Business Strategy · Law

What terms do I need to protect my startup ?

Parvez Husein Co-founder and CTO @ Portable Office Company. Exited.

August 16th, 2019

I’m about to step into the data protection (GDPR) market. I'm going to partner with a tech startup to resell their product that I’ve found that pretty much does what I think is necessary to get of the ground. I’ll be white labelling their product.

This strategy, at the least, provides me with a low cost method to enter the market, reducing my technical risk and test the market for the right channel that I can scale into.

The tech partner/provider is planning an exit in 2 maybe 3 years time. They are currently looking at a channel only strategy. This might change, and they might go direct. I’m one of the first partners and I’m negotiating T&C’s with them. I’m nervous that if they become direct to consumer or exit and are bought … I could be left exposed without the appropriate contractual cover. For example, I’m nervous that the purchaser of my provider could change prices significantly, or stop supporting / updating the platform, and push me and my customers out. Or worse yet, undercut my prices, because they can, and swallow up my customer base.

What things should i be looking to add into my contract to protect me ?

Paul Garcia marketing exec & business advisor

August 19th, 2019

These are questions for a contracts attorney, not laypersons. Your attorney will ask you questions about your priorities and concerns and can guide you to the language to cover those circumstances.

I have seen examples of contracts for white label products that give the reseller exclusivity in a certain channel, prohibit competition from the maker, limit territories, define how leads are distributed, protect pricing, and many other conditions. It all depends on the desires of both parties and how motivated the maker is to supporting a reseller channel.

There's no magic list from which you can pick and choose. But a contracts attorney will likely have encountered more possible scenarios than any of us regular business people here on the discussion board.