As an entrepreneur or a startup founder, if there is only one agreement you can ask from a corporate lawyer for your company, what will that agreement be?

They are many business agreements out there. Let’s do some guessing game. Are you going to choose an employment agreement? Non-disclosure agreement? Non-compete agreement? A purchase order? Licence agreement? Website terms and conditions? Privacy policy? A purchase agreement? Or any other type of agreement?

After being involved as a corporate lawyer for over a decade on a wide range of legal work for bootstrapped startups to venture-backed companies, I believe there is one single most crucial agreement that every business owner, entrepreneur, and a founder should have is an agreement covering the following items below.

These agreements are usually known as a shareholders agreement, stockholder agreement, founders agreement, and also known as a partnership agreement in some places. Although they may be called by different names, entrepreneurs and founders should ensure that they cover the following issues in such an agreement.

By default, if you don’t have a shareholders agreement in place between the shareholders (at the initial early stage of a company, usually only between cofounders), the “fallback” positions for the commercial terms will be based on the existing companies laws. In other words, the default positions under the statutes covering such issues that may or may not be in your favour.

If you don’t have this agreement in place addressing these commercial issues below, you may likely get into a dispute that may you up in a courtroom (that means expensive long legal battle!).

In my experience, I have seen entrepreneurs losing their business because they failed to put any agreement in place. I also know founders like to ignore the importance of discussing these important issues for the sake of trying to avoiding a ‘difficult conversation’ with their team members.

If you don’t want to address these issues upfront before you start the business, you may end up getting into a major disagreement once you start running the company especially in stressful times like fundraising or even scaling a business. If you don’t want to have this difficult conversation for fear of upsetting the other founder, you may be doing yourself a favour and be better off by not starting a venture with the person.

Also Read: Hey angel investors and startups, here are legal templates you can use

The company may not be able to survive a deadlock when there is no way out in a shareholders’ dispute, especially when there is no agreement in place to resolve such conflict.

When drafting a shareholders agreement, make sure you work with a corporate lawyer to address and answer all these important questions.

Setting out and recording different contributions by the founders

Different founders bring in different expertise and skillset to a business. What are the specific contributions that will be made by the respective founders to the business? What if one founder puts in cash? But the other founder only provides his sales skills? How will each of these contributions get treated and be valued in monetary terms?

Putting up a fixed decision making framework on business decisions

In practice, when there are only two founders, both founders tend to agree for their equity ownership to be owned equally 50/50 by the founders (personally, I do not recommend this). How will you both decide if there is a deadlock between both of the founders? In other words, both of you can’t agree on a matter and ended up with a tie vote?

Will the voting deadlock get fixed by a third party independent and trusted person (like a neutral friend) to come up with a final deciding vote? Or even trigger a buy/ sell agreement (usually known as a ‘shotgun agreement’) for a founder to acquire the shares by the other cofounder when both can’t agree on a decision), or mediation, arbitration or another method?

Managing transition of key people in a business

What if an existing founder decides to leave the business after six months after starting a company with you because he decided to accept a different role or leave the country to start a new venture some place else? What will happen to the shares that have been issued upfront to the outgoing founder (usually known as a vesting schedule)?

Will it get forfeited or can it be retained by the outgoing founder? And how will the business handle the departing founder’s exit and his equity interest? And how will the business onboard a new founder?

Clarity on ownership of intellectual property assets

What if a founder develops a new software? Will the founder be required to assign the ownership of the software to the company? How will the founders decide what type of intellectual property assets needs to be assigned to the company? Can a founder merely licences out the platform to the company for a fee?

Minority shareholders protection

What if one of the cofounders only has 30 per cent equity ownership in the company? Or an angel investor that came on board in your company at pre-seed stage only has 5 per cent stake? What are the safeguards in place to ensure that both of them are protected against critical business decisions as a minority shareholder?

Some of the usual critical business decisions include:

• deciding on the salaries of the staff
• hiring new staff or firing of existing staff
• buying new assets or selling assets owned by the company
• changing the business direction
• agreeing on a budget
• on boarding new founders
• taking up loans or issuing loans
• getting the founders to put in additional capital contributions (also known as a ‘capital call’)
• entering into a contract or terminating an existing contract
• investing in other new ventures
• winding up i.e. closing down a business

Board composition and appointment mechanism

How will you decide who gets to be a member of the board of directors? How will the board member be elected? Will certain founders have a right to be on the board or to appoint a number of directors? How will a director get removed from a board seat? Only for certain grounds or for any reason? How will vacancies on the board get filled?

If the board of directors decides to set up new committees like an advisory committee, how will the members of these committees gets selected, removed and replaced?

Confidentiality covenants

Are the founders of the business bound by confidentiality obligations? What amounts to “confidential information” in a business? What type of safeguards in place to protect the business from the cofounders disclosing proprietary information?

Exclusivity arrangements

Are the founders of the business required to dedicate their time exclusively on the business? Or are the founders agree not to undertake any other similar venture that may be in competition with the business?

Funding options for the business

What if the company’s cash runway is depleting in several months? What will be the first preferred mode of funding? Will it be equity funding or debt funding? What if one of the founders fails to contribute to the capital call?

Also Read: How to protect your early stage startup from unnecessary legal hassles

Profits distribution mechanism

Let’s say the business makes profits which allow the company to issue out dividends (i.e. the distribution of the company’s earnings to its shareholders). How will the founders decide how much the company’s dividends will be? Will it be agreed upfront or based on a certain threshold? And how often?

Managing expectations and performance issues

If a founder fails to fulfil his obligations to the company like failing to achieve certain business milestones or deliverables, will the founder be compelled to sell his shares? If so, how is the value of the equity interest will be assessed and determined by the founders? Will the founders agree on an upfront formula?

Or engage a third party valuer (like one of the Big Fours accounting firms)? Or a combination of the two? Also, which party will be responsible to pay for the fees and charges in relation to the equity transfer? Will the final purchase price for the equity be paid in a lump sum? Or can it be paid over a certain timeline?

Restrictions on transfer and disposal of shares

What are the restrictions and conditions in place if a founder wants to transfer his shares in the company? Can the founder transfer the shares to anyone like a competitor, an enemy, an ex-girlfriend, or anyone that may not be beneficial to the company? Will the existing founders or shareholders have the right to match any offer received by another potential buyer seeking to sell his equity interest?

Dispute resolution between shareholders

What if there is a dispute among the cofounders? How will the shareholders resolve their dispute between themselves? Will it be resolved by a judge in a normal court? Mediation? Arbitration?

Dealing with these commercial terms can be overwhelming for many new aspiring entrepreneurs or founders. But look at having a shareholders agreement as a statement or a record of your understanding between your cofounders.

So if there is any dispute, any founder can refer back to their shareholders’ agreement to find out what was the initial agreement in terms of the relevant roles and responsibilities agreed by the cofounders and even the investors in a company.

–

Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

Join our e27 Telegram group, FB community or like the e27 Facebook page

Image credit: Adeolu Eletu on Unsplash

The post Legal matters: What is the most important business agreement for your startup? appeared first on e27.

The shift to remote work that began during 2020 is set to continue apace, with the technology industry leading the change. As the digital transformation across the economy accelerates, tech companies competing for in-demand talent are embracing remote work.

How they do this will determine whether they make the shift successfully.    

Digital acceleration

The pandemic has seen people  shop, study, and work online  With the technology sector among those least impacted by the economic fallout from the COVID response and with the strongest jobs growth through the second half of 2020, employers will be catering for a growing demand for remote roles in order to secure the skills they need to thrive.  

Indeed data shows sustained interest in remote working on the part of jobseekers. Searches for remote work in Singapore tripled almost overnight in early 2020 and have remained at that heightened level. For technology companies seeking to hire, this presents a clear imperative to implement remote work – and remote hiring policies. 

The market for technology skills is global. For employers in Singapore, that means they are competing for talent with companies in other markets with a much longer history of working and hiring remotely. 

It’s important for employers locally to remain receptive to both changing employee desires and established best practice to make the best possible shift to remote work and remote hiring. 

Restructure the culture

The traditional idea of a 9-to-5, physical office space has evolved to a more flexible, hybrid arrangement. Employee work arrangements should be arranged to balance the genuine requirements of the role and business with both the employees’ preference and safety.

Under Indeed’s recent working policies, employees will either be completely remote, work in the office full-time, or both, depending on their role. 

COVID-19 has challenged technology companies to rethink the work culture in addition to the practical aspects of work. As employees are increasingly comfortable with the flexibility of working from home and telecommuting, remote hiring and work options expand for hiring managers. These arrangements can expand access to quality talent and leverage the cream of the crop for their workforce.

Recent Indeed survey data revealed that the top policies and measures that employers in Singapore are planning to implement for 2021 are improved flexible work options (53 per cent) and increased work from home options (52 per cent).

Also Read: Improving work efficiency and ergonomic conditions for remote work proficiency in 2021

Almost a third (31 per cent) of respondents think that more employers designing jobs with flexible working options built in from the start will be a permanent fixture in the future workplace, in 2021 and beyond.

Our Singaporean job seekers and employers have maintained a strong interest in remote work throughout 2020. Being in sync with jobseekers means moving hiring processes online and using virtual events, networking software and hiring platforms to connect with talent. 

There are digital tools such as automated processes and video-based platforms that can maximise the experience out of the process. Interviews provide insights about candidates that resumes do not, so take advantage of the rare opportunity to interview candidates in a comfortable environment that allows them to really express themselves.

Pay attention to how they interact and how they think on the spot. Consider if they’re a good culture fit and take note on the ways that they can contribute to the team as a whole.

You should also look at how you structure and communicate your employee benefits in light of changed work practices. Some benefits, like on-site gyms and catering, will need to be reconsidered. Others may need to be deployed in a way that makes them able to be enjoyed asynchronously for employees in different time zones. 

You can’t install a ping-pong table in people’s home offices or buffets in their kitchens. Delivering these kinds of on-site experiences in a remote work environment requires a creative and fresh approach. When examining work culture incentives, look to desired outcomes rather than specific initiatives to determine what will be appropriate for a hybrid or remote work future.

Also Read: Why you shouldn’t resist collaboration and remote work

Those that create a shared sense of purpose and community should be prioritised to promote cohesion and combat the inherent isolation in shifting to remote work.

At Indeed, we have instituted wellness days to preserve the capability and productivity of our employees working remotely. We have doubled down on one-on-ones between managers and direct reports to ensure that any issues are identified early and that remote employees know their concerns are being heard and acted on. 

Tech employers should be aware of their leadership role in the shift to remote work as they will be providing the tools and knowledge that companies across the economy use to engage, manage and nurture remote workers. 

Tech companies who ensure that remote hiring, work and management is productive, supportive and mutually beneficial will emerge as both cultural and commercial leaders in the new world of work. 

–

Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

Join our e27 Telegram group, FB community or like the e27 Facebook page

Image credit: Helena Lopes on Unsplash

The post How the tech industry is redefining the remote work culture appeared first on e27.

TRIVE Ventures, a Singapore-based early-stage VC firm investing in data-driven tech startups in Southeast Asia, announced today it has partnered with an undisclosed family foundation to co-launch a US$2 million venture philanthropy fund.

Termed ‘Tenacious Founders Venture Philanthropy Fund‘, it aims to seek out Singapore-based entrepreneurs who have shown “tenacity” in running their businesses but are struggling to build a successful business due to a shortage of financial resources.

The fund will issue financial support of up to S$100,000 (US$75,000) to each successful applicant, in the form of a redeemable SAFE (simple agreement for future equity) note. It seeks to support up to 10 founders in the next 12 months, with plans to support more should demand increase.

As per a press note, TRIVE will not take equity in the business. Rather, recipients of the fund are encouraged to repay the sum upon being financially positive, with returned funds used to fund the next successful applicant. Recipients also do not need to guarantee the SAFE Note.

Also Read: How to craft your startup’s financial projections

The VC firm is looking for founders with “proof of passion, tenacity and integrity” with plans to scale a profitable business. Applicants are required to nominate a known credible person in the business or startup ecosystem who can vouch for the above values. Besides, startups have to be based in Singapore with at least 2 years of operations.

“Through our past incubator, we understand tenacity is what drives an entrepreneur to success. The fund aims to be the short-term bridge for these founders who are tenacious and have a ‘never-say-die’ attitude. We hope to support such local entrepreneurs to succeed and for them to create a positive economic impact for Singapore,” said Christopher Quek, Managing Partner of TRIVE.

Launched in 2015, TRIVE has invested in 18 startups thus far. Among its notable investees are Agrimax, a Singaporean agritech startup focusing on increasing farm productivity; Park N Parcel, a Singapore-based logistics firm; and Coderschool, a Vietnam-based coding education company.

–

Image Credit: TRIVE

The post TRIVE Ventures launches US$2M venture philanthropy fund to support cash-strapped founders in Singapore appeared first on e27.

Mars Growth Capital invests US$4M in American SaaS startup Hiver

Story: California-based SaaS platform Hiver has raised US$4M in debt financing from Singapore’s Mars Growth Capital.

What the funds will be used for: Expansion of sales and marketing efforts to increase customer base and double revenues in 2021 and 2022

About Hiver: Founded in 2011, Hiver is a Gmail-based customer service solution created for businesses that use Google Workspace t0 manage everyday operations like email, calendar, and Google Drive.

It offers features like email assignment, tracking, automation, analytics, and SLAs (service level agreement) for companies to help them collaborate much easily from within the Gmail platform itself.

The startup claims to have more than than 1,500 companies from over 30 countries on its platform, including Vacasa, Upwork, AppsFlyer, Flexport, Harvard University and Kiwi.com.

Also Read:  TRIVE Ventures launches US$2M venture philanthropy fund to support cash-strapped founders in Singapore

About Mars Growth Capital: A joint venture between Mitsubishi UFJ Financial Group and Liquidity Capital, Mars Growth Capital looks to provide debt facilities to fast-growing startups in the Asia Pacific region. It tends to steer mostly towards e-commerce and SaaS verticals.

Revolut launches new feature to help children make better financial decisions

Story: Revolut, a global fintech platform headquartered in the UK, has announced the launch of Revolut Junior on its platform.

What is Revolut Jr.: A feature that will allow parents to create a Junior account for their children using their personal Revolut app.

Parents can send money to their children’s account and get instant spending alerts for their online and physical in-store payments.

Also Read: Revolut arrives in Singapore after a year of beta testing, providing more overseas money transfer option

According to a press statement, approximately 10,000 Junior accounts are being created each week globally.

“Digital technology usage is prevalent amongst young children and teens who are extremely technology savvy. At Visa, we believe the importance of educating youths on money management skills and digital payment usage starting from a young age and parental guidance is crucial,” said Kunal Chatterjee, Visa Country Manager for Singapore and Brunei.

‘Filipinos are the highest consumers of social media in the world’

The story: According to a report jointly released by We Are Social and Hootsuite, the Philippines holds onto its record for the most time spent on social media (4 hours 15 minutes) and the internet (10 hours 56 minutes) by internet users aged 16-64 globally.

Other key findings: Thailand and Malaysia are in the top 10 countries for consumer online purchasing and Singaporeans are the world’s most prolific QR code users (79 per cent).

More about the story: Christina Chong, managing director, Singapore at We Are Social, commented: “Every year, Southeast Asia demonstrates a thriving digital landscape. People here are some of the most digitally savvy in the world. It’s more important than ever that brands understand how to connect culturally relevant ways with online audiences.”

The report also outlines the expanded use of social media and the growing popularity of messaging platforms.

–

Image Credit: Revolut

 

 

The post In brief: Mars Growth Capital invests US$4M in US startup Hiver; Filipinos are world’s highest social media consumers appeared first on e27.

According to government data, in 2010, Japan was declared as one of the worst-affected nations by the worldwide diabetes epidemic with type 2 diabetes predominating in both adults and children alike. With approximately 13.5% of the Japanese population affected by type 2 diabetes or impaired glucose tolerance, the disease was identified as a healthcare priority by the Ministry of Health, Labour and Welfare.

While the country has progressed a lot in the past decade, when it comes to diabetes, things haven’t necessarily changed a lot. As of 2015, Japan had over 7.2 million people diagnosed with diabetes. According to a 2018 survey conducted by the Ministry of Health, Labor, and Welfare, around 20 million people in Japan had either contracted or were at risk of contracting diabetes.

There are many small children who cannot produce insulin in their bodies and need to undergo painful finger pricking multiple times for their whole lives. The disease is equally common among adults, and this is not just in Japan. According to the World Health Organisation, the global prevalence of diabetes among adults over 18 years of age has risen from 4.7% in 1980 to 8.5% in 2014, and between 2000 and 2016, there has been a 5% increase in premature mortality from diabetes.

Launched in 2017, Quantum Operation, an IoT healthcare startup based out of Tokyo envisions revolutionising healthcare for diabetes affected patients by leveraging IoT.

The world’s first non-invasive glucometer: The future of diabetes healthcare

To help children and adults affected by diabetes in Japan and around the world, Quantum Operation is set to launch the world’s first-ever non-invasive wearable glucometer. The healthtech startup has two core goals at the heart of their operations: to help extend healthy life expectancy and provide preventive care. Quantum Operation’s wearable glucometer helps achieve just that. It utilises the startup’s proprietary technology and eliminates the need for invasive blood glucose measurement.

The device is compact and easy-to-wear and is easily connected to their app. The app connectivity allows for data coordination via open API in that they are able to leverage data analytics for accurate glucose measurement. As per Quantum Operation, the device is also capable of reading other vital signs, such as heart rate and ECG.

also read: Why a robust digital insurance distribution system is the future in APAC

To use the device, the wearer just needs to slide the watch on and activate the monitoring from the menu, and after around 20 seconds, the data is displayed. They are also building a big data platform to collect and analyse the data generated by patients. Currently, Quantum Operation is in the first stage of seeking certification for commercial use of the wearable device.

An inspired invention with a bright future in healthcare technology

Helmed by CEO Kazuma Kato, the Quantum Operation team is small but strong with members that bring in years of startup experience. Kato who grew up in a small bankrupt town in Japan where there was a severe lack of hospitals and healthcare felt the need to do something to help make healthcare easily accessible for all. He was moved by small children undergoing immense pain for the treatment of diabetes. As such, he set out to develop this non-invasive and not-so-expensive medical device with his team.

This year, during CES — the world’s largest technology trade show that takes place annually in Las Vegas, Quantum Operation showcased their noninvasive glucose monitor as well as their second product, an oxygen saturation measuring sensor (SpO2) that can be worn around the wrist. The program was conducted virtually this year and Quantum Operation’s wearable device got many queries from patients, doctors, investors and key stakeholders.

also read: How this Tokyo-based startup is protecting e-Commerce merchants against fraudulent orders

So far, the startup has raised 10 million USD in funding from Alfresa, a leading medical wholesaler, and a Japanese pharmaceutical company. Quantum Operation is actively seeking partners to sell its hardware to insurers and healthcare providers based on their B2B2C model wherein they have the capacity to provide hardware as well as software. They are also looking for investors for their Series B fundraise in 2021 wherein they plan to use the capital for expansion into Southeast Asian markets and the mass production of their flagship wearable device.

Find out more about Quantum Operation at https://quantum-op.co.jp/en.

– –

This article is produced by the e27 team, sponsored by 
JETRO

We can share your story at e27, too. Engage the Southeast Asian tech ecosystem by bringing your story to the world. Visit us at e27.co/advertise to get started.

The post How this Tokyo-based IoT startup seeks to revolutionise healthcare appeared first on e27.