Startup Founders

Founders need both: an online filer for the certificate of incorporation, and an attorney to structure the company so it survives investor diligence. The cheap incorporation flow handles paperwork. It does not draft founder agreements with vesting, run IP assignment language past every contributor, set up an option pool that protects the founders, or flag the 30-day window for tax elections each founder must file. Diligence checks all of those.

Investors expect a certificate of incorporation, founder agreements with vesting, IP assignments from every contributor, board consents, an EIN, and a clean cap table. They also review prior contracts, the option pool, and any side letters. Missing or sloppy documents extend diligence and tighten term-sheet language. The stack each investor's counsel runs is consistent across firms; the differentiator is whether yours is ready when they ask.

A written founder agreement is the only document that survives the moment a cofounder leaves, gets fired, or wants to renegotiate equity. It locks in equity splits, vesting (usually four-year with a one-year cliff), single- or double-trigger acceleration, IP assignment, decision-making rules, and what happens if a founder departs. Handshake deals fail under the simplest stress test: ask each cofounder, in writing, what they think they get on day 365 if a key partner walks. The answers diverge.

Most VCs only fund Delaware C-corporations, because Delaware's corporate code is the most established in the U.S. and its Chancery Court resolves disputes quickly. The Delaware Division of Corporations sets out the formation steps. C-corp tax treatment lets institutional investors (most of whom are partnerships or LLCs themselves) participate without complicating their own tax positions. LLCs, S-corps, and home-state corporations work for some businesses; they do not work for venture-backed scale. Re-incorporating later is costly. Form the company once.

By default, the cofounder who wrote the code owns it; each founder must sign an IP assignment to the company for ownership to transfer. Copyright vests in the human author at fixation per the U.S. Copyright Office's Circular 1, and a corporate entity does not automatically own work its founders or contractors created. The remedy is a written assignment from every founder, contractor, and early employee that transfers all relevant IP to the company. Without it, a departing cofounder can claim the code, the architecture, or the brand.

An IP assignment agreement is a written contract that transfers ownership of intellectual property from a founder, contractor, or employee to the company. Without it, the individual keeps what they built, and the company has no clean chain of title. Strong assignments cover code, architecture, designs, training data, prompts, model weights, and any pre-existing IP licensed in. Trade secret protection layers on top under the Defend Trade Secrets Act, which requires reasonable measures and gives the company a federal civil remedy if a trade secret is misappropriated.

A Section 83(b) election is a tax filing that lets a founder pay tax on restricted stock at grant value, instead of when each tranche vests. 26 U.S.C. § 83(b) sets the deadline at 30 days after the date of transfer, with no extensions and no administrative relief for late filers. At incorporation the stock is worth almost nothing, so the upfront tax is near zero; the savings compound as the company appreciates. Missing the window means every vesting event becomes a separate ordinary-income event at the then-current fair market value.

Most founders should file before launch, because federal registration is the only signal that holds up against another company using a confusingly similar name. A registered domain is not a trademark; a state filing is not a federal lock; common-law rights are limited to where the brand is actually used. Pre-filing clearance is the cheap step. It covers USPTO, state registries, common-law uses, and domain layers. USPTO trademark basics walks the application stages.

Most institutional investors will not sign an NDA at the pitch stage, and asking is widely read as inexperience. The convention is rooted in deal volume: VCs see hundreds of decks a quarter and cannot track which idea they heard from which founder. Reserve NDAs for vendors, contractors, advisors, and prospective acquirers: anyone with operational access to confidential information. The protection at the pitch stage is patent strategy, trade-secret discipline, federal trademark, and execution speed.

Equal splits are common when contributions are roughly equal; weighted splits are common when one founder is full-time and another is moonlighting. Vesting is the mechanism that turns founder equity into earned equity over time, typically four years with a one-year cliff. The cliff means a founder who leaves in month nine forfeits all unvested shares; after month twelve, the first 25% is vested. Acceleration provisions cover what happens on acquisition. Vesting is non-negotiable for venture investors.

Fractional general counsel is a flat-fee monthly retainer that gives a founder ongoing access to a senior attorney, scoped to the company's actual legal volume. It works for companies that need recurring contract review, IP strategy, and regulatory questions answered, but cannot justify a full-time General Counsel. Hourly billing fits one-off matters; retainers fit continuous legal questions where the cost of re-briefing a new lawyer each time is high. Most founders cross the threshold around the first enterprise contract or first hire.

Founder agreements and IP assignments come first, because investor diligence opens before the AI governance regulator does. If you are not yet shipping AI to EU users or regulated US sectors (employment, lending, healthcare, insurance), the priority is the formation stack. If you are already shipping AI in market, especially across borders, AI governance moves up the priority order. The AI & Generative AI Companies page covers that view. Either way, founder agreements and IP assignments are not optional.

Start with the founder agreement, IP assignment to the Delaware entity, and a tax-effective allocation of where US-Canada operations and revenue book. The cross-border layer (where to hold IP, where employees and contractors are based, where revenue books for tax purposes) is its own scope and is where most Canadian founders bleed value. The Cross-Border Canadian Tech Companies page covers the bi-jurisdictional layer in depth. StarGuard Law is admitted in California, Ontario, and Quebec, which is rare; one firm handles both sides without referring out.