Who Owns Founder-Created Software and Inventions?

A founder may create the prototype, register the domain and write the first version of an application's code long before the company is incorporated. When investors acquire shares in the company, they need to know whether those assets actually belong to it. Use of an asset by a company is not the same as title.

Pre-incorporation work requires specific attention

Software, designs, branding and technical documents developed before incorporation may remain owned by their creators or third parties, depending on the governing law and agreements. Incorporating a business does not automatically transfer every asset associated with the venture. The company should obtain suitable assignments or licences from founders and other contributors. Each instrument should identify the subject matter and rights transferred, rather than rely on a broad oral understanding that everything was built 'for the startup'.

Contractors and employees may have different rights

The law governing ownership of works can distinguish employment-created material from independent contractor contributions. Written agreements should address assignments, permitted use of background tools, confidentiality and cooperation in securing registrations. A payment receipt does not necessarily answer copyright ownership. Where several developers have contributed code through independent arrangements, the company may need a clear chain of title showing each material contribution. Absent contributors and old agencies can become obstacles during a later investment or sale.

Third-party rights must be visible

Open-source libraries, licensed fonts, datasets, stock images and APIs may carry permissions or restrictions affecting commercial use. A founder's declaration of 'original technology' can be inaccurate if the product incorporates third-party components. Investors may ask for a software bill of materials and evidence of compliance with relevant licences. The company should also establish ownership or control of domains, hosting accounts and developer repositories. An asset held under a founder's personal account may become inaccessible after a dispute even where the company has a plausible contractual claim.

Translate ownership into governance protections

Where key intellectual property remains with a founder for commercial reasons, the company requires a licence sufficiently broad and durable to continue operating after resignation, change of control or a dispute. Investors may require that critical rights are assigned before funding. The shareholders' agreement should deal with conflicts and restrictions on diverting company opportunities without attempting to impose unlawful restraints on trade. Any founder exit should include orderly transfer of credentials, records and customer-facing technology.

Transfer the technology before valuing it

Technology due diligence asks who created each asset, who owns it today and what the company can lawfully do with it. Founders should resolve that chain of title before an investor prices the business. A compelling product is not equivalent to a legally owned asset.