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The life cycle of a startup is defined by its milestones. It is
a fast-forward lifestyle aimed at achieving success. It is also a
journey through legal challenges and legal decisions that need to
be taken. Here is a quick overview of this life cycle.
1.IDEA / PROOF OF CONCEPT
The ideas that make you leave your 9 to 5 paid job need
protection (confidentiality agreements), but also need to be
tested. So, be nice to your ideas, and appreciate feedback / learn
from failure.
2. FOUNDATION OF THE START-UP
You have your minimum viable product (MVP). Now consider the
appropriate legal form from a tax and liability perspective, but
also in terms of practicability. Reduce complexity, but think about
the next five (not only two) stepsa. Avoid mistakes that can't
be fixed later; saving money in the wrong place ultimately can be
very expensive! Properly transfer IP rights and have a suitable
founders' agreement / articles of association for your
start-up.
3. FINANCING ROUNDS
Find the right partner and determine your relationship, like in
a marriage. You will spend a lot of time with your investors, so
they should be true partners, not only cash providers. Proper
contracts are vital.
4. GROWTH OF THE BUSINESS
As your business grows, take care of all the things you had to
ignore at the beginning: proper commercial documents and employment
contracts, GDPR, trademark protection, know-how protection,
etc.
5. EXIT
There is no gift shop at the exit: when it comes down to a
corporate buying your start-up, things get real. Be prepared,
anticipate legal, tax and financing issues. Have proper
documentation and know your weaknesses and strengths. A good
m&a advisor is key to the success of your exit. Fingers
crossed!
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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