Austin tech startup Gazzang Inc. has been quite busy lately. The tech company, specializing in cloud security software, continues its aggressive productivity that began in 2010. Gazzang was established in 2008, but moved from Houston to Austin last year to take advantage of the fertile market of tech-savvy executives. The move also benefitted the startup financially, as Gazzang was able to raise $3.5 million from venture capital investments.

Gazzang is just one of hundreds of startup tech business in Travis County that is experiencing rapid growth. As we’ve discussed earlier, while most of the country is still suffering through the lagging effects of the recession, Austin continues to be a friendly place for technology startups to grow. Austin investors continue to reward promising young companies that make sound business decisions.

However, a successful venture needs more than a good idea and talent to make it happen, as unsound business decisions can quickly cause a company to fail. Complex business startups face a dizzying array of decisions that can have profound and long-lasting effects on the entity. Just a few of these business issues include:

• Choosing the proper business entity: crucial choices on whether to form a LLC, S-Corporation or Limited Partnership.
• The legal aspects of venture capital investments.
• Financing: whether money should be obtained through a lender or a private investor and how the agreement should be structured.
• Covenants not to compete: bringing in key personnel and executives from other businesses in the area may potentially infringe a non-compete agreement.
• Real estate and lease agreements: many businesses have been doomed by terms of an unfavorable lease.

These are just a few of the tough decisions that new businesses face. An experienced Austin business attorney can be an invaluable asset to any company, especially one just starting up. Contact a Travis County business lawyer to discuss what choices are most appropriate for your entity.

Source: Austin Business Journal, “Former Phurnace VP joins Austin cloud security startup” June 16, 2011.