Sponsors Funding App Development Concern

[JoM2018]

What is the name of your state?
California

 

[JoM2018]

Hi, I'm developing an app and have an NDA in place with my software developer. We are ready to begin seeking out company sponsors to fund the development, in exchange for free add space on the app. I have come up with a tentative sponsor / sponsee contract using some free templates as models, and we have stipulations for repayment of all funds if the app does not launch within a certain number of months.
However, I recently saw the movie The Polka King and got very scared seeing his story of being sentenced to jail time for taking 'investments ' from people towards his company.
I don't know anything about the legal side of all this, so I'm trying to get help on what I need to do to be 100% legal in terms of how I go about obtaining sponsorship monies from companies.

 

[quincy]

Hi, I'm developing an app and have an NDA in place with my software developer. We are ready to begin seeking out company sponsors to fund the development, in exchange for free add space on the app. I have come up with a tentative sponsor / sponsee contract using some free templates as models, and we have stipulations for repayment of all funds if the app does not launch within a certain number of months.
However, I recently saw the movie The Polka King and got very scared seeing his story of being sentenced to jail time for taking 'investments ' from people towards his company.
I don't know anything about the legal side of all this, so I'm trying to get help on what I need to do to be 100% legal in terms of how I go about obtaining sponsorship monies from companies.

A forum cannot teach you all you will need to learn to be 100% legal. You will want to locate a business law attorney in your area with whom you can personally discuss your plans and how to best protect you and your new business.

Good luck.

 

[ALawyer]

Although Quincy is absolutely right, I am sure you'd rather use what money you have to grow and develop the business rather than pay a lawyer, and I wouldn't blame you! Reading a book or two on getting funding would make a great deal of sense and save you lots of money and potential heartache. Looking on Amazon I quickly saw a series of appropriate books -- and your public library undoubtedly has some highly relevant books you should read as well. Then you'd be an educated consumer when it come time to hire a lawyer.

Going to a handful of wealthy family members and very close friends for money is one time tested route to get started, but even then you need to be careful (1) so that it is crystal clear what they are investing in, (2) that any statements made to them are 100% accurate, and that you've not omitted any material statements of fact. Similarly you would want to make sure that you are documenting everything in writing, being fair to your investors, but not overpromising or giving away a far greater share of your business than would be fair and appropriate.

 

[JoM2018]

While I found your reply to be much more helpful than Quincy's, I find the assumption that I have any wealthy friends or relatives to be very classist. Thank you for the suggestion on libraries, though. I definitely will go inquire at my graduate school's library and see what they can help me find.

 

[quincy]

While I found your reply to be much more helpful than Quincy's, I find the assumption that I have any wealthy friends or relatives to be very classist. Thank you for the suggestion on libraries, though. I definitely will go inquire at my graduate school's library and see what they can help me find.

I understand my response was not the response people want when coming to this forum. And it is a response I don't like to give.

Unfortunately, forums are limited in what they can offer. Your needs appear to exceed these limits.

Most states have legal aid clinics, often connected to law schools, where you can find low or no cost legal assistance. I know California has them sprinkled throughout the state.

Templates are fine to use as a guide but you will want to fashion contracts to your specific business. An attorney can help you do this. Your state's small business administration also may offer helpful resources.

The worst mistake a new business can make is to not invest in professional help at the beginning. Having professional guidance can help the business avoid more costly problems in the future. So you are smart to be looking for help. Nothing puts an end to a new business quite as quickly as a lawsuit (or a "Polka King" Ponzi scheme ) will.

Good luck.

 

[JoM2018]

Thank you for that additional info. My first grad school had a free law clinic; I'll research if the one I'm at now for my doctoral work does, too - and for sure I'll look into other Options around me here in CA.

 

[quincy]

Thank you for that additional info. My first grad school had a free law clinic; I'll research if the one I'm at now for my doctoral work does, too - and for sure I'll look into other Options around me here in CA.

Sounds good.

Good luck with your fund raising and your app.