Getting your IP ready before fundraising

During a fundraising round, investors examine the startup in detail. This review is called due diligence. Intellectual property plays a central part in it, with one simple question: does the company really own what it is valuing?

Software, a brand, a design or a technology that actually belongs to a founder, a former partner or a contractor weakens the valuation. In the most serious cases, it can delay or block the deal. These points are much easier to settle beforehand than during due diligence.

Who really owns the company's creations

Creations made before the company was set up belong to their authors. If the founders developed the prototype, the code or the logo before incorporation, a written assignment of their rights to the company is needed.

Creations by contractors belong to the contractor, unless there is a written assignment. A freelance developer, a design agency or a freelancer keeps their copyright as long as no contract assigns it. Under French law, the assignment must specify the rights assigned, their scope, their duration and the territory.

Creations by employees follow different rules depending on their nature. Software created by an employee in the course of their duties belongs to the employer. For other creations, such as a design or a text, this transfer is not automatic. A suitable clause in the employment contract or a specific assignment is needed.

The other points reviewed

The trademark. Check that the trademark is registered in the company's name, in the right classes and in the right territories. Also check that the domain name belongs to the company and not to a founder.

Open source licenses. Most software uses open source components. Some licenses impose obligations, for example to publish the code that includes them. An inventory of the components and their licenses reassures investors.

Patents. If your technology is patentable, investors will look at the filings made or planned. Avoid any disclosure that could jeopardize a future filing.

Confidential information. Know-how, algorithms, data: show how they are protected as trade secrets.

Build a dated history

Investors appreciate a file that tells the story of the technology: the first versions, the key milestones, each person's contributions. This history answers the question of where the creations came from. It is also useful in a disagreement with a former partner.

The simplest approach is to timestamp as you go: each major version of the code, each mock-up, each technical document. Before each investor meeting, also timestamp the documents you present, such as the business plan or the pitch deck. Our guide on protecting an idea before you pitch it details these habits.

With Ipocamp, in practice

Ipocamp lets you timestamp each version of your creations within seconds and keep their certificates in one place. On the day of due diligence, you present a complete and verifiable history. Find out more about our offers for startups.

This article is for informational purposes only and does not constitute legal advice. To prepare a fundraising round, the support of a lawyer remains necessary.