Setting up a business is exciting, and without a legal foundation, it can sink. This holds especially true in a fast-growing startup environment in Bangladesh, where many founders make gigantic errors on agreements and contracts. Such mistakes could destroy partnerships, lead to investor disputes, revenue loss, or even lawsuits.
Whether your startup is a tech platform, F-commerce brand, or service-based venture, having the right legal agreements is not just a luxury but a necessity.
Let’s explore the most common mistakes Bangladeshi startups make with their agreements and how to avoid them. Contact Legal Advice BD if you need more information!
1. Not Having Any Written Agreements
Handshakes or verbal agreements are the usual starting points adopted by many startups among co-founders, between friends, and sometimes with family members. This might have seemed like a good idea in the early days, reflecting flexibility and consensual behavior. However, in the long run, this was not the path that would lead to peace and happiness.
Why it’s a mistake:
- Verbal promises are hard to prove in court
- Misunderstandings about roles, equity, or responsibilities become common.
- It leads to confusion during exits, fundraising, or profit-sharing
What to do instead:
Draft clear, written contracts for all major relationships—from co-founders and employees to vendors and investors.
2. Copy-Pasting Legal Templates Without Customization
It’s tempting to download a contract template online and fill in the blanks. But not all contracts fit all situations—especially not in the Bangladeshi context.
Why it’s a mistake:
- Legal systems vary from country to country
- A generic agreement might miss local compliance needs.
- You could accidentally sign away important rights or protections.
What to do instead:
Consult a Bangladeshi legal expert to draft or review agreements tailored to your business type and local laws.
3. Ignoring Founders’ Agreements
This is one of the biggest blunders. Many startups fail to create a Founders’ Agreement when forming their company.
Why it’s a mistake:
- No clarity on ownership percentages
- Unclear decision-making authority
- No plan for conflict resolution or what happens if a founder leaves
What to include in a Founders’ Agreement:
- Roles and responsibilities
- Equity distribution and vesting
- Intellectual property ownership
- Exit strategy or buyout clauses
4. Skipping NDAs (Non-Disclosure Agreements)
Startups usually continue to share ideas, strategies, or technologies with potential investors, partners, or freelancers without safeguarding that information with an NDA.
Why it’s a mistake:
- Your confidential information could be reused or leaked
- You may lose first-mover advantage.
- There’s no legal ground to sue if someone misuses your idea.s
What to do instead:
A good practice is to sign an NDA whenever sensitive information is to be shared with an outside party regarding business modeling or technology.
5. Poorly Drafted Employment Contracts
Startups often take in early members informally and sometimes, instead of salary, offer equity or deferred payment. However, without these in writing, it can lead to misunderstandings.
Why it’s a mistake:
- Employees may later demand more than what was agreed
- No legal basis to handle poor performance or resignations
- Risk of IP theft or competition
What to include:
- Job role and responsibilities
- Compensation and benefits
- Confidentiality and non-compete clauses
- Ownership of work or ideas produced
6. Overlooking Vendor and Service Agreements
From web developers to logistics partners, many startups work with third parties but forget to sign contracts.
Why it’s a mistake:
- Missed deadlines or low-quality service may go unpunished
- Disputes over payment or deliverables become difficult to resolve.
- You may be held liable for their errors.
What to do instead:
Have clear service-level agreements (SLAs) that define scope, timelines, quality standards, and consequences for non-performance.
7. No Shareholders’ Agreement
When raising funds or bringing in new investors, many startups skip this critical document.
Why it’s a mistake:
- Investors may interfere in business decisions
- Future rounds of funding may get complicated
- Exit or profit-sharing expectations may clash
What to include:
- Rights and duties of shareholders
- Voting rights
- Transfer and exit clauses
- Dividend and liquidation preferences
Learn More: 10 Most Common Legal Issues for Businesses in Bangladesh
8. Weak or Missing IP Agreements
If you’re building software, designing products, or writing content, you need to secure the intellectual property (IP) from the people creating it.
Why it’s a mistake:
- Freelancers or employees may claim ownership of their work
- Investors may see IP risk as a red flag.
- Competitors could steal unprotected ideas.
What to do instead: Ensure that all contributors sign an IP assignment agreement that transfers ownership to the company.
9. Ignoring Regulatory or Licensing Requirements
Some startups operate in regulated environments—fintech, e-commerce, or healthcare, to mention a few- without valid licenses or contracts.
Why it’s a mistake:
- You could face penalties, suspension, or legal trouble
- Customers may lose trust if you’re shut down.
- Investors may back out due to compliance risk.s
What to do instead: Research local laws or consult a legal expert to ensure you’re operating within legal limits and have the right paperwork.
10. Not Reviewing or Updating Agreements
The market changes fast. But many startups forget to review or update their agreements as they scale or pivot.
Why it’s a mistake:
- Outdated terms may no longer reflect business goals
- You may miss out on better legal protections.
- Some clauses may become legally invalid over time.
What to do instead: Set a reminder to review key contracts every 6-12 months, especially when raising funds or expanding operations.
Why Choose Legal Advice BD
Legal Advice BD helps Bangladeshi startups remain in the clear from the above costly blunders. We understand the ecosystem, whether it’s tech, e-commerce, logistics, or services. And our legal support distinguishes itself as prompt, cost-efficient, and reliable.
Here’s why startups trust us:
- Startup-Focused Expertise: We don’t just understand the law—we understand your business journey
- Custom Agreements: Tailored to your goals, industry, and local legal framework
- Clear Explanations: We break down complex legal jargon so you can make informed decisions
- Responsive Team: Need a quick contract or urgent review? We’re just a message away.
- Affordable Plans: Perfect for bootstrapped founders and early-stage teams
From day one, we help you lay the legal groundwork to grow safely and confidently. Whether it’s drafting a Founders’ Agreement, creating an NDA, or reviewing investor terms, Legal Advice BD has your back.
Final Thoughts
Bangladeshi startups are full of talent and innovation. But even these ideas risk failure primarily due to simple legal errors. Having proper agreements is not just meant to sidestep problems; it’s designed to help foster trust, clarity, and a strong basis for long-term success.
Don’t wait for issues to start solving your paperwork.. Start strong, stay protected, and grow with peace of mind.
Need help? Contact Legal Advice BD today and get expert legal support made for startups like yours.