Crowdfunding is a fast-growing option for start-ups seeking to raise capital to fund their business ventures and ideas. As an entrepreneur considering this type of funding, you must be cognizant of the legal issues that can affect your company.
While crowdfunding may seem like the way to get quick investment in your business, first review the tips we offer below to help you navigate the legal issues that may arise.
Get Professional Help
Whether you have been in business for a long time or just starting your first venture, it is important to seek out an experienced business lawyer who can assist you with your crowdfunding campaign, a professional that can help with navigate the pitfalls of the new securities laws. For example, if you are looking to offer equity to your investors, your business lawyer will let you know about your filing requirements with the Securities and Exchange Commission.
With crowdfunding, you are essentially conducting a securities transaction that is regulated by both federal and state laws. Breaches of securities laws carry serious consequences, and the regulations are often very technical. Thus, it is crucial to have the presence and guidance of an experienced business and securities lawyer to help you throughout this process.
Understanding IP Issues
Intellectual Property is a huge concern for start-up companies. This is because it can be difficult to protect your intellectual property in this very competitive and technological business environment. To protect one’s business, one must take the necessary steps to file the needed copyrights, trademarks, and patents. If you fail to do so, you may find your company, brand, or product the victim of intellectual property theft.
Crowdfunding projects are easy targets for overseas entities, which may take the opportunity to duplicate your product or idea and undercut you in the marketplace. Once again, having an experienced business lawyer will help you secure the required legal protection for your intellectual property.
In crowdfunding, you are making a promise to your investors in return for their monetary investment. Whatever the crowdfunding approach, a legal relationship is established the moment you receive the funds. So, what will happen if you are not able to deliver?
It is important to put together a contract that will protect you if your business plan does not prove to be successful. Whether you prepare the legal contracts or your investor, it is critical that you have a lawyer by your side who can make sure that the terms and conditions are fair to you and your company.
Don’t jeopardize your campaign and your business by not being prepared and protected legally. The best decisions you will make in this process is to have the services of an esteemed business lawyer in Los Angeles such as the highly experienced and reputable Afshin Hakim of Hakim Law Group to protect your personal and business interest.