The legal basics of building a business

The final legal workshop we delivered at Ventures'n'Law last year was with VIP Romania.

They're a cross-university student association. It was an interesting experience to interact with people from very different universities - from dentistry all the way to construction works, and including students from The Entrepreneurship Academy.

We chatted for about 2 hours about starting a business and things to look out for from a legal standpoint.

I like keeping in touch with the up-and-coming generations of founders & managers. I get to see the world through their eyes, and I want to think that makes me better at what I do and how I do it.

Here's a glimpse into what we talked about:

1. Mission Statement: It is crucial for startups and SMEs to define a clear mission statement that outlines their purpose and how they aim to contribute to their respective industries. This statement not only serves as a guiding light for the company but also helps in aligning the team and attracting the right investors and partners.
2. Legal Entities: Choosing the appropriate legal entity, such as a PFA or SRL (or whatever might be applicable in other jurisdictions), is a critical decision that impacts various aspects of the business, including taxation, profit distribution, and management structure. Understanding the implications of each type of entity is essential for making well-informed decisions about what to choose.
3. Incorporation Process: The process of incorporating a business involves several steps, such as opening a bank account, securing a registered office, and appointing a legal representative. We talked about pitfalls in this process.
4. Investment Rounds: Startups and SMEs should familiarize themselves with different investment rounds, such as seed and Series A, as well as the exit process. We went through some of the steps to consider in an investment deal.
5. Proprietary Intellectual Rights: Protecting intellectual property (IP) through trademarks, patents, and other rights is essential for startups and SMEs, especially in technology and innovation-driven industries. We talked about implications of IP and how it looks like in other industries as well.
6. Employment Contracts: Signing clear and comprehensive employment contracts with employees is crucial for defining the terms of engagement and protecting the interests of both the company and its workforce. We talked about when to hire if you're just starting off.
7. Termination of Contracts: Understanding the proper procedures for terminating contracts, whether by mutual agreement, expiration, or due to breach of contract, is essential for mitigating legal risks and maintaining professional relationships. I was pleasantly surprised to see how some of the students had already faced some issues in this area.
8. Legal Challenges: Identifying and addressing potential legal challenges, such as regulatory compliance, competition, and IP protection, is a proactive approach that can help startups and SMEs navigate complex legal landscapes and avoid costly disputes. I've shared how most successful companies we work with have at least one founder dealing with compliance on a regular basis.