I hear a version of this question often — usually at a stage when it's already hard to fix: "Does the company actually own its product?"
It sounds absurd. But here's how it usually happens. A founder hires a freelancer to build the first version. A friend who codes helps out "just for one evening." A co-founder who later leaves takes part of the codebase with them — nothing was ever signed.
Each of these people may have genuinely created something. And if nowhere is it written that the rights transfer to the company, they stay with the author. Not with the startup. With the person.
I saw this with a founder preparing for a seed round. The product's core module had been built over a year earlier by a developer who'd joined through a personal referral — paid in a few lump sums, no contract beyond a conversation and a handshake. By the time investors asked for the IP chain, that developer had long since moved on to a competitor.
We spent several weeks, and a meaningful part of the legal budget, tracking him down and negotiating a retroactive assignment before the round could close. He understood exactly how much leverage that gave him, and he used it. The round still closed — but it closed later, and at a cost that a single signature, eighteen months earlier, would have avoided entirely.
This isn't about distrust. It's about the difference between doing business properly and doing business on trust alone — especially once due diligence or a funding round is on the horizon.
Everyone who touches the product — employee, freelancer, co-founder — should sign something that explicitly assigns rights to the company. Not implied. Written.
It doesn't need to be elaborate. A short, properly drafted IP assignment clause, signed before the work begins, resolves a problem that otherwise surfaces at the worst possible moment — in front of an investor's lawyer, not yours.