Somewhere between the term sheet and the wire transfer, an associate at your investor’s law firm will open a folder labelled “IP” and start asking questions. Founders who prepare for that moment early raise faster and negotiate from strength. Founders who don’t spend the diligence period signing frantic backdated assignments. Here’s the checklist.
1. Does the company actually own the IP?
Not you personally. Not your co-founder who left last year. Not the freelancer who built the first prototype. The company. Every founder, employee, contractor, and agency who touched the product should have a signed agreement assigning their work to the company. The departed co-founder is the classic landmine. Resolve it before diligence finds it, because the price of fixing it rises with your valuation.
2. Is the brand registered, in the company’s name?
Investors expect the trademark to be filed, in the right classes, and owned by the entity they’re investing in. A mark registered in a founder’s personal name, or in a predecessor LLP that never assigned it, is a diligence flag. And if you haven’t filed at all, remember: your MCA company name is not a trademark.
3. Patents: filed, pending, or deliberately not?
Not every startup needs patents. But every startup needs an answer to the patent question. “We evaluated our core ranking algorithm with counsel and chose trade-secret protection because…” is a strong answer. “We never really looked into it” is not. If you have filings, keep the prosecution status current and the deadlines calendared.
4. Open-source hygiene
Know what open-source components are in your stack and under what licences. Copyleft licences (like GPL) in the wrong place can, in theory, put your proprietary code at risk, and investors’ counsel know it. A simple internal register of components and licences answers the question before it’s asked.
5. The disclosure schedule writes itself, if you kept records
- Registration certificates and application numbers, in one folder
- Assignment agreements for every contributor, past and present
- Licences in and out, including that co-marketing deal with the logo rights
- Any disputes, oppositions, or cease-and-desist letters, sent or received
We prepare startups for exactly this scrutiny (chain-of-title clean-ups, missing assignments, the disclosure schedule itself) as part of our licensing and transactions practice. If a raise is on your horizon, start the conversation a quarter early.
This note is general information, not legal advice. For advice on a specific matter, consult a qualified advocate.