Following the success of Google, Facebook, Snapchat and other high-tech companies originally started by college entrepreneurs, college campuses continue to churn out innovative and lucrative new businesses.
College entrepreneurs are certainly full of game-changing ideas and industry-disrupting business models. However, they may not be quite up to speed on how to legally protect their newfound business interests. This can come back to bite budding businesses big-time in the form of future litigation, such as the lawsuit filed against Snapchat by an ousted co-founder, settled last week for an undisclosed (but likely substantial) sum.
What legal tips should college entrepreneurs bear in mind? Here are five to consider:
Get everything in writing. Although oral agreements can sometime be enforced, it's always best to memorialize any sort of agreement regarding your business in written contract form. This includes founder agreements, employment contracts, and the terms of any investment in your business. If the other side fails to live up to their side of the bargain, having a signed contract may be the best way to enforce your rights in court.
Consider using non-disclosure agreements. The sensitive nature of start-up intellectual property may require that your contracts with employees, co-founders, or investors include non-disclosure agreements, which protect the confidentiality of your businesses trade secrets.
Also consider adding non-competition agreements. You may also want to require your employees to sign non-competition agreements, which may limit their ability to work for a competitor or start their own competing business.
If you need help finding an experienced business lawyer in your area, check out FindLaw's lawyer directory to browse a list of lawyers near you. And to learn more about the legal basics of running a business, check out FindLaw's comprehensive section on Small Business Law.