Prenup is latest must-have for startup founders in love
The young woman in Monica Mazzei’s San Francisco law office was adamant: she wanted a prenuptial agreement. Never mind that the client had barely anything to her name. What she had was a bunch of startup ideas.
She and her fiancé, who already had his own small tech company, signed a prenup with clear terms, Mazzei said: “The spouse who has an idea [and] starts a business `owns’ that business. It’s their baby.”
A few years later, Mazzei, a partner at Sideman Bancroft, was traveling through the San Francisco airport when she saw her former client on a magazine cover. Her startup had struck gold. Her husband’s business had fizzled. In Silicon Valley, where penniless programmers fervently believe their ideas are worth billions, getting rich can take priority over getting married. California law assumes that any wealth created during a marriage is community property, which should be split equally in a divorce. That’s alarming not just for young entrepreneurs but also their investors.
Fortunately, a well-written prenup is a safeguard against post-divorce havoc, which is why more and more young couples are insisting on the agreements, according to more than half-a-dozen lawyers in the Bay Area and elsewhere. Long popular with older wealthy couples who re-marry, prenups are also being demanded by entrepreneurs who want to keep future windfalls to themselves.
“I am seeing more and more young people want to enter into prenuptial agreements who do not currently have a lot of money now but plan to have a lot of money someday,” said Manhattanbased divorce attorney Jacqueline Newman.
In a 2016 survey by the American Academy of Matrimonial Lawyers, 3 in 5 divorce attorneys said more clients were seeking prenups in the past three years. About half said they’d seen a spike in the number of millennials requesting the agreements.
“People’s concepts and notions of fairness when it comes to privately held businesses are changing,” said Mazzei.
Edtech startup White Hat Jr is supporting this trend. Founded by Karan Bajaj, an author and corporate professional-turned entrepreneur, it teaches children aged 6 to 14 the fundamentals of coding and guides them in developing commercial-ready games, animations and apps. The chatbot Shaurya created can serve as an AI concierge of information