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Why should I found my innovative, game-changing startup in litigious America?

news.ycombinator.com

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Re: Why should I found my innovative, game-changing startup in litigious America?

#12

Post by rubinelli »

There are things you will find more easily in the US, like funding, mentors, strategic partners, and decent payment. Depending on where you move to, you have to contend with taxes and bureaucracy. All in all, you trade some money and convenience to minimize your risk. Personally, I won't be surprised if this becomes a trend.

Re: Why should I found my innovative, game-changing startup in litigious America?

#13

Post by turbojerry »

You do not have to move, all you need to do is split the company into different parts and setup those parts in different countries that give you the protection you seek. For example you could have a US company that does the development and a company in a different country that does the sales. You really need to talk to a lawyer about this so you can make informed choices about how the companies relate and also potential investors so that not only are you legally covered but that the arrangements do not spook future potential investors.

Re: Why should I found my innovative, game-changing startup in litigious America?

#15

Post by nurik »

Because of the size of the market. I had to experience it for myself: back in 1999 I founded the first flower and gift ecommerce store in Germany, at about the same time similar stores launched in the US. Within the following years the US Stores grew tenfold compared to us. We had the same products and comparable set ups, but the stores in the US had the market advantage by far.

Re: Why should I found my innovative, game-changing startup in litigious America?

#16

Post by trussi »

Preface: This is not legal advice. Consult your attorney and CPA. Blah blah blah

This is a great question.

The short answer is to license the IP between several corporate entities.

Here's a structure that offers a huge amount of protection and risk reduction:

-You own 100% of Company A

-Company A owns all IP

-Company B licenses the IP from Company A

-Company B is an operational company (with a merchant account, employees, office, etc).

Any potential litigation will target Company B because it's exposed. However, you structure the licensing agreement between Company A and Company B such that:

-Company A is indemnified of all of Company B's transgressions

-Company A has very little value because most income is paid to Company B as the licensing fee. You want Company B to essentially be worthless, which means it's not a big target for lawsuits.

Company B would probably be a US-based company. However, Company A could be based in another country, which would further reduce the likelihood of a lawsuit touching the IP.

So you get to operate in the US, but still protect your IP from litigation. The best of both worlds.

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