Business & Legal Issues for SaaS Startups Seeking Funding

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SaaS (Software as a Service) is obviously a hot business model and this article from Forbes, while more general than specific to SaaS companies, is worth reading. A couple of topics resonated with me:

Investors will insist that your IP be buttoned-down, that rights in your IP be clear. But beyond clear ownership of IP and having appropriate protection (copyright, patent, trademark, trade secret, etc.), your IP strategies should be informed by and reinforce your competitive advantages. Identify the key content and functionality of your software (and services) and develop your IP strategies accordingly. And think beyond mere protections. IP for a SaaS company, as for any tech company, is a potential business development tool, a strategic asset that can be licensed and otherwise leveraged to grow the business.

Your Customer Agreement needs to be clear and comprehensive. Its terms need to cover both aspects of your offering – the software and the service. And if your customer is an institution or organization and its employees or members are the end-users, your Customer Agreement should be written at the institutional/organizational level and your Terms of Use should be written for the end-user. That seems obvious, but I have seen SaaS companies conflate or confuse the two.