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Most founders spend too much time worrying about legal documents and not enough time understanding what they’re actually signing. Here’s what you actually need, when you need it, and how to avoid common mistakes.

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Fundraising Documents

SAFE vs. Convertible Notes: SAFE notes are usually better for early-stage fundraising because they’re simpler and don’t create debt. But some MENA investors prefer convertible notes because they’re more familiar with debt instruments. Key terms to understand: Valuation cap, discount rate, pro rata rights, and most favored nation clauses. Don’t negotiate these blindly—understand how they affect your ownership and future fundraising. Sharia compliance considerations: If you’re raising from Islamic investors, your documents need to avoid interest-based structures and excessive uncertainty (gharar). Work with lawyers who understand both venture law and Islamic finance. Where to find templates: Y Combinator’s SAFE documents are open source and widely accepted. The BSA AIR (developed for Arab markets) is an alternative designed for regional legal systems. Don’t use random templates from Google—stick to widely-accepted standards.

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Employment and Contractor Agreements

Employment vs. contractor classification: This matters for taxes, benefits, and termination procedures. Each MENA country has different rules, and misclassification can be expensive. Intellectual property clauses: All work done for your company should be assigned to the company, including code, designs, and business plans. This should be explicit in every agreement. Stock option provisions: If you plan to offer equity to employees, your employment agreements need to reference your stock option plan. Set this up early—retrofitting equity compensation is complex and expensive. Non-compete and confidentiality: Non-compete clauses are generally unenforceable for employees in most jurisdictions, but confidentiality agreements are important and enforceable.

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Corporate Formation Documents

Articles of incorporation: These establish your company’s legal existence. Keep them simple initially—you can amend them later as your structure becomes more complex. Shareholder agreements: These govern relationships between founders and early investors. Include vesting schedules, transfer restrictions, and decision-making processes. Board resolutions: Every major corporate decision should be documented with a board resolution. This includes equity grants, major contracts, and strategic decisions. Cap table documentation: Maintain accurate records of who owns what percentage of your company. Use tools like Carta or Capdesk rather than spreadsheets.

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What You Don’t Need Initially

Complex IP assignments: Don’t spend thousands of dollars on comprehensive IP strategies before you have IP worth protecting. Focus on basic assignment agreements first. Detailed partnership agreements: Partnership MOUs and detailed collaboration agreements can wait until you have concrete partnership opportunities. International trademark registrations: Register trademarks in markets where you actually operate, not everywhere you might someday want to operate. Employment handbooks: Start with basic employment agreements. Comprehensive handbooks become important when you have 10+ employees, not when you’re a 3-person team. Unusual terms: If your lawyer suggests terms you haven’t seen in standard templates, ask why. Sometimes it’s necessary for your specific situation, but often it’s unnecessary complexity. One-sided agreements: Investor agreements that give investors excessive control or founders agreements that don’t protect all founders equally usually indicate problems. Inconsistent documents: Your employment agreements, stock option plan, and corporate documents should all reference each other consistently. Inconsistencies create confusion and potential disputes. Missing key provisions: Some lawyers forget startup-specific clauses like accelerated vesting, drag-along rights, or information rights. Make sure your lawyer understands venture-standard terms. Read everything: Don’t sign documents you don’t understand. If your lawyer can’t explain a clause in simple terms, find a different lawyer. Use standard forms when possible: Don’t try to be creative with legal documents. Standard forms exist because they work and are familiar to investors and other parties. Version control: Keep organized records of all legal documents and their versions. Legal disputes often come down to which version of an agreement applies. Regular updates: Review and update your legal documents as your company grows. What worked at founding might not work after your first funding round. The goal is to have legal documents that protect your interests without creating unnecessary complexity or expense. Good legal documents should be invisible when everything goes well and protective when problems arise.