / services: (i) have assigned all IP to the company (ideally with “full title guarantee”); and (ii) provided a warranty that all moral rights have been waived to the fullest extent permitted by law. If not, an IP assignment and/or moral rights waiver will be needed;

g) have your lawyer perform an IP audit to ascertain what the issues are. It is advisable to have this done frequently as well as in preparation for investments or another corporate transaction.

JAG Shaw Baker is a firm dedicated to advising entrepreneurs, companies, and investors in high-growth industries. The firm advises on all aspects of venture and growth capital, as well as other corporate finance transactions, corporate structuring, intellectual property and growth and exit strategies. It also acts as general counsel for high-growth companies.

Seedcamp is Europe’s leading pre-seed and seed investment fund and mentor network, and provides its startups with an ongoing Learning programme, known as Seedcamp Academy. Sessions are provided on a variety of topics; from marketing, to product development, to fundraising, to legal. Ambitious startups with disruptive products/services and global aspirations are invited to apply.

This article contains general information only. It does not constitute legal advice. You should consult a suitably qualified lawyer on any specific legal matter or issue.

Carlos HeadshotThis article is written by Carlos Espinal, Partner at Seedcamp and was originally published at TheDrawingBoard.

One of the options that founders are reminded of more and more above and beyond VC and Angel funding, is Crowdfunding via online platforms such as Kickstarter, AngelList, and Seedrs (to name a few). However, these platforms are not all the same and in this post we’ll cover how they differ as well as what makes them unique.

To help better categorise the use-cases for the different types of crowdfunding platforms, let’s split them into two:

  1. Cash for Product Pre-Orders – Kickstarter, IndieGogo, etc.
  2. Cash for Equity – AngelList (USA), Seedrs (UK), Crowdcube (UK), etc.

While we won’t delve too deeply into the first category, in summary, it is used primarily as a way to help fund the pre-order of tech product inventory, as usually other sources of cash are needed to make your company viable operationally; this doesn’t mean that this is the only way people use cash raised on these types of platforms, but it does help to at least highlight how it is used by them.

To highlight the above, let’s take a look at the Kickstarter Stats on their site (dated Oct, 2014) ( to help highlight some conclusions. With some number crunching, what you can see is an interesting set of conclusions:

  1. The bulk of successful projects are raising around $1K to $10K on Kickstarter, with only a relative minority (2.2%) of successfully completed projects raising in excess of $100K.
  2. Technology projects as a whole, no matter what the size, only represent 2.73% of the successfully completed projects on Kickstarter. The highest are music projects at 25% success rate, even if the amounts that are requested for those projects are smaller.
  3. The highest success brackets for technology projects are ($20K – $100K) and ($1K – $10K) each at roughly 30% of the total Technology successes.
  4. The success rate overall for technology projects raising $100K – $1M is a low 2.09%, even if as part of the overall Technology projects that have been funded, that bracket represents 20%.
  5. Raising over $1m on Kickstarter for technology projects is just not really going to play in your favor with an overall success rater of less than 1%.

That said, the largest outlier and most well known tech Kickstarter fundraise was that of one of my favorite products, the Pebble Smartwatch with over $10m pledged. That said, they still raised capital from VCs and Angels. I’ll let you draw your own conclusions from that.

On the other hand, for the second category of crowd-funding platforms, those enabling investors to invest cash in exchange for equity you start seeing a different trend, one of fund-raising designed to help you build and scale your company rather than just to help you build a product.

On these platforms, however, rather than having your contributors provide cash in exchange for a promise or a pre-purchase of a product, your contributors are getting a share of your company. Literally, they are becoming investors and shareholders, with all the pros and cons that entails. What differentiates all the major platforms in this category are factors about how they structure the investment into your company and where they can operate.

AngelList, the dominant platform in the USA, for example, allows startups to raise two ways (in the word’s of AngelList’s Philipp Moehring):

“Offline fundraising” – This option is open to all companies and allows startups to use AngelList’s network and introduction features to connect with investors who might be interested in your company.

“Online fundraising” – AngelList Syndicates allow investors to invest in startups alongside an experienced Lead investor. The company can leverage the network, experience and reputation of Lead investor to raise funds for their business.

Fundraising on AngelList works better if the Startup’s profile is complete, the funding round has momentum, and the founder is responsive to answer intro requests and questions. Thousands of companies have raised funding in this way, or have augmented their existing round with additional investors they found on AngelList. The success rate is similar to what a company would experience offline.

Since the launch of Syndicates, however, more than 250 companies have raised money online through AngelList. The closest analogy for a founder is to think of a Syndicate as a one-time fund pulled together by the Syndicate Lead.

AngelList has closed about 90M through syndicates, and it is closing about a company per day now. They’ve had some european companies that raised from syndicates, including Patients Know Best (Elad Gil), Spatch (Andy McLoughlin), Holidog (Ed Roman), Enevo (Scott Banister).

Investment amounts

Since every syndicate is backed by different investors and is variably active, total investment amounts vary from syndicate-to-syndicate. Founders should work with with the lead investor to understand what they usually close. Across AngelList, syndicates have closed up to $1m, with most companies raising between $200K and $500K.

Lots of AngelList’s stats can be found online here.

Success rates

Companies that have a lead investor with an active syndicate have a more than 90% success rate from start to finalisation. After a deal is announced, investors can make reservations to invest, and closing is started after the allocation minimum is met. Once in closing, about 99% of all deals will be “finalized” and completed. The reason for these high numbers is the pre existing commitment of backers to invest in the lead’s syndicated investments.

Update Jan 24, 2015 – Added Crowdbnk data and streamlined numbers.

Now.. moving across the Atlantic… Let’s look at European crowdfunding platforms Seedrs, Crowdcube and Crowdbnk.

Jeff Lynn, founder of Seedrs, provides some statistics on his platform below:

Successfully Closed Round size distribution. <£100K: 63% £100K to £200K: 23% £200K to £500K: 11% >£500K: 6%

Average round size £160,000

% successful closing (number of deals that close as a percentage of total) 36%

Average time to round close on platform (eg. # of days) 29 days

Rounds closed sector distribution 80% tech 20% non-tech

Ayan Mitra from Crowdbnk also shares his numbers below

Successfully Closed Round size distribution 0-9,999: 15% 10,000-49,999: 10% 50,000-249,999: 20% 250,000-499,999: 30% 500,000-999,999: 15% 1,000,000-2,000,000: 10%

Average round size £537K

% successful closing (number of deals that close as a percentage of total) 42%

Average time to round close on platform 51 days

Rounds closed sector distribution Consumer Product: 5% Film, Art, Design: 10% Food & Beverages: 5% TMT: 60% Leisure, Retail, Services: 10% Other: 10%

Last but not least, Luke Lang from Crowdcube shares his platforms numbers below:

Successfully Closed Round size distribution < £100k: 23% £101-£200k: 39% £201-£300k: 16% £301-£500k: 11% £501k-£1m: 6% >£1m: 5%

Average round size £360K

% successful closing (number of deals that close as a percentage of total) 37%

Average time to round close on platform 32 days

Rounds closed sector distribution 54% tech 46% non-tech (i.e. food & drink, retail, manufacturing etc.)

Things to Consider

In general, when considering a platform, make sure you research various things:

In conclusion, crowdfunding as a way of either funding your product or your company’s growth is increasingly going to be a trend that will supplement, and in some cases entirely replace early stage investment capital from institutional sources such as VCs. For sure, at the very least you should consider building profiles on the relevant platforms for you.

Here are some additional resources for you on crowdfunding for your own research:

Richard FirewerksThis guest article is written by Richard Hughes-Jones, ‘The Boss’ at Firewerks and a Seedcamp mentor. He works with C-teams of startups and early-stage businesses to help them scale up. This article addresses a topic covered during a recent workshop with Shoprocket, a Seedcamp company.

One of the biggest challenges that startups face is choice, or too much of it. When it comes to taking a product to market there are a thousand and one different ways that you can do it. Committing to rapid lean style experimentation is a good start, but it can be dangerous if a random approach is taken because this spreads time and resource constrained founding teams too thinly.

Lean experimentation should not be an exercise in launching darts at a dartboard, hoping that you land a bull’s eye.

With clear goals set, founding teams must make informed decisions about where, how and in what order experiments will be focused in order to get the greatest bang for their limited buck. A thousand and one ideas must be intelligently turned into a hundred and one activities that can actually be executed.

Turning strategic thought into actionable tasks

A few weeks ago I ran a full day Workshop with the C-team at ShopRocket in which we took on this challenge. ShopRocket offers an enterprise level eCommerce payment solution that integrates into any existing application with one line of code. If you are exploring new online payment platforms then check them out.

With a number of impressive customers now onboard they need to ramp up sales over the next six months. Here’s what we did in the Workshop:

  1. Asked ourselves some searching questions about ShopRocket’s goals for the future and anticipated milestones along the way
  2. We produced a long list of all ShopRocket’s potential markets, by individually taking some quiet time then comparing what everyone had come up with
  3. Posted the long list up on the wall and defined criteria against which to ‘filter’ it. This included variables such as size and growth potential of customers, transaction volumes versus size, brand value, how much effort and time it might take to acquire clients and their technology integration capability
  4. The long list was ‘scored’ against the criteria. Unattractive markets were put to one side and attractive ones were ranked in order of overall appeal
  5. Relatively quickly, and simply by moving notes around on the wall, we had arrived at a short list of prioritised markets
  6. We followed up by defining sales channels, process and evaluation criteria for acquiring customers from each market

What Shoprocket now has is a highly flexible strategic sales plan. The team can organise themselves around the plan and, in short sprints, quickly target customers in specific markets and evaluate success.

For Shoprocket’s CEO, Anthony Gale, “Actually taking some time to identify all the markets available but focus on the most appropriate ones is really valuable”.

Otherwise, he says “In a startup environment it’s very easy to disappear off in random directions, without the physical and financial resources to execute on them all and understand where real value lies”.

A goal-orientated approach, supported by a clear and executable plan is the essence of good business strategy.

Most importantly, it ensures focus, a quality often lacking in many startups. It’s Mark Suster who reminds us that “the best teams are hyper focused” and are often defined by what they choose not to do: “the scarcest resource in your company is management bandwidth. Spend it wisely” he says. I’d recommend giving his post a read.

Building a strong team early in your company’s life-cycle is one of the key attributes that pre-disposes your company to success and to gathering investor interest.

In this presentation, Seedcamp Partner Carlos Espinal covers some of the attributes that makes an A-Team compelling.

Here are the slides that accompanied Carlos’ presentation…

This guest post is written by Liam Fay-Fright, CEO and Founder of Common Industry and formerly Director of Communications at iconic agency Mother and Head of Communications at D&AD. In 2012 Liam was named by Forbes Magazine as one of the world’s top 30 young marketeers. In this article Liam addresses a common question we hear at Seedcamp – “Should we hire a PR agency?”

Google ‘Should my startup hire a PR agency’ and you get a mixed bag of responses. Mostly, computer says ‘no’. You are the founder of your brand; its greatest ambassador; its most eloquent evangelist. Why entrust your baby’s reputation to someone external, when your own channels and networks may well be sufficient to getting the word out?

As the founder of a communications shop that specialises in startup, you might expect me to contradict this. But I know first hand how protective we feel about our businesses; the money, sweat and late nights we pour in to them, and letting go can be hard. The truth is, not every business should – or is ready – to hire PR support. And not every PR agency is suitable to work with startups.

Great communications can be the difference between the rapid acquisition of customers and fast growth, or the slow death of your idea as it is pecked to death by more agile competition. It can help your leadership establish itself as the top players in your sector and place your products and services in the trend-setting position you think they deserve. In the days of social capital, we all know the endorsement of an influential peer or a journalist we respect is worth 1,000 intrusive ads.

But hiring an agency is a smart move only if you have clear objectives for your business and resource to support your investment in consultancy…


What are my business objectives?

Sounds obvious, but if you don’t know where your business is going, you’re not in a position to start shouting from the rooftops about it. Get that right first, know your product, know its place in the market. Even if this is aspirational and even if you pivot it out of all recognition from its first iteration, have conviction and a plan. Without either of these, you’ll come apart under scrutiny.

A good PR or marketer will assess your business objectives and help you shape a communications plan that will support them.

Do I need access to a larger network?

If we’re good at anything in startup, it’s collaboration. Your own networks and channels should form the foundation of a community around your business. But when that network reaches its capacity to deliver what your business needs – user acquisition, finding talent, differentiating yourself in a noisy marketplace – the right agency could be the answer.

What you’re buying is a network of quality relationships in your sector that extends beyond your own, and strategic expertise on how to the make most of them.

A good communications agency is a brokerage between your brand and the media.

It understands the needs of media businesses and the people who work in them as well as it knows your objectives. The agency’s job is to spend its time working out how to bring them together in lucrative ways for both parties. The benefit of great relationships is the ability to audit ideas; just like bringing an MVP to market to see if it works, an agency with really strong ties to media can test a campaign idea to see if it will fly – before you waste time and effort on something that won’t work (we call this ‘hacking communications’).

We worked with the guys at early on, and discovered fast that our strategy of targeting trendy parents in the creative industry via lovely looking design blogs didn’t give us scale. So we learnt – fast – how to talk to mums and aunties around the world, by providing great content for online parenting communities. went on to become the most successful Dragon’s Den investment ever (I am still kicking myself for not taking points!) But beware the flipside: a critical mass of users is only worthwhile if the product is robust, as Sean Parker and Shawn Fanning no doubt learnt following the high profile, celeb-packed launch of the ill-fated Airtime.

A modern agency can offer a suite of services including media relations, social strategy, content strategy and production – often described as ‘below the line’ marketing, or earned media. Broadly, it’s about getting influence and recommendation from a respected third party: in the news, on twitter, from the podium at an event. The alternative is paid (‘above the line’) media, which is traditional advertising – TV, outdoor, etc. You may well need a mix of both.

Should I go agency or in-house?

You might decide that what you really need is in-house support, someone close to the day-to-day of your business. This can be the perfect choice for a business with a very specific communications need – someone who is honed in B2B in your sector.

Alternatively, for the same cost you can probably hire a whole team of smart minds tackling your problem. Again, good communications is about networks. Networks in the media, among other businesses, and in culture. So hiring an agency with a bunch of smart, connected people can hugely increase your chance of making useful connections with partners. You might not think of Red Bull (everyone’s favourite in-house PR machine) needing support, but when Red Bull Music wanted to build a network of startups to enhance their user experiences (online and offline), we worked with Sidekick to create an incubator programme that introduced them to the music tech community – we got over 150 applicants and Red Bull made some friends they’d had no idea how to reach.

Ready? Not yet…

If you decide to take the plunge, remember hiring a communications team is the same as taking on any consultancy – chemistry is key. Who is on the team? Are the people in the pitch the actual people you’ll work with? Do they understand your sector in depth?

And in the first meeting you have with them, just make sure they know your business: if your prospective PR starts waxing lyrical about Italian football when you bring up Series A, politely cut your losses.

With the help of JAG Shaw Baker we’ve updated the Advisor Agreement template available at (where you can find a collection of free startup-friendly legal documents).

This template has been been tailored to meet the specific needs of early stage, high growth companies and reflects the current market standard. It includes the following provisions;

The updated Advisor Agreement has been amended to ensure that, in most situations, it can be used by companies with minimal amendment or legal input. The main changes from the previous version of the agreement include the following:

1. Advisors are no-longer appointed as a director of the company by default

The previous version of the Advisor Agreement also envisaged that advisors would fulfil a non-executive directorship at the company – in practice a non-executive role is usually associated with large companies and is not often relevant for early stage companies.

2. The agreement now more accurately reflects the most common methods of remunerating advisors

Companies will typically want to grant advisors vesting shares or options to acquire shares in the company, rather than paying a flat monthly fee. The latest version of the advisor agreement provides companies with a choice of suitable clauses (with explanatory notes to assist). In this version, it is envisaged that the advisor can be granted shares, options to purchase shares or a paid standard monthly fee.

3. The agreement recognises that advisors may create or develop intellectual property

In practice, the role of an advisor will often exceed the provision of advice, and advisors will frequently provide creative input. The latest version of the advisor agreement recognises that advisors may create or develop intellectual property and includes comprehensive provisions to ensure that the company owns any intellectual property rights that the advisor creates or develops for the company; and

4. Advisors often provide services on an “as and when” basis

The latest version of the advisor agreement has removed the requirement for advisors to commit a fixed period of time in each week to advise the company.

This template advisor agreement is not a substitute for legal advice and may need to be tailored to the circumstances of the company and the advisor in order to maximise the legal protection it offers.

Ivan RamirezThis guest post is written by Ivan Ramirez, Entrepreneur, Investor, Advisor and restless Product Guy. He is the Former VP of Groupon Goods for APAC and Director of Global Product at Groupon. His experience in startups, product development, p&l management, operations, and technology make him a great source of information on how to handle a wide range of business challenges. This article offers recommendations on how to come up with a practical process to address some of the challenges enterprise service companies face when on-boarding new clients.

As simple as some of these things may seem, all startups, even large enterprises have challenges around operational processes to streamline something like customer on-boarding.

Recently, I received an email with the following question:

Our current launch process seems to be too simplistic for our enterprise clients, we need a more sophisticated approach to get the projects started and finished when we sign somebody. Do we know anyone who can help us create a complex but predictable and repeatable launch procedure?

I understand where this question stems from. As an entrepreneur I have been in the same situation, where I wanted to impress our enterprise clients by adding a level of sophistication to our business processes. However, with time I have learned that simplicity is the highest form of sophistication, not some complicated process put together by a Six Sigma black belt.

I encourage us to think about processes is the simplest form possible. There is a slogan on wall street that says “Liquidity Begets Liquidity”. I like to say that “Simplicity Begets Simplicity”. The simpler we make things, the more elegant and sophisticated processes get. No disrespect to the SIx Sigma guys, but come on, do we really need a whole industry to simplify processes?

Here are some of the challenges described to me by the sender of the email I received:

These are just a few of the challenges that can be faced in an on-boarding process. These will vary based on your technology and how much you have been able to productize your tech, which can be quite challenging in some industries given legacy systems and fragmented data sources.

Here is the recommendations I made to this company, and now sharing with you:

Client Onboarding Process

Why I love SmartSheet (SS)

SmartSheet is a SaaS based app that I like to describe as an excel spreadsheet on steroids. You can create sections, add documentation to the line items, assign stakeholders both internally and externally, set up auto alerts, due dates, etc. which helps you stay on top of any major project.

Sheet 1

Sheet 2

The client will appreciate the transparency the SS provides. It allows them to see what dates you are completing certain things and gives them a solid date they can report up to their upper management with any level of detail needed. In SS you can add documentation and keep all your notes centralised in a single place which helps you explain any setbacks or share great news on coming in ahead of schedule.

SS is what I have found to be the most helpful, but I have also used Excel or Google Docs for this process as well. Use whatever you’re comfortable with. Depending on how you structure the process, a tool like Excel or Google docs is pretty mouldable. If the time comes where you see your self not being able to do something with Excel or Google docs, then explore SS.

I hope this helps, and remember “Simplicity Begets Simplicity”.