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    Accelerate Law Article on AI Data Ownership Published on Information Age

    Check out our recent article, "The legal blind spots stalling data and AI start-up growth – and what to do about it", recently published on Information Age

    Our team recently collaborated with Information to share our thoughts on a key issue affecting tech and AI startups - ownership and use of their data.

    The initial stages of an investment or acquisition deal are exciting, and when it closes everyone is understandably in a particularly celebratory mood.

    However, somewhere in the early-middle there is a due diligence process where our client (usually the company being invested in or acquired) is asked to provide hundreds of documents demonstrating pretty much everything that it has ever done or that has ever happened to or with it, and answer countless questions and follow up questions. The investor/buyer wants to know exactly what it is getting involved with and it wants proof. If the company has been there and done it before, matters are simplified, but often this isn't the case, and it becomes a mad rush and a scramble.

    The legal part of the due diligence requests and questions are generally split by subject matter (e.g. shareholders, employment, share options, IP, data protection, disputes, pensions, etc). Each subject matter aligns with a different law firm department, and the investor's/acquirer's appointed firm will usually share that work with each department - makes sense.

    What it means is that there is no stone un-turned as each question and series of questions are being asked by experts in each area. On the other hand, for our clients, it can often be frustrating as the questions/lines of enquiry feel distant from the deal itself and the reality of the business (e.g. "Why are we being asked this many questions about our pensions scheme?").

    When it comes to the 'data and IP' section of due diligence process, it can and does become problematic when the due diligence report finds that a tech company doesn't technically own or have the rights to chunks of its data and IP, which was supposed to be a core part of the company's value. It can be a deal breaker, or a deal changer (and not a good change), because all of a sudden the company has overpromised and underdelivered.

    You can read the article here: https://shorturl.at/AgCwX

    Our insights are based on our daily work together with startup founders and founding teams on launching and scaling innovative businesses.

    Please do not hesitate to reach out to info@acceleratelaw.co.uk for support if you would like to discuss founder matters or other legal questions within your business, and a member of our team will come back to you.

    Accelerate Law provides flexible strategic and legal support to startups end-to-end through angel investment rounds and VC funding rounds, which includes supporting with SEIS and EIS matters, private M&A, working with founding teams on commercial contracts, hiring and incentivising, data privacy and trademarks, and the steps required to scale. Contact us here to find out more.