Legal and Business Tips for Startup and Entrepreneurs

Home > Legal and Business Tips for Startup and Entrepreneurs
Table of Contents

Ideation

When you’re researching or validating your idea, it’s important to talk to as many people as possible (about your startup idea)! 

“But what if someone steals it Assaf?!”

No one is going to steal your idea. 

This happens maybe once in a 

million cases, and the reason that it hardly never happens is simple:

Finding ideas is easy!

But executing the idea and bringing it to life is really (really) hard! 

It takes:

-> Skill.
-> Money
-> A lot of time (1-4 years),
-> Pain & Personal sacrifice.

And most people don’t have, or aren’t ready to give all of the above. 

So “no”, they won’t steal it. 

But if you share it with people, you’ll get:

-> advice,
-> Insights
-> New customers
-> Potential connections & partnerships that will help you advance your business.

A few practical tips on how to do it: 

  1. Sharing with almost anyone is ok, but you’ll get MUCH more value if you share with people who are in your target audience.
  2. Present your idea/service clearly and make sure you’re asking the right questions.
    Clarity: a 12 year old needs to understand.
    Questions: no leading questions. Use open ended questions. Wait for answers, don’t interrupt.
  3. Be careful of the ‘ugly baby syndrome’ – this is when you show the person that you love your startup so much, that the person doesn’t feel comfortable giving you his/her real opinion.

Present the idea in an objective way, even say something negative about it, like: “I’m not really sure this is the best idea” – this makes them feel comfortable to be honest.

Final words:
It’s not fun getting negative feedback, and sometimes people will say things that aren’t even correct or relevant. But try to keep an open mind, and if the same feedback repeats itself, then there’s probably something to it.

Validation

50 years ago, creating a company used to be about creating a solution, and then marketing the hell out of it to people.

Today, it’s about recognizing a pain (that’s big enough) and then offering a good enough solution for that pain.

“Ok Assaf, but how do I find that pain?”

Well, it helps if it’s something that you or someone close to you experienced.

But if not, here’s a few ideas (lots more, but don’t want this message to be too long):

  1. Sub-Reddit groups (you can use tools like Gummysearch.com)
  2. Niche Facebook groups
    There’s ton of niche groups, with people asking or complaining about 1 specific thing. Find it, understand it, and see if you can solve it.
  3. Find keywords with high demand and low competition – build a product around it. You can use tools like Google Keyword Planner or “Buildthekeyword.com”.
  4. Write down your own problems or frustrations – then check if others suffer from it.

Once you find a problem, you need to see if enough people suffer from it, and if they’re willing to pay (enough) for a solution.

How to be unique in a market where almost anything can be made ‘instantly’ with AI.

“I built in 1 week what previously took me and my CTO 6 months to build – and it’s exactly the same ‘product’ “

This is what a founder (and one of my clients) told me last week.

He’d been working with his co-founder CTO for 6 months, and because of personal reasons they decided to split up.

So instead of finding another CTO, he decided to try build his service/app by himself.

He only had a bit of technical background.
He tried Lovable, Basee44 and eventually decided that Cursor was best for his needs.
He build the web-app in a week.
But that’s not even the point.

We all know that you can now build crazy stuff with AI – and build it super fast.

The question is:
if everyone can build ‘everything’ (or almost everything), then what makes your product special?

And what prevents your users from just switching to a competitor?

Here’s my 2 cents:
→ UX/UI (5%)
→ Pricing (10%)
→ Uniqueness (5%)
→ Having a story (10%)

→ Timing (being first) (20%)
→ Building a pre-launch follower base (30%)
→ Personal connection + base of followers (20%)

If you’re before launch:
↳ start sharing your journey.
↳ create personal connections.
↳ nurture those first 100 customers.

I talk to about 10-20 entrepreneurs every week, and many of them make the same mistake.

They all share with me that everyone tells them that their idea is great and that they can’t wait to start using their product.

“Ok, but that sounds great Assaf, so what’s the mistake?”

The mistake is that it gives you, the entrepreneur, fake hope.

It’s not real. It’s not validation.

The only real way to validate your idea, is to get people to put their hand in their pocket, and pay for it.

It doesn’t have to be a lot.
It can be a low price.
It can be a downpayment, it can even be a small ‘registration fee’.
Whatever you like, so long as they pay.

Because only when people show that they’re willing to pay, does it mean that they really need your solution.

“But Assaf, we don’t have a product yet”

You’re in luck! It’s never been easier than today to build an MVP, or even an advanced MVP.

It’s faster than ever and cheaper than ever.

You can use No Code tools like Bubble or Webflow, OR you can use AI tools like Cursor, Loveable or Base44.

Bottom line: compliments are great. They make us feel good, but they are not real validation. Always make sure that you really validate before spending years of your life and thousands of dollars.

POC / MVP

Every entrepreneur (and business) needs to be able to answer these 5 questions in a super simple way (so that a 12-year-old can understand) and within about 45 – 90 seconds:

  1. What does your startup do?
  2. Who is your target audience (if not already clear from answer #1)?
  3. What is your business model? (I dare you to say advertisements!).
  4. How/Why are you different from others? (AKA the “why you?”)
    [if you say we have ‘better features’ I’ll smack you!]
  5. Why should I invest in you/your startup now? (aka: the “why now”)

 

I speak to 10-30 entrepreneurs every week and very few know how to really answer this (most get stuck in question #1).

I’ve even seen pitches where after 10 minutes the investor stops the entrepreneur and asks them: “but wait, what is the startup??”.

Master answering the above questions and your startup journey will be so much easier.

Homework:
(“sheesh Assaf, I’m here for the tips not for you to give me stuff to do” 😂)
For this Thursday, practice answering question 1 in just two (short) sentences and share it with the group (if you like).

 

Business Models & Monetization

Most startups use the following models:

  • Subscription model: a monthly or annual payment for a service, based on the plan that the user selected.
  • Credits model: Payment for a service through a package of credits. This model can be linked to the subscription model or treated as a separate model.
  • Advertising model: This model is very hard to profit from unless you have a lot of traffic on your site/app, or you’ve found a niche with little competition and in a sector where advertisers are willing to pay a lot of money per lead or click. For example the mortgage industry (although that business space is already highly competitive).
  • Freemium model: The basic service is provided free of charge, but advanced features require payment.
  • Marketplace: Your platform connects between side A and side B and charges a commission for making the connection. For example, a platform for mentors – you have users who are looking for a mentor and users who want to provide mentoring services. 
  • Affiliation (affiliate marketing): Earning a commission for referring leads or customers. For example, you run a fashion site, and you add an image of a jacket and link on it to Amazon using your affiliate ID (a unique link that you got from Amazon). Every time someone buys through that link, you receive a payment (either a fixed amount or a percentage of the transaction).
  • Leads: Receiving payment for referring a customer to another service provider. For example, you have a website about cars, and you add a form for people who need car insurance. Every time you pass the lead (the customer’s details) to the insurance company, you get paid.
  • Licensing model: You sell licenses to use your software or a product/service you created. For example, you developed code that performs a useful function, and people use it in their own software or websites. You charge a monthly or annual fee for that usage.
  • Direct sales: The classic traditional method: you sell products (including digital products) and charge for each sale.

There are of course many more models, but these are the most common. Sometimes it is better to use familiar models (easier for your customers), and sometimes inventing a new model can be the foundation of the venture itself. Netflix or Airbnb are examples: they took a familiar service but changed the model.

Team / Founders

What is *vesting* (of shares) and why it’s so important.

I get this question a lot, so I thought I’d explain.

Imagine the following: you’re 3 founders: Jenny, David and Ryan. You’re sitting at a coffee shop, planning your big startup.

You agree that you’ll each get 33.33% of the shares, you shake hands, raise your drinks and go to sleep all happy and excited.

2 months later, Jenny (the talented programmer), get’s an offer from Facebook. Crazy salary. Her dream come true.

Or option B: she get’s into a huge fight with David. Whichever option you like.

Here’s what happens next:

she says adios amigos, and leaves *with her 33%* which then kills the startup….

Why? Because they agreed that they each get 33%….doesn’t matter when or how they leave…

And that’s why they invented vesting:

Same story, each get 33%, but they’re not really getting it just yet.

They have the *RIGHT* to 33% but that right is only ‘released’ in small bits over a period of 3-4 years (the vesting period) -assuming Jenny stays in the venture…

So if there was a vesting mechanism (let’s say 3 years), and she left after 6 months, she would only get 5.5% – which wouldn’t leave the company crippled.

[4 quarters i n each year x 3 = 12 quarters. So 33% divided into 12 quarters =2.5% x 2 quarters – because we said 6 months]

Today people use reverse vesting for tax reasons, but if you understand vesting it’s enough.

I hope this helped.

Cliff is the younger brother of Vesting (a legal ‘tool’ in founder’s agreements used to prevent founders from walking away with too many shares too soon) and they usually go together.

What is Cliff or a “Cliff Period”?

A cliff period is a section in your founder’s agreement that says that if a founder leaves before a certain time, they don’t get any shares / equity.

How long is the average Cliff period?
The cliff period is usually 6-12 months – depending on the stage of the startup and the founder’s situation (but it can be less in some cases).

Does it apply to all the founders?

Yes, usually it applies equally to all the founders.

Example: David, Dayna and Jim started a startup. They each have the *right* to 33% of the shares.

They agreed on a cliff period of 8 months.

So, if David leaves or gets fired within 6 months, he doesn’t get any shares (even if according to the vesting schedule he was supposed to get something).

Again: the purpose is to prevent founders that were only involved for a short time from leaving with shares, because you don’t want an early stage startup that has 2-3 people who aren’t involved but have shares in the Company – it causes a mess.

But you need to be careful with Cliff, because you may need adjustments.

For example, if Jim already worked on the startup for 9 months before David joined, is it fair that he’ll have the same Cliff period as Jim who just joined?

Or: what if David finishes all the coding in just 5 months, and then Jim and Dayna decide to fire him? How is he protected?

There are solutions, but you need someone who knows what they’re doing to guide you (and no, Chat GPT won’t even ask you about this).

 

 

Advisors / Mentors

Advisors and Advisory Boards

What is the Advisor Board?
It’s a person, or group of people (1-5) that give advice (business, technical, marketing, legal) to the founders, help them ‘open doors’, mentor them, and connect them with the right people/investors/customers.

Why do I need advisors?
Not everyone does, but the right advisors can add a lot of value and help you save time + avoid mistakes.

What type of advisors should I get?
The right advisors are:
1. People who (really) care and are enthusiastic about you and your startup.
2. People who (really) have the relevant knowledge, connections and skills to help you and/or your startup advance/succeed.

How much are they usually involved?
1-5 hours per week. Sometimes more, sometimes less. Depending on the type of advisor.

Do I pay them? How much?
Yes, most advisors want compensation for their time.

  1. Fee per hour.
  2. Options / shares (“equity”).
  3. A combination of both.

How much equity is usually given?
Before raising money:
* 0.25% – 0.5% for light involvement (a few hours a month).
* 0.5% – 1% for more hands-on involvement / more value.
* 1% – 2% intensive ongoing involvement with strategic contributions and lots of value.

Note 1: After raising money, the % goes a bit down because the startup has more value and less risk.
Note 2: some advisors, like me, may take a little more. In the end, it’s all about the value you’re getting. If you feel that an advisor can add real value, it’s better having a little less % of a bigger cake, than having more % in a smaller cake.

Do I need an agreement?
Yes. It’s called a “Board Advisor Agreement”
Key things to cover:

  • Compensation (vesting + cliff).
  • Confidentiality + non-compete.
  • Obligations.

For more info on the agreement, you can read my blog post: https://startuplawyer.co.il/everything-you-need-to-know-about-the-startup-advisor-agreement/

Intellectual Property (IP)

It is crucial that when working with freelancers, you make sure to protect your Intellectual Property (IP).

If you use any type of freelancer, you need to have one of the following:

  •  an IP Transfer + Waiver agreement (including for inventions). This is a 2-4 page agreement that clearly states that you own the IP + covers topics like Non-compete, confidentiality and more (best option).
  • sections in the services agreement with the freelancer that covers IP ownership + non-compete etc. (ok option).
  • an email that specifically states the below (least best option but better than nothing).

 

What does it need to say:

  • Ownership – Any IP that they create is yours/the startups.
  • Full IP Transfer – they transfer any and all rights to any IP to you for no additional cost (except what you agreed as payment).
  • Moral Rights Waiver – they waive any claims about ‘moral rights’ (for example if you change something they created).
  • They only use materials that are theirs or that they have the right to use.

 

P.s.:
✅ Handshakes and verbal deals don’t hold up in court.

✅ Get everything signed before work begins (and if you already started then before it ends).Later it will be hard.

 

Legal/Law Updates

SaaS provider with EU clients? Your customers just got a legal right to leave you.

The EU Data Act (which came into force 12th of September 2025) just changed your legal obligations and relationship with your customers in the EU.

Your standard long/fixed-term contracts and data transfer
processes can now be ‘overridden’ by the Act, and
if you didn’t recently update these terms, then
they’re probably no longer compliant with the Act.


Here are the 7 (main) actions required*:
* a few hours of legal work and your situation is much better!

  1. No more ‘Fixed Term’:
    • Customers now have a statutory “Switching Right.” 
    • They can terminate a fixed-term contract with a maximum 2 months’ notice if they are moving to a competitor or their own ICT infrastructure.
      You can still set a term, but you need to adjust for early
      (2 month) termination.
  2. Protect Your Revenue Legally: 
    • You can still charge a penalty for breaking the contract term, but it must a “proportionate early termination penalty” (e.g., reclaiming the value of discounts granted).
      The fee cannot be tied to the cost of data transfer.
  3. Extended Data Export Period:
    • You must make sure that customers can export their
      data for a minimum period of 30 calendar days from
      the termination of the services.
      Meaning: if you have a section saying that you will delete
      all the customer’s information “immediately”, this is problematic.
  4. Data Transfers Must Be Made ‘Easy’:
    • Data must be made available in a structured,
      machine-readable format to ensure the customer can
      achieve a minimum level of “similar functionality”
      with their new service provider.
  5. You must provide data transfers free of charge.
    • This applies immediately to all contracts signed
      after September 12, 2025 or renewed after this date.
      For customers under contracts before, you can continue
      to charge for transfer costs until September 12, 2027,
      or until the renewal of the contract.

  6. Publish Your ‘Data Manual” (Interoperability Register)
    • You must publish an online register with details of your
      data structures, formats, and interoperability specifications
      (the rules of how your service talks to another service – the
      competing service) before contracting with a customer.

  7. Make Your Agreement Fair:
    I know, what the hell is “fair” right?
    • The Act now prohibits contract terms that create a
      “gross imbalance” in favor of the service provider.
    • For example, one-sided indemnity clause and liability caps
      have a high chance of being determined ‘unfair’ and therefore void.
      → revise these sections (not too hard) to make them enforceable.

 

If you have customers in Europe, these changes are crucial and can help you avoid a lot of headaches.
Feel free to contact me

 

Contracts

“Isn’t an online template or an agreement by GPT enough?”
That’s a question I get asked a lot by new clients.

The short answer: it depends how well you want to sleep at night.

I like to compare the answer to a warrior’s shield (see image):

  1. The warriors from the bible (on the right with the small shield)
    = An agreement made from scratch using ChatGPT.
    → It’s not really an agreement, and it doesn’t really protect you.
    ↳It just gives you a better feeling because you think you have something.
    And if it worked for David (and Goliath), it’ll work for you too, right? 😉

    Why it’s not a real agreement?
    Because you won’t really know what to ask / tell GPT and GPT doesn’t really make agreements (it makes summaries).

  2. The barbarian warrior (middle, with the medium shield)
    = a template from the internet + edits you made after looking at competitors + ‘tips’ from GPT
    → Sure, it’s bigger, but it has tons of missing points and contradictions.
    ↳ And the worst part? It makes you feel even more protected – but the moment the first arrow hits, you’ll realize you didn’t have a real shield at all.

  3. The Roman warrior = An agreement made with a lawyer (who specializes in that field).
    ↳ No, it still doesn’t offer 100% protection (no agreement does), but it’s customized specifically for your needs, so it offers much better protection.
    ↳ And “yes”, it’s more expensive,

 

“Come on Assaf, you’re just trying to scare us so that we’ll use a lawyer.”
Listen: I have enough work + I’m not saying you ALWAYS need a ‘Roman’ shield.


If you haven’t validated your idea + you don’t have money, then of course even a small shield is better than none.


But what’s important is that you don’t go into battle thinking you’ve got a Roman shield, when what you actually have is bible one. 😉

 

Management / Goals

Most first time entrepreneurs make these 3 mistakes:

  1. They become the business.
  2. They lose balance (100% work, no personal life).
  3. They forget the end game (an ‘Exit’ / selling the business,
    or at least: the business working for you, and not you for the business).

 

To avoid this, you need to build your business in a way that makes it easy to sell.

A really good book that teaches how to do this is: “Built to Sell” by John Warrilow.

It explains how to build your business so that it is sell-able,
in a light, story-type way. I highly recommend reading it
(and no, I don’t get any commission or anything else).

Here are 3 quick conclusions from the book:

  1. Focus on building a business that can operate without you.
  2. Specialize, productize and systematize your offering –
    Rather than your business doing everything, you should
    pick a single service or product you do best, create a
    repeatable process around it, and build a
    standardized offering that can scale.
  3. Build recurring revenue, a diversified client base, and strong management. A company that’s sellable has predictable cash flow (often via retainers
    or recurring services), is not overly reliant on one client, and has a management team and systems in place that will stay
    and run the business after the sale.

 

enjoy: https://builttosell.com/

General / Useful Hacks and tips

I’ve worked with startups for over 10 years! Here are 6 super important things that every entrepreneur should know before starting:

  1. Choosing the right co-founder is crucial!
    ↳ Your partner will make or break the startup!
    ↳ Align expectations in advance. Share your thoughts, hopes, what you’re good at / suck at!
    ↳ Even if you’re friends, working together is different from hanging out together – prepare yourself.
    ↳ Choose someone you enjoy having a coffee with – you are going to spend a lot(!) of time together.

  2. Don’t develop a product/service before making sure there is a real need! Just don’t!
    ↳ You love the idea? Great. But before rushing to build, check that:
    → People really suffer from the problem + need the solution.
    → People are willing to pay for it.
    → The amount they are willing to pay is enough for you to dedicate 1-3 years of your life.

  3. Use a lawyer!
    ↳ You don’t have a lot of money? That’s fine but at least take a few hours of consultation so you know what to be careful of and what to focus on.
    ↳ I promise you: two hours with an experienced lawyer will save you hundreds of hours, a lot of money (on mistakes), and maybe more importantly:  a lot of grey hairs. 

  4. Surround yourself with a supportive environment (other founders or mentors).
    ↳ You are going to get a lot of “no’s”
    ↳ There will be a million challenges.
    ↳ Friends, family, and even your partners won’t understand why the hell you’re doing this crazy thing called a startup.
    → A supportive system will help in the tough moments.

  5. Your intellectual property (IP) is critical – make sure it’s really yours!
    ↳ One of the founder’s or a freelancer is writing code? Great, make sure there’s an agreement that says all the IP is the company’s (or the startups’) and not theirs. 

  6. Put your ego aside.
    ↳ The more open you are to opinions and advice –> the more you’ll learn.
    ↳ This doesn’t mean you have to *do* what they say, but just listen.

 

Startup life is hard, but it’s also exciting!
There’s nothing like receiving the first payment for something that you built – even if it’s not even enough to by a falafel. And if you have the right advisors/mentors and a good team, your chances are much better.

Search Like a Pro 🔍

Most Google users use only the most basic Google search feature. Keyword + enter.

But there’s a powerful world of advanced search you’re missing.

Meet Google Dorking → your key to finding hidden information:

What is Google Dorking?
= Using advanced search features.

3 powerful shortcuts to start:

  • site:domain.com “keyword” → finds results on a search a specific website
  • filetype:pdf “topic” → finds only PDFs on that topic.
  • intitle:”exact phrase” → search page titles only and find the ones with that exact phrase.

Real business applications:

Find competitor documents they forgot to secure (be careful how you use it)

Discover market research hidden from regular search.

Access industry data in forgotten databases.

Pro tip: Combine operators for laser-focused results

If only someone told me this before I started my 1st startup

  1. No place for EGO.
    You’re going to hear the word “No” a million times. Learn from each time. Put your ego aside. Focus on making sure your users get value, not your ego.
  2. Validate – so many entrepreneurs build stuff that no one needs!
    Make sure people are willing to pay before you build!
  3. Sell the features BEFORE you even built them.
    Ask existing users if they want a feature before you build it.
  4. Don’t aim for perfect – it will only be your enemy.
    Aim for 80% or for “good enough”.
  5. Only hire doers until you have product market fit.
    People who come from the corporate world or people who prefer to manage, most likely won’t be a good fit.
  6. Hire only people you will enjoy spending time with.
    Remember: you’re going to be working with them a lot!
  7. Don’t chase investors; first get as many users as possible.
    The investors will follow.
  8. Try going Bootstrapped.
    Being Bootstrapped forces you to be 100% focused on products & users now. Raising means you’ll be focused on funding rounds, events and news coverage.
  9. Start doing SEO as early as you can.
    It takes some time to see the results, but when they start showing, you’ll be so happy that you started early.
  10. Post on social networks (depending on your target audience) regularly.
    They are a great source for new customers and new connections.
  11. Chase global market from day one.
    If the product and marketing are good, it will work on the global market too, if it’s bad, it won’t work on the local market either. So better aim for the global market so that if it works the profits are much bigger.
  12. Think carefully before working with or partnering with large companies.
    They may seem like a good opportunity but usually the process will be a waste of time, destroy focus, shift priorities, and eventually bring in no users/money.
  13. Know that B2C is MUCH, much, much harder than B2B.
    Better to focus on B2B.
  14. Don’t hold on to a bad project / service / feature / worker for too long. Better to cut things earlier.
  15. Most conferences are a waste of time – unless you’re just going to get out of the office a bit.
  16. Assaf Ben-David is the best startup and high-tech attorney there is. 😊
  17.  

Many of my clients tell me that they wish they would have known X or Y
Before they came to me because it would have helped them avoid a lot of mistakes.

And it’s true. Knowing what to avoid or do differently makes a huge difference in your startup journey.

The good news: all the information already exists.

The challenge is sometimes finding it and having the time to read/view it.

Here’s how you can get the information:

  1. Read books
  2. Listen to lectures / podcasts.
  3. Have coffee with experienced founders.
  4. Join founder networking groups.
  5. ‘Private lessons’ (these can be a great source of value. I offer a 1:1 hour meeting. During the meeting I analyze the startup and the team and give a summary of the legal (and business) aspects that need to be solved/fixed. If you don’t have time to read/listen, this is a much faster method.

p.s.: part of the journey is also making mistakes. So when you do make them, don’t be too hard on yourself – just imaging that you paid for a degree in entrepreneurship 😊

Skip to content