Does My Company Own My Code? Startup IP Assignment Explained.
You built the product. You wrote the code. But does your company actually own it? Most early-stage founders never stop to ask this question. By the time an investor’s attorney asks this during due diligence, the deal may already be at risk.
This is a legal question with a clear but often overlooked answer.
What IP Assignment Actually Means
Who Owns What You Build
Under U.S. law, the person who creates intellectual property generally owns it—unless there is a valid assignment or a work-for-hire arrangement in place. The individual creator. Code, designs, inventions, and trade secrets written by a founder personally belong to that founder until they are formally transferred in writing.
If you built the product before your company was incorporated, that work typically belongs to you individually; it is not the startup, unless it has been formally assigned.
Why Pre-Incorporation Work Is the Danger Zone
Most founders start building before the company exists. That early code is the foundation of the product. It is also legally owned by you, not the company. Once you incorporate, each founder must sign an IP assignment agreement that explicitly transfers all prior work to the company.
Standard employment agreements do not always cover this retroactively. The assignment must be explicit about work done before incorporation.
What Investors Check First in Due Diligence
IP ownership is one of the first items investors verify. If founders have not assigned their pre-incorporation work, the company may not legally own its product. IP ownership gaps can:
- delay or, in some cases, derail a deal
- delay a closing by weeks
- reduce valuation or require escrow holdbacks
- force a last-minute scramble to sign retroactive agreements
What a Proper IP Assignment Must Cover
An IP assignment agreement should cover all inventions, code, designs, and trade secrets created by the founder, including:
- work created before incorporation
- work created after incorporation during the company’s life
- work created on personal time if related to the business
Covering all three windows is what creates a clean chain of title.
Prior Employer Agreements Can Complicate Everything
If a founder was employed elsewhere while building, their prior employer’s IP agreement may create claims over the startup’s early work. Check those agreements before writing code.
Common Founder Mistakes
Mistake #1: Assuming Employment Agreements Cover Pre-Incorporation Work
Founders incorporate the company, sign offer letters or employment agreements, and assume that covers everything. It often does not. Standard employment agreements assign future work. They do not automatically reach back and capture work done before the company existed. A separate IP assignment agreement is often required to clearly cover that window.
Mistake #2: Not Reviewing Prior Employment Contracts
Before building, most founders do not check whether their last employer’s IP agreement could create a claim on the startup’s early work. Common broad clauses assign ownership of:
- any invention related to the employer’s business
- work done during employment, even on personal time
- ideas developed using employer resources
Reviewing prior employment contracts before you write a line of code is the safer move.
Mistake #3: Treating IP Assignment as a One-Time Event
Many founders sign IP assignment agreements at formation and consider it done. But ongoing work must also flow cleanly to the company under the same assignment framework. Not maintaining a clean chain of title for post-incorporation work can create similar due diligence issues later.
10-Minute Self-Check
☐ Did I build any part of the product before the company was incorporated?
☐ Has every founder signed an IP assignment agreement that explicitly covers pre-incorporation work?
☐ Did I review my prior employer’s IP agreement before I started building?
☐ Does the assignment cover inventions, code, designs, and trade secrets, not just one category?
☐ Have co-founders who contributed early work each signed their own assignment?
☐ Has any attorney confirmed the chain of title is clean enough to survive investor due diligence?
If any answer is no, address it before you send the first investor deck.
Bottom Line
Investors do not assume your company owns what you built; they verify it. A missing IP assignment is one of the most common and most fixable problems in early-stage due diligence. Fixing it before fundraising is far less painful than fixing it under deal pressure.
Does My Company Actually Own My IP?
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Sources Used
- WilmerHale Launch, “Who Owns Your IP?” — WilmerHale Launch, https://launch.wilmerhale.com/explore/formation/founders/who-owns-your-ip
- Weintraub Tobin, “Who Really Owns Your Startup’s IP?” — Weintraub Tobin, https://www.weintraub.com/2026/01/who-really-owns-your-startups-ip/
- Sandberg Phoenix, “Why IP Assignment Agreements Are Essential for Startup Founders” — Sandberg Phoenix, https://sandbergphoenix.com/why-ip-assignment-agreements-are-essential-for-startup-founders/