The number of startups operating in Brazil continues to expand. According to the Brazilian Association of Startups (Abstartups), the country already has more than 14 thousand active businesses, and the ecosystem continues to attract thousands of investors and generate billions of reais annually, according to market data. But, despite the growth, many entrepreneurs still neglect a crucial aspect: the legal security of the operation.
SecondMatheus Martins, lawyer and founder of Barcelos Martins Advogados, a boutique specializing in legal advice for startups, basic mistakes made in the initial phase can generate significant losses, and even make investment rounds unfeasible. "Founders are often so focused on the product and fundraising that they leave aside the legal part, which is the foundation of any business. Without a solid structure, the startup runs the risk of stalling just when it starts to grow", explains the lawyer, specialist in Venture Capital and Business Law.
Below you can find five legal mistakes that startups make and how to avoid them:
1. Lack of contract between partners
The absence of a corporate agreement is one of the main mistakes of early-stage startups. This document defines roles, responsibilities and rights, avoiding future disputes. "It is common to see partners breaking partnerships without a clear definition of who gets the product, the brand or the customers. The contract is what separates a professional partnership from an informal friendship", he highlightsmartins.
2. Not formalizing the relationship with employees and providers
Startups often hire freelancers, developers and contractors without adequate legal instruments. This can lead to labor lawsuits and questions about intellectual property. The ideal is to formalize everything through service provision contracts and copyright and code assignment clauses.
3. Ignoring brand and intellectual property protection
Registering the brand with the National Institute of Industrial Property (INPI) is essential. Without this step, another company could use the same name and even prevent future use. According to market studies, the number of startups with registered trademarks is still low in the country, a high risk for those seeking investment.
4. Neglecting compliance and data privacy
With the LGPD in force since 2020, companies that collect and store personal data must follow strict protocols. Inspection by the National Data Protection Authority (ANPD) has intensified, with the initiation of several sanctioning processes. Startups that process data without a privacy policy may suffer sanctions and lose credibility with investors.
5. Lack of preparation for investment rounds
The absence of governance, vesting clauses and clear corporate structure can deter investors. "Venture capital funds carry out thorough due diligence. If the company is not legally organized, the round falls apart before it even starts", he warnsmartins.
For the lawyer, legal maturity is an essential part of the professionalization of Brazilian startups. "Founders need to understand that legal is not a cost, it is an investment. A well-written contract can save months of litigation and thousands of reais in fees in the future", concludes the expert.
