Corporate lawyer for start-ups: the legal structure your tech company needs

Tech start-ups make legal errors that are costly to remedy when the first serious investor appears. A cap table badly structured from the outset, a founders' shareholder agreement without a vesting clause, contracts with the first clients that assign intellectual property to the client rather than licensing it, an investment agreement with a business angel that lacks a drag-along provision — these errors are common and become deal blockers when legal due diligence is carried out ahead of a funding round. Correcting them then costs far more — in time, in negotiation, and in legal fees — than having done it right from the beginning.

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Why BM Consulting

Specialised advice and personal service

At BMC we advise tech start-ups from incorporation through to Series A rounds and international expansion. We know the Spanish entrepreneurial ecosystem — its instruments (SAFE, convertible loan, convertible note), its actors (VC funds, business angels, family offices), and its market practices (vesting schedules, liquidation preferences, anti-dilution) — and translate them into solid legal structures that will not block the next transaction.

  • Cap table errors at incorporation — absent vesting, missing IP assignment clauses, or early business angel agreements without drag-along — are the most common deal-blockers discovered in VC due diligence; fix them at seed, not Series A.

  • Vesting schedules for co-founders

    standard Spanish market practice is 4-year cliff-vest with a 1-year cliff and monthly vesting thereafter — bad leaver / good leaver definitions determine what shares a departing founder retains.

  • SAFE and convertible loan are the two standard pre-seed instruments in Spain; the SAFE is not regulated as debt but converts at a discount or valuation cap at the next priced round (market practice aligned with US conventions).

  • Spain's Ley de Startups (Law 28/2022) raised the stock option annual tax-free threshold to €50,000 and deferred tax to sale/IPO for ENISA-certified startups — option plan design must explicitly reference these conditions for the exemption to apply.

How we work

From first contact to case completion

  1. Incorporation and initial corporate structure

    We design the initial corporate structure: choice of legal form (SL, SA, or holding), distribution of shares among founders, articles of association adapted to the start-up ecosystem (share transfer, pre-emption rights, share classes), and first founders' shareholder agreement.

  2. Founders' shareholder agreement with vesting

    We draft the shareholder agreement governing the relationship between founders: vesting schedule (typically four years with a one-year cliff), exit conditions (good leaver / bad leaver), minimum time commitment, non-competition clause, and dispute resolution mechanisms. Vesting is the key to preventing a co-founder who leaves early from retaining their full shareholding.

  3. Investment round documentation

    We draft and negotiate the round documents: term sheet, investment agreement, expanded shareholder agreement with investors, representations and warranties, anti-dilution provisions, liquidation preferences, and information rights. We also review documents when they are provided by the investor.

  4. Tech contracts and intellectual property

    We draft the contracts typical of a tech company: MSA and SOW for development projects, SaaS contracts with SLAs, platform terms of use, privacy policy, NDAs, and intellectual property assignment agreements for employees and freelancers.

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The problem

Tech start-ups make legal errors that are costly to remedy when the first serious investor appears. A cap table badly structured from the outset, a founders' shareholder agreement without a vesting clause, contracts with the first clients that assign intellectual property to the client rather than licensing it, an investment agreement with a business angel that lacks a drag-along provision — these errors are common and become deal blockers when legal due diligence is carried out ahead of a funding round. Correcting them then costs far more — in time, in negotiation, and in legal fees — than having done it right from the beginning.

Our solution

At BMC we advise tech start-ups from incorporation through to Series A rounds and international expansion. We know the Spanish entrepreneurial ecosystem — its instruments (SAFE, convertible loan, convertible note), its actors (VC funds, business angels, family offices), and its market practices (vesting schedules, liquidation preferences, anti-dilution) — and translate them into solid legal structures that will not block the next transaction.

Process

How we do it

1

Incorporation and initial corporate structure

We design the initial corporate structure: choice of legal form (SL, SA, or holding), distribution of shares among founders, articles of association adapted to the start-up ecosystem (share transfer, pre-emption rights, share classes), and first founders' shareholder agreement.

2

Founders' shareholder agreement with vesting

We draft the shareholder agreement governing the relationship between founders: vesting schedule (typically four years with a one-year cliff), exit conditions (good leaver / bad leaver), minimum time commitment, non-competition clause, and dispute resolution mechanisms. Vesting is the key to preventing a co-founder who leaves early from retaining their full shareholding.

3

Investment round documentation

We draft and negotiate the round documents: term sheet, investment agreement, expanded shareholder agreement with investors, representations and warranties, anti-dilution provisions, liquidation preferences, and information rights. We also review documents when they are provided by the investor.

4

Tech contracts and intellectual property

We draft the contracts typical of a tech company: MSA and SOW for development projects, SaaS contracts with SLAs, platform terms of use, privacy policy, NDAs, and intellectual property assignment agreements for employees and freelancers.

Legal due diligence ahead of a funding round is the moment of truth for many start-ups. It is when the VC fund or business angel reviews all the company’s documents and discovers the poorly advised decisions of the past. A co-founder who left without vesting and holds 30% of the shares contributing nothing. Contracts with early clients under which the software was assigned rather than licensed. Key employees who signed contracts with no intellectual property assignment clause. These situations do not prevent every investment, but they complicate it, make it more expensive, and sometimes make it unviable.

At BMC we advise start-ups and scale-ups with knowledge of the entrepreneurial ecosystem and the technical rigour of corporate law. We know what is market standard in a seed round term sheet, which clauses are negotiable and which are not, and how to structure the company from the outset so that each round is a step forward rather than a repair of past errors.

Incorporation: the decisions that determine everything else

The initial corporate structure of a start-up — legal form, share distribution, articles of association, and first shareholder agreement — determines the company’s future flexibility to grow, attract investment, and manage changes in the founding team. Many start-ups are incorporated without thinking about future investors, which means renegotiating articles and the shareholder agreement later.

We design the initial structure with the future in mind: articles of association that anticipate different share classes (ordinary and with economic or voting privileges for investors), a shareholder agreement that governs vesting and exit conditions for founders, and a clean cap table that facilitates future rounds.

Investment rounds: from term sheet negotiation to closing

Negotiating a funding round is a process where the experience gap between the investor — who has done dozens of deals — and the founder — who may be on their first round — is common. The term sheet defines the key investment conditions: pre-money valuation, instrument type, liquidation preferences, information rights, anti-dilution, drag-along, and tag-along. Once the term sheet is signed, it is difficult to renegotiate.

We review the term sheet before signature, explain the practical implications of each clause, and advise on what is negotiable in the context of the Spanish ecosystem.

Tech contracts: protecting the principal asset

Software, algorithms, data, and brand are a tech start-up’s principal assets. Protecting them requires well-drafted contracts with clients, suppliers, and employees: a SaaS contract that does not include a clear liability limitation clause can generate multi-million claims; a freelance contract without an IP assignment clause leaves the ownership of the code developed in doubt.

We draft the company’s standard contracts — platform terms of use, MSA, SOW, NDA, employee contracts with IP assignment — and review them when proposed by the other party.

Contact our team of specialist start-up and technology lawyers for an initial assessment of your legal position.

FAQ

Frequently asked questions

The initial founders' shareholder agreement should cover: the vesting schedule for each founder's shares (when the right to the shares is earned), exit conditions distinguishing between good leaver and bad leaver (how many shares the departing founder keeps depending on the reason for departure), each founder's minimum time commitment to the start-up, the majorities required for key decisions (new round, sale of the company, change of activity), pre-emption rights between shareholders, and mechanisms for resolving founder deadlocks.
A SAFE (Simple Agreement for Future Equity) is an investment instrument in which the investor provides money now in exchange for the right to receive shares in a future funding round, at a price determined by a discount or a valuation cap. It is not debt, generates no interest, and has no maturity. In Spain, the SAFE is not expressly regulated but can be structured as a financing agreement with a right of conversion into shares. The Spanish convertible loan has similar effects but is structured as debt until conversion.
Protecting a tech start-up's intellectual property requires several layers: (1) ensuring all code, design, and content developed by employees and external contractors is properly assigned to the company by written agreement; (2) registering trademarks in Spain and target markets before expansion; (3) documenting software and technology development to establish authorship in the event of a dispute; (4) including confidentiality and non-disclosure clauses in all agreements with third parties who access the company's know-how. In sectors with genuine technical innovation, patent protection may also be relevant.
A liquidation preference is the investor's right to receive a minimum amount (typically the invested amount plus a multiplier) before founders receive anything on a sale or liquidation of the company. A 1x non-participating liquidation preference means the investor recovers its investment and the remainder is distributed pro-rata. A 2x participating preference means the investor recovers double its investment and then participates in the remainder. Excessive liquidation preferences can mean founders receive nothing even in an apparently successful exit.
Incorporation of an overseas subsidiary is typically considered when the start-up wants to establish a local presence in a market to hire local employees, sign contracts with clients in that country, or meet local regulatory requirements. It may also be necessary when seeking investment from overseas VC funds that prefer to invest in entities in their own jurisdiction. The decision of where to incorporate the subsidiary — and when — has significant tax implications that should be analysed jointly with the tax adviser.
An anti-dilution clause protects investors from the economic dilution that occurs when new shares are issued at a lower price than their investment price (a down round). The two main types are: (1) full ratchet — the investor's share price is adjusted to equal the lowest price at which any new share is issued in a subsequent round, providing maximum protection but harshly penalising founders; (2) weighted average — the adjustment is calculated by weighting the number of shares issued at the lower price against the total outstanding shares, producing a less severe but commercially more balanced result. Weighted average anti-dilution is market standard in Spanish VC rounds; full ratchet is negotiated only by investors in distress situations or very early seed deals.

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Frequently asked questions

Questions about Corporate Lawyer for Start-ups and Tech Companies

The initial founders' shareholder agreement should cover: the vesting schedule for each founder's shares (when the right to the shares is earned), exit conditions distinguishing between good leaver and bad leaver (how many shares the departing founder keeps depending on the reason for departure), each founder's minimum time commitment to the start-up, the majorities required for key decisions (new round, sale of the company, change of activity), pre-emption rights between shareholders, and mechanisms for resolving founder deadlocks.
A SAFE (Simple Agreement for Future Equity) is an investment instrument in which the investor provides money now in exchange for the right to receive shares in a future funding round, at a price determined by a discount or a valuation cap. It is not debt, generates no interest, and has no maturity. In Spain, the SAFE is not expressly regulated but can be structured as a financing agreement with a right of conversion into shares. The Spanish convertible loan has similar effects but is structured as debt until conversion.
Protecting a tech start-up's intellectual property requires several layers: (1) ensuring all code, design, and content developed by employees and external contractors is properly assigned to the company by written agreement; (2) registering trademarks in Spain and target markets before expansion; (3) documenting software and technology development to establish authorship in the event of a dispute; (4) including confidentiality and non-disclosure clauses in all agreements with third parties who access the company's know-how. In sectors with genuine technical innovation, patent protection may also be relevant.
A liquidation preference is the investor's right to receive a minimum amount (typically the invested amount plus a multiplier) before founders receive anything on a sale or liquidation of the company. A 1x non-participating liquidation preference means the investor recovers its investment and the remainder is distributed pro-rata. A 2x participating preference means the investor recovers double its investment and then participates in the remainder. Excessive liquidation preferences can mean founders receive nothing even in an apparently successful exit.
Incorporation of an overseas subsidiary is typically considered when the start-up wants to establish a local presence in a market to hire local employees, sign contracts with clients in that country, or meet local regulatory requirements. It may also be necessary when seeking investment from overseas VC funds that prefer to invest in entities in their own jurisdiction. The decision of where to incorporate the subsidiary — and when — has significant tax implications that should be analysed jointly with the tax adviser.
An anti-dilution clause protects investors from the economic dilution that occurs when new shares are issued at a lower price than their investment price (a down round). The two main types are: (1) full ratchet — the investor's share price is adjusted to equal the lowest price at which any new share is issued in a subsequent round, providing maximum protection but harshly penalising founders; (2) weighted average — the adjustment is calculated by weighting the number of shares issued at the lower price against the total outstanding shares, producing a less severe but commercially more balanced result. Weighted average anti-dilution is market standard in Spanish VC rounds; full ratchet is negotiated only by investors in distress situations or very early seed deals.

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