Does the company own code a contractor wrote because it paid for it?

Not reliably. Paying for work does not by itself transfer ownership of the copyright in it, and investor counsel will not treat an invoice as an assignment. What they want is a written agreement in which the contractor assigns the work to the company. If the contractor is gone and there is no agreement, ask them to sign a short assignment now; most will.

What about work I did before the company was formed?

That is the gap investors look for first, because it is so common. The fix is a founder assignment of technology and related rights to the company, signed by each founder, covering what they built beforehand. Many incorporation packages include one. Check that yours was signed and that it covers the work that actually became the product.

Why does the wording of the assignment matter?

Counsel looks for language that assigns rights now, such as "hereby assigns," rather than a promise to assign later. A promise to assign in the future can leave ownership with the person until a second document is signed, and investors want the chain complete on paper. If your agreements use the weaker wording, a short confirmatory assignment fixes it.

A cofounder left on bad terms. What now?

Check what they signed. If their founder assignment and stock agreement were signed at formation, you are likely covered and the departure is a cap table question rather than an IP one. If they never signed, talk to counsel before a term sheet, not after, because the leverage shifts once they know a financing depends on their signature.

Do we need to register trademarks or file patents before raising?

Not usually at seed. Investors want to know the company owns and has the right to use its name and its code, and that nobody else has a claim on either. Registrations help at later stages. The assignments are what they check first.

Guide

Missing IP assignments: the diligence finding that stalls a closing, and how to fix it first

Investors check that the company, not the people who built it, owns what it sells. That means a signed assignment from every founder covering work done before the company existed, a signed invention assignment from every employee, and a written assignment from every contractor who wrote code or designed anything the company uses. The gaps are almost always the same: the founder who wrote the first version before incorporating, the early contractor paid by invoice with no contract, the cofounder who left, and agreements that promise to assign in the future instead of assigning now. Each is easy to fix with a signature while everyone is still friendly, and slow and expensive to fix during confirmatory diligence with a closing date set.

By Vanward. Published 2026-09-27. Updated 2026-09-27.

IP is the one diligence area where a small paperwork gap can hold up a closing on its own. The investor is paying for a company whose value is mostly its code and its name, and counsel will not sign off until the record shows the company owns both. Nobody expects registrations at seed. They expect signatures.

The four places the chain breaks

Where	What investors find	The fix
Before incorporation	The founder wrote the first version on a personal laptop months before the company existed	A founder technology assignment covering prior work, signed by each founder
Early contractors	A freelancer built the first app; there are invoices and no contract	A short written assignment from the contractor, signed now
A departed cofounder	No signed assignment on file for someone who wrote early code	Their signature on an assignment, with counsel involved before a term sheet
Weak wording	Employee agreements that promise to assign rather than assign	A confirmatory assignment using present-tense language

What to have on file

For each founder

A technology assignment signed at or near formation, covering what they built before the company existed, and the stock purchase agreement that references it.

For each employee

A signed confidentiality and invention assignment agreement, dated on or before their start date. Investors spot-check a few names from the payroll census, so an agreement signed two years after someone started is a question you will be asked.

For each contractor who built anything

A contract with an assignment clause, or a standalone assignment. Designers count: a logo is part of the brand the company is selling.

A worked example

Halyard Systems, a fictional software company, found three gaps while preparing for a seed round: the cofounder's pre-incorporation prototype, a contractor who built the first mobile app, and a logo from a freelance designer. The founders signed a prior-work assignment in an afternoon. The contractor and the designer each signed a one-page assignment within the week. When investor counsel asked for the IP chain, Halyard answered with seven documents and no open items.

Fix it before anyone asks

List everyone who has written code, designed anything or named anything for the company. Next to each name, put the signed document that assigns their work. The empty cells are the work. It is rarely more than a handful of signatures, and it costs far less now than during a diligence process where every open item has a closing date attached.

Questions founders ask

Does the company own code a contractor wrote because it paid for it?: Not reliably. Paying for work does not by itself transfer ownership of the copyright in it, and investor counsel will not treat an invoice as an assignment. What they want is a written agreement in which the contractor assigns the work to the company. If the contractor is gone and there is no agreement, ask them to sign a short assignment now; most will.
What about work I did before the company was formed?: That is the gap investors look for first, because it is so common. The fix is a founder assignment of technology and related rights to the company, signed by each founder, covering what they built beforehand. Many incorporation packages include one. Check that yours was signed and that it covers the work that actually became the product.
Why does the wording of the assignment matter?: Counsel looks for language that assigns rights now, such as "hereby assigns," rather than a promise to assign later. A promise to assign in the future can leave ownership with the person until a second document is signed, and investors want the chain complete on paper. If your agreements use the weaker wording, a short confirmatory assignment fixes it.
A cofounder left on bad terms. What now?: Check what they signed. If their founder assignment and stock agreement were signed at formation, you are likely covered and the departure is a cap table question rather than an IP one. If they never signed, talk to counsel before a term sheet, not after, because the leverage shifts once they know a financing depends on their signature.
Do we need to register trademarks or file patents before raising?: Not usually at seed. Investors want to know the company owns and has the right to use its name and its code, and that nobody else has a claim on either. Registrations help at later stages. The assignments are what they check first.