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Starting a Data and Analytics FinTech: A Legal Guide

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Note from August 25 2021, the innovation patent will cease to exist. After this date, you can only file a divisional innovation patent if it is based on a previously filed patent. Read more about this change in our article.

Data and analytics businesses focus on processing data at an enterprise level. They cover industries like trading, insurance, real estate and security. As a data and analytics FinTech startup, you may use technology like artificial intelligence (AI) to process data on a large scale and provide solutions for businesses. It is useful to know what legal issues you should be aware of at each stage of growth. This article provides guidance on the four key stages of your startup.

1. Research and Development

Completing market research is important for the success of your product and the technology you use. It will help you identify your target market and, consequently, define your growth strategy. This is especially vital if you are aiming to target larger enterprise customers.

There are plenty of resources available to help you determine how your technology will process and aggregate large amounts of data and what kinds of insights you aim to provide to enterprise level businesses. For example, the FinTech Adoption Index released by Ernst & Young and FinTech Australia contains valuable industry information for new FinTech businesses.

Legal Needs

You will have to address different legal requirements or issues at each stage of your business’ life cycle. The table below identifies key legal requirements at the Research and Development (R&D) stage.

Legal Need Purpose
Business Structuring Setting up your business structure correctly can help your company grow quickly. A good business structure can also help:
  • protect your company’s assets;
  • limit your personal liability; and
  • benefit you from a tax perspective.
Australian Financial Services Licence
You may be required to obtain an AFSL if you are:
  • providing financial services; or
  • offering services to AFSL providers.

The Australian government has a regulatory sandbox for FinTech startups. For the first 12 months of your FinTech startup, you may not need to apply for a licence. This allows you to conduct detailed R&D without having to comply with AFSL regulations.

Confidentiality Agreement In your R&D stage, you will probably talk with developers, potential investors, and other key personnel about your business. Signing a confidentiality agreement with these parties can help protect your innovative ideas in these initial conversations.

2. Pre-Minimum Viable Product (Pre-MVP)

At this stage, engage developers to develop your technology and the interface that your consumers will use. Additionally, finalise your branding and set up mechanisms to protect your intellectual property (IP) (such as your business logo) as best you can. It is also a good time to conduct marketing campaigns before the launch.

Consider holding a soft launch with an early adopter business to test the algorithms and technology you are using. This will give you access to large datasets to test solutions. For example, if your technology uses an AI agent to provide data insights for companies, you will need enough data to train the AI technology before launching it into other businesses.

Legal Needs

The table below identifies key legal requirements in your pre-MVP stage.

Legal Need Purpose
Trade Marks

A trade mark lets you build brand identity and loyalty.

Registering a trade mark gives you the exclusive right to use your mark for a renewable period of time. It also protects your mark from being used by your competitors.

Development Agreement If you are engaging an external developer for your website and software, you should have a formal agreement in place with them. A development agreement should detail:
  • the scope of work;
  • the assignment of the IP to you on completion (otherwise the developer may own the IP); and
  • cancellation rights.
Employment Agreement

Use formal employment agreements when hiring staff. As an employer, you will also need to comply with the National Employment Standards and any relevant awards.

You may also want to consider whether to put an employee share scheme in place to incentivise employees.


A patent is the exclusive right to monetise an invention for up to 20 years (or eight years for an innovation patent).

If your platform is a novel form of software or technology, you may be successful for patent protection.

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3. Launch

At this stage, your data and analytics FinTech products are ready to be launched to businesses. If you are engaging enterprise customers, ensure your terms and conditions suit larger businesses and that your software licences are in place.

Legal Needs

The table below identifies key legal requirements of the launch stage.

Legal Need Purpose
Website Terms of Use This document protects the IP on your website. It also limits your liability in regards to the content on your website.
Website Privacy Policy

This document ensures that your business complies with the Privacy Act. You should have a privacy policy on your website if you are solely operating online.

This is particularly important for a data and analytics FinTech, as you will be processing large amounts of data with personal information.

Software as a Service (SaaS) Agreement A SaaS agreement is the contract between you and your clients. If you are providing services through an online platform to large businesses, you will need an enterprise SaaS Agreement.
End User Licence Agreement (EULA) A EULA is a contract between a software developer and the end user. When you have an enterprise SaaS agreement with a large business, you will also need a EULA. Your employees or customers (the end users) will need to sign up to the EULA.

4. Growth Stage

Once your data and analytics FinTech is in the growth stage, you may be considering raising capital. High-growth startups usually do this by seeking equity investment from venture capital funds and other professional investors. Investment helps you inject capital in the business, resulting in quicker expansion compared to organic growth.

For example, Hyper Anna is an AI-powered data analyst that is generally used in organisations to provide commercial insights. Hyper Anna initially had a venture capital round in 2016 to assist with developing the AI technology. When they later decided to launch in the United States, they completed a Series A capital raise to assist them in their expansion.

Legal Needs

The table below identifies the key legal issues of the growth stage.

Legal Need Purpose
Capital Raising When seeking investment to raise capital, you may need to:
  • finalise a pitch deck or information memorandum;
  • negotiate a shareholders agreement; or
  • draft or finalise a share subscription agreement, SAFE note or convertible note.

Key Takeaways

There are legal steps and documents required at each stage of growing your data and analytics FinTech. Being aware of what you need to do, and when, can help ensure your path to growth is smooth. 

For further advice on how to start up your business, or help with meeting legal requirements, contact LegalVision’s startup lawyers on 1300 544 755 or fill out the form on this page.

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