Ted Dewhurst workshop

1. Starting a technology business
(the boring bits....)
CUTEC, 14 December 2011
Ted Dewhurst, Kesteven Law

2. Starting a technology business
• About Kesteven
• Incorporating a company and company names
• Directors and shareholders
• Shares and shareholders’ agreements
• Raising funds
• Intellectual Property
• Q&A

3. About Kesteven
• Start-up, founded in June 2010
• Expertise from city private practice and in-
house with VCs (Accel, Balderton)
• Focus on needs of technology start-ups
• Flexible and entrepreneurial approach
• Fixed fees

4. Why incorporate?
• Limited liability
• Tax advantages
• Company is a “legal person” – independent
• Ownership and management can be split
• Gives the impression of substance
• Not expensive

5. Company names
• Some restrictions on names
• Cannot register a name already in use
• Certain kinds of words / names restricted
• Registration of a particular company name
does not by itself create protection
• Can use a separate “business name”
• Be careful about IP infringement

6. Articles of association
• General rules which govern the running of the
company and describe share rights
• Can adopt the “Model Articles” or create
bespoke articles
• Articles can be changed at any time

7. Directors and shareholders
• Directors manage the company on a day to
day basis
• Shareholders own the company
• Shareholders and directors can be different
people
• Directors’ duties – Companies Act 2006

8. About shares
• Can have several classes of shares with
different rights in relation to e.g.
– Capital
– Income
– Voting
• Transferring shares
• Share options and warrants

9. Shareholders’ agreements
• What are they?
• What are they used for?
• Very versatile
• Need to be considered alongside Articles

10. Raising funds
• Debt v “Equity”
• Secured and unsecured debt
• Convertible debt
• Government funding and grants
• Sources of equity funding
– Friends and family
– Business angels
– Venture capital funds / corporate venturing

11. Equity investment
• Terms depend upon type of investor
• VC investment terms generally toughest, e.g.
– Liquidation preference
– Fixed dividend rights
– Consent rights
– Information rights
– Board appointment rights
– Restrictions on share transfers

12. About Intellectual Property
• Registrable IP (e.g. patents, trade marks)
• Non registrable (e.g. copyright)
• Valuable / unique IP should be protected
where possible
• All IP should be registered in company name
• IP and employees / consultants
• Confidential information

13. Sources of information
• Companies House website
(www.companieshouse.gov.uk)
• Business Link website (www.businesslink.gov.uk)
• Intellectual Property Office (www.ipo.gov.uk)
• HMRC website (www.hmrc.gov.uk/startingup)

14. Questions
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NOTE: The information contained in this presentation is not, and is not a substitute for legal advice