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The business world has seen a huge range of different startups in various industries, engaging technology to change the way people interact with that space.
Proptech startups are another venture of this sort, where business, technology and property combine to create a more efficient experience for all stakeholders.
Here’s what you need to know about launching a proptech startup in Australia.
What Is Proptech?
Proptech is property technology. It is essentially the use of modern innovations to influence the way people interact with the property market. From buying, selling, searching to even managing properties, proptech startups aim to use technology to engage this experience.
Whether the target audience is real estate agent or a first time buyer, there are different types of proptech startups catering to all types of stakeholders.
What Are Property Tech Companies?
Property tech companies are the owners or inventors of the technological innovations that have been changing the way people interact with the real estate market. Property tech is a rather large field, so there are different companies resolving to provide more efficient solutions in various areas of real estate.
For example, Brick X gives investors the ability to access real estate in minor doses while :Different deals with making rent payments, inspections and the overall organisation of the landlord-tenant relationship more manageable.
Running A Proptech Startup In Australia
If you’re thinking about running your own proptech startup, there are a couple of things like registration, legal documents and intellectual property to sort out before you launch your idea into the world.
Register Your Proptech Startup
The first order of any business is the registration. To register your proptech startup, you will need to get an Australian Business Number (ABN).
Prior to doing this, it’s good to think of a business name and take a look at the Business Name Check to see if the one you want is available. Having a name ready to go makes the process a little bit more efficient.
Getting your business registered may sound like a lot, but it’s actually a pretty simple process that can be done entirely online.
The process of registering your business also gives you the option to apply for any relevant taxes. It’s a good idea to be on top of this when you get to the registration process and know what taxes will apply to your business as this may differ depending on the business structure you choose.
If you’re setting up a company, then you will need to get an Australian Company Number (ACN) in addition to an ABN. The requirements for a company are very different to other business types such as sole traders or partnerships.
It’s wise to consult a business lawyer so you can ensure you’re doing everything right.
Legal Documents For Your Proptech Startup
Next, you will need to look into getting the right legal documents for your proptech startup. Legal documents can help protect your business from key risks, so it’s important to have them drafted by a legal professional to ensure they work for you.
We’ve listed a few key ones below for you.
- Employment Agreements: when hiring employees, it’s necessary to have a written contract so everyone can understand their roles and responsibilities
- Contractor Agreements: you want to be able to distinguish between your contractors and internal employees to avoid getting accused of sham contracting. A contractors agreement can help.
- Supply Agreement: if you’re going to need materials, it’s better to have a clear agreement in place with your supplier letting everyone
- Internationally Enforceable Contracts: if your startup is conducting business overseas or working with overseas parties, your contracts should be enforceable in those relevant jurisdictions
- Non-Disclosure Agreements (NDAs): There is some information that is meant to stay private to protect your business – NDAs are a useful tool here
Protect Your Intellectual Property
Protecting your intellectual property (IP) is a key step in managing competition. Your intellectual property is material that isn’t tangible and often plays a key role in your startup’s branding in the market.
Therefore, a lot of things can be classified as intellectual property, such as designs, articles, trade secrets, patents – the list is pretty comprehensive!
Generally, your intellectual property is central to your business. For example, if you have a design that you plan on using as a logo, you can protect it by getting it registered as a trade mark. This way, no other business (in the same industry) can try and copy your design.
Before you register a trade mark, you may want to familiarise yourself with the 45 trademark classes in Australia.
Your IP can be protected by registering it or through the correct legal documentation. Trade marks, patents, designs and plant breeders’ rights can all be registered through IP Australia.
However, not all forms of IP go through IP Australia. Other types of IP, such as copyright material or trade secrets, will likely need legal documentation such as Non- Disclosure Agreements or confidentiality clauses for legal protection.
Furthermore, your business’ internal process will need to be garnered towards protecting IP. For example, using security measures and not allowing everyone to access certain things.
A common way to go about this is to build a strong cyber security system. This is particularly important for workplaces where employees work remotely, or if you’re running your startup entirely from home.
Get Funding For Your Proptech Startup
To get your protech startup running, you will need to get funding!! There are a number of options when it comes to funding your business venture, but it’s really up to you to decide which course of action will be best for you.
The following are some options you could explore:
- Capital raising: Investors can bring capital into your business exchange for shares
- Grants: At times, there are grants available for new and innovative ideas – keep an eye out for them so you can apply
- Loans: Some banks offer specialised loans for small businesses. Be aware of any interest rates and other clauses before you sign
- Bootstrapping: This term refers to using your personal finances to fund your business
- Crowdfunding: It’s relatively non-traditional, however, crowdfunding allows you to pitch your idea to the general public and if they like it, they can opt to donate funds towards it
Licences And Qualifications
In order to run a legally compliant business, you will also need to get any licences and qualifications you may require. As proptech is part of the real estate industry, depending on what your startup specialises in, you may need to attain a particular class of real estate licence.
Licences required can also depend on state and locality – be sure to be aware of any you need in order to get it sorted.
Running An Online Proptech Startup?
If your proptech is going to be online in any way, then there are some additional legal considerations you will need to make such as privacy and liability. We elaborate on a few of these below.
Website Terms And Conditions
Website Terms and Conditions allow you to set out terms that users must agree to before they can further engage with your online business. These are legally binding, so any breach of these terms can be enforced.
So, why do businesses use Web T&Cs?
Web T&Cs allow startups with an online presence to regulate what happens on their site. So, if anything goes wrong while users are on the site, they can limit their liability for losses. Additionally, it gives them the power to remove anything they believe is inappropriate or not wanted on their site.
Do I Need A Privacy Policy For My Proptech Startup?
You may be legally required to have a Privacy Policy under Australian privacy laws. However, even if it doesn’t apply to your startup, it’s always good to be transparent with your customers.
Having a Privacy Policy looks good as a startup because it shows people that you’re serious about legal compliance, and shows that you care about customer data and privacy.
Generally, if your business has an annual turnover of over $3 million, then you are required to have a Privacy Policy under the Privacy Act 1988 and the Australian Privacy Principles.
However, a general rule is that any business that collects personal information should have a Privacy Policy. Personal information is anything that can be used to identify another person, such as:
- Name
- Email address
- Phone number
- Home Address
- Bank details
- Photographs
- IP Address
A Privacy Policy lets people know the information of theirs that is being collected and what is being done with that information. For example, you should disclose how you collect data, where you store that data and if there are any third parties you’re disclosing that data to.
Does My Proptech Startup Need Online Disclaimers?
An online disclaimer can aid in mitigating risks. As you have no control over what users will do with the knowledge or content they obtain from your website, an online disclaimer can help in limiting your liability.
You’ve likely seen online disclaimers in websites you’ve visited, letting visitors to the site know the extent to which the business claims responsibility. In some instances, it can be appropriate to have one for your business as well.
Building An App For Your Proptech Startup?
Many proptech startups have an app for their business or as the main functioning component of their business. Either way, if your startup has an app, there are some additional legal aspects that you might need to consider that are aimed specifically towards keeping your app safe.
Get App Terms And Conditions
App Terms and Conditions work much like a website terms and conditions. It lets people know the conditions for using your app.
In addition to this, terms and conditions for your app (if drafted appropriately by a legal professional) gives you the legal right to add or remove content, users and anything else that goes against the terms and conditions.
You also want to make sure your app’s terms are consistent with certain requirements of the App Store or Google Play. It’s best to consult a lawyer to ensure you’re doing it all correctly.
Limit Your Startup’s Liability
As we discussed above, T&Cs can also help limit your liability in some circumstances as there’s a written agreement between you and your users.
At times, you might find it appropriate to take this a step further by adding a disclaimer, limited liability clause or even an exclusion of liability clause to your agreements.
All three of these work differently to limit the legal responsibility you may have in particular scenarios – contact us today if you would like to know more.
Working With Developers
When running a startup, there is a chance you will hire someone with a set of skills that are necessary for building your vision. A developer is someone with the knowledge in information technology who is able to build applications and software.
Developers can help bring your app ideas to life, however, it’s important to make sure you establish a strong relationship with your developer. This can often start by having the right contract in place.
Do I Need A Developer Agreement?
We highly recommend having a Developer Agreement in place if you are considering hiring a developer. A Developer Agreement is a contract between both parties highlighting the scope of work, payments, warranties, restraints, confidentiality and other important matters.
It’s always safer to have these in writing, so be sure to have an agreement drafted prior to starting any work!
Who Owns The IP?
One aspect that can be confusing when it comes to developer and business owner relationships is the matter of who gets to own the IP once the project is completed. Naturally, you will want to own the product you have paid to create. On the other hand, a developer may want to use it as part of their portfolio (or for any other reasons).
Some businesses choose to have an IP Assignment Deed to clarify the transfer of ownership.
In order to avoid any confusion down the line, your Developer Agreement should address the matter of IP so both parties are on the same page regarding it.
Key Takeaways
Proptech is a great industry to launch your startup in, however, it’s important to have all your legal aspects sorted before you launch into the business side of things. To summarise what we’ve discussed:
- Proptech startups combine property and technology
- To run a proptech startup, register your business and look into getting the right legal documents
- You will also want to protect you IP, get funding and attain any relevant licences or qualifications
- If your startup is going to be online, consider your privacy policy, terms and conditions as well as your disclaimers
- An app will likely require app terms and conditions
- A developer agreement can be useful when utilising the services of a developer
If you would like a consultation on a proptech startup, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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