Tech Startups in California
Tech startups throughout California have been thriving and continue to thrive, and they do so because they have an attorney helping them – at least initially. Experienced tech and biotech startup attorneys help clients with things like company formation, seed funding, investments, agreements, intellectual property, and many other matters that can make or break a company. And that’s important when a tech or biotech startup is trying to navigate the crowded market space and complex business law environment in California.
Mohsen Parsa, a resourceful and trusted tech startup lawyer in Los Angeles, knows what it takes to get a company up and running. Contact his office today if you are considering or have already started work on your tech or biotech company in California. In the meantime, here’s an overview of tech startups in the greater Los Angeles metro area.
What are common issues tech and biotech startups confront when starting out?
There are many issues that tech and biotech startup companies may face. Here are some of the things you should consider when starting up your own tech company.
Challenge No. 1: Insufficient Funding
Funding in ever-important for a startup, and tech and biotech startups especially because of their very nature. These are complex companies driven by advanced technology, and that doesn’t come cheap. Finding the right investors and even making the right investments in the company can be the beginning or end of the company. In California, too, the market is very competitive, making it more difficult to secure the proper amount of funding.
If cash flow becomes an issue for your tech or biotech startup, it can delay program and growth, delaying the entry of products into the market.
Challenge No. 2: Inefficient Planning
A successful tech or biotech startup in California requires planning and lots of it. Startups will falter and fail because a plan was not put in place or was not adequately developed. You cannot act retroactively to things like funding, sales, staff, etc. You must be proactive. If you have to act retroactively at the start of your tech company, then the company has probably already failed.
Challenge No. 3: Difficulty Finding Quality People
Skills. Vision. Execution. These things are what makes a tech company thrive. But you need quality people do get it done. You need to know what your vision is, what skills you need, and how it’s going to be executed. This all takes the right people for the right reasons in the right positions.
But startups often find it difficult to find the right people initially. To counter this issue, you want to make sure you have laid out a hiring strategy. You need to be strategic about it so you hire key personnel who will have the right impact on success.
Challenge No. 4: Difficulty Scaling Up
Scaling up is what every tech and biotech startup want. But doing it too fast (or too slow) can be disastrous. This in part is why funding, planning, and having the right people is so important. It all works to build and grow the company. Through planning, you can make sure you grow according to your capabilities and your needs.
Challenge No. 5: Difficulty Complying with Regulations
The tech and biotech industries are well-regulated. Making sure you are in compliance is essential. This again goes back to planning. You must nurture a culture of compliance from the very start. The problem facing so many tech and biotech startups in California is this: they want to move up rapidly, so they check the boxes they need – doing it in name only – without further consequence because they don’t want to skip a beat. But shortcuts and outright rule-breaking can ultimately be the end of the startup.
So, again, start at the beginning by establishing a culture where shortcuts are frowned upon and rules are abided by. You’ll need someone – like an experienced business law attorney – who has a clear understanding of the law and regulations to help you make sure you are doing it right.
What entity formation is best for your California tech or biotech startup?
Various entity formations exist to best provide you with what you need. They can form as partnerships, limited liability companies (LLCs), and corporations, among other entity formations. You will want to consider all the advantages and disadvantages of each, especially if your startup requires investments for operations to get off the ground.
You should always speak to a business law attorney before making decisions about your entity formation and the state of incorporation. You will have to weigh some priorities against others to make sure you form your business in a way that is best for you and your product or service.
What agreements are common to California tech and biotech startups?
As a tech or biotech startup, you are going to be sifting through a lot of paperwork, whether in hand or via a computer. Some important agreements you may have to enter into include:
- Founders Agreement, which covers ownership, decision-making, operations, etc.;
- Assignments of International Property (IP), which allows co-founders to assign intellectual property to the company;
- Finder Agreement, where you agree to pay a finder who gets money for your startup;
- Investment Agreement, agreements between the startup and the investors;
- Non-Disclosure Agreements (NDAs), which prevents investors and others from disclosing secrets of the startup;
- Commercial Lease, an agreement to rent space for operations, etc.;
- Employment Agreement, which provides terms of employment, like salary and benefits;
- Service Agreements, where you enter into agreements with vendors for development, consultations, etc.;
- Distribution Agreements, which are agreements between the manufacturer and distributor outlining terms and conditions; and, among other possible agreements,
- End-User License Agreements, which are agreements in place for use of software, etc.
When it comes to your startup, you never want to use generic agreements, and you never want to sign something unless you know exactly what you are entering into. The details matter – in every single case. A lawyer can help make sure agreements are to your benefit and are absent hidden issues that could carry potential consequences.
Why do you need a lawyer for your tech or biotech startup in California?
Starting a tech or biotech company involves a lot of thought, paperwork, legal analysis, and market analysis. Having someone who can oversee it, make sure you are in compliance with the law, and keep you moving toward your goals is essential to success. A lawyer experienced representing and advising tech and biotech startups in California can do this and more. The insight an attorney possesses alone can be imperative to success.
Mohsen Parsa is a trusted and resourceful business law attorney who works with tech and biotech startups. If you are starting your own tech company, contact his office today online or at 949-394-6930 to get the advice and support that will prepare your business for investors and growth.