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Legal Nature Of Incubators And Accelerators And Their Contractual Relationship With Start-Ups

Published on 11 . December . 2017

By Pedro Wehrs do Vale Fernandes [1]


 The last decades have shown a strong legislative trend to stimulate technological innovation by fostering the entrepreneurship, creating a favorable environment for the emergence of organizations called start-up, as well as incubators and accelerators. These organizations provide the start-ups the necessary means to start and improve their activities, and enable effective interaction among researchers, university professors, entrepreneurs and investors, contributing to the creation and improvement of products or services offered to the market. This article seeks to define the legal nature of start-ups, incubators and accelerators, to analyze the usual clauses in these types of agreements and to suggest certain parameters for their interpretation.

Keywords/Palabras-claves/Mots-clés: Innovation, Start-up, Incubator, Accelerator, Contracts



 There is no audacity to say that the term start-up has never been so much in vogue. The accelerated pace of technological development of the present times, especially in the information technology field, the increasing ease of starting one’s own business and the speed with which information spreads around the world seem to encourage innovative entrepreneurship, materialized in the so-called start-ups.

The fact that Microsoft, Apple, Amazon, Ebay, Google and Facebook, among many others have been born as start-ups and today are among the largest companies in the world reinforce the thought that stimulating innovative activities is essential for the development of the capitalist economy, as emphasized by Joseph A. Schumpeter (1961) more than a hundred years ago.

Still far from the North American economic strength[2], our country follows the perennial search for the improvement of its legal model in order to incentivize technological progress and allow greater interaction between scientific production and the National productive sector.

Recently, after more than ten years since the enactment of Law No. 10.973, of December 2, 2004 (“Innovation Law”), Law No. 13.246, of January 11, 2016 was approved, which amended the Innovation Law, expanding the references to incubators of companies from three to ten[3], as well as defining this expression (article 2, III-A).

The emphasis in the Innovation Law on incubators highlights the importance given to these structures for the emergence of new enterprises, through the promotion of inter-relations between government, academia and the productive sector[4].

There are added to incubators, promoting the emergence and development of start-ups, the so-called accelerators of companies[5], not mentioned in the Innovation Law.

The relevance of start-ups, their incubators and accelerators in today’s economy and the ever-increasing and more constant number of contractual relations between these legal entities justify a more accurate analysis of their legal nature and of the contracts entered into among themselves.

Nevertheless, even if there can be found, in legal or infra-legal norms, certain concepts of incubators or accelerators, given the novelty of the institutes, there are not  many studies that are intended to analyze in depth their legal aspects. And if there is scarce material about the institutes themselves, there is still less about the legal relationships arising from the contracts that the incubators and accelerators celebrate with the start-ups.

Thus, for the preparation of this review, a number of contracts entered among incubators and start-ups and between start-ups and accelerators were reviewed, in order to verify the main rights and obligations therein and, knowing their essential structure, to draw parameters for their interpretation in the light of the applicable norms.

Thus initially, we will try to define the legal nature of start-ups, of incubators and accelerators (Chapter 2), then we will review the contractual relations between them (Chapter 3) and finally, we will offer considerations on the interpretation of these contracts (Chapter 4).



The brilliance of a certain innovative idea or a formidable technological breakthrough does not automatically turn out to be a product ready to reach the consumer market. More often than not, the entrepreneur is faced with a long and arduous journey to be trodden, from the epiphany to the time to harvest the laurels.

The availability of goods and services for the market in general, as highlighted by Giuseppe Ferri (1980, pp. 35-36), is not the result of accidental and improvised action, but the subject of specialized and professional activity, which is explained by means of economic bodies purposely predisposed.

These economic bodies, which are concretized in the organization of the production factors and which are intended to satisfy the needs of the market in general, assume the terminology of company.

Thus, from the socioeconomic point of view, the company consists of the collective production unit in a market economy, that is, the organization of resources (human, natural and capital) to carry out a productive activity, with a view towards placing a particular product or service in the market.


2.1. Entrepreneurship

In order for this activity to occur, initially a person (or group of persons), usually referred to as entrepreneur, should identify a particular product or service, whose production meets a demand or about which there is an expectation of demand (as in the case of innovations[6] [7]). In this particular point, Joseph A. Schumpeter points out that:

[…] the innovations of the economic system, as a rule, do not occur in such a way that, first, they spontaneously arouse new desires of the consumers, and then the production gear rotates around such pressure. We do not deny the existence of this connection. It is, however, the producer who normally initiates the economic transformation and the consumers are guided by the producer, if necessary; it’s as if they taught them to desire new or different things, or things other than those they have become accustomed to using. (Ob. Cit., P. 92, emphasis added)

At this point, it is interesting to differentiate innovation from invention, as well described by Aristóteles Moreira Filho (2014, p.95), when analyzing the lessons of Joseph Schumpeter:

The pioneering premise to differentiate innovation from invention is that both imply the implementation of a change or difference in relation to human activities carried out in the past, and the invention has a technical basis, while innovation has an economic basis. In this sense, it is irrelevant to characterize innovation whether there is scientific discovery or not: innovation is perfectly possible without invention. On the other hand, mere scientific discovery without its realization as a relevant economic fact, in the form of a change in the offer of utilities that impact the market, does not consist in innovation.

[…] The entrepreneur, who is innovative, is not necessarily the    inventor.

[…] To achieve innovation, as or more important than the creation or design of new ideas is to confer to them a practical utility and commercial or economic interest.


2.2. Financing

In addition to identifying a product or service for which there is a market demand (whether innovative or not), the entrepreneur must obtain the necessary sources to finance his activity, which enables him to raise the indispensable human, natural and capital resources.

If the entrepreneur associates with other people (entrepreneurs like him or investors) for the purpose of forming a company, the financial resources for the carrying out the company’s objectives will be conferred by the partners themselves. In this sense, article 981 of the Civil Code defines a partnership agreement as one in which people “reciprocally undertake to contribute, with goods or services, to the exercise of economic activity and the sharing, among themselves, of the results”.

It is, therefore, of the essence of the articles of association the contribution by partners to the formation of the company capital, in the case of limited companies and corporations, such contribution, by express legal determination, must be made with money or assets (Article 7, Law 6404/76, article 1.055, § 2, Civil Code). After the initial contribution of the partners, the company may use other sources (internal or external) to finance the company, other than the capital contribution of the partners, as appropriate to the development of company activities[8].


2.3. Organization

 It is not enough, however, to design a product or service with market demand and obtain financing for its development. The entrepreneur must also manage the business in order to properly produce the products or services designed to meet the market satisfactorily.

Knowledge of the potential of the product or service and the ways to develop them does not necessarily qualify the entrepreneur to manage the company – that is, from the technical expertise, the entrepreneurial expertise does not always derive – and it is often necessary to seek human resources with this capacity, which can either integrate the internal structure of the enterprise or be provided from outside.


2.4. Legal Nature of the Start-up

The English expression “start-up” denotes something in its initial stage[9]. The term, however, as it is currently used in the market does not apply to any company (or entrepreneur) in the beginning of activity. There is a strong tendency to differentiate the small business[10], created as such and without great expectations of growth, from true start-ups, enterprises that are temporarily micro or small10, but that have growth potential, based on the development of innovative product or service[11]. This seems to be the meaning most widely accepted worldwide.

In France, the term “start-up” can be defined as “jeune entreprise innovante, dans le secteur des nouvelles technologies[12]

Americans usually refer to start-ups as companies (i) in the beginning of activities, which seek growth through the development of innovative or technological product or service for which they believe there is market demand, and that for this reason (ii) have high growth potential and (iii) need external investment to achieve success, given their low initial revenues and the high costs involved.

The Italian law defined[13] the innovative start-up (innovative start-up) as a company whose shares or quotas representing the capital stock are not traded on a regulated market and, in short: (i) has been established for less than forty-eight months; (ii) from the second year of activity, the annual production value does not exceed five million euros; (iv) does not distribute and has not distributed profit; (v) has as prevailing company purpose the development, production or marketing of innovative products or services of high technological value; (vi) is not a result of corporate reorganization; (vii) meets at least one of the following requirements: (vii.a) research and development expenses are equal to or greater than the cost and total value of production of innovative start-up; (vii.b) one third of the people who work for the start-up should be doctoral candidates, doctorates in research or researchers, or at least two-thirds of the partners or collaborators in any capacity must be masters; (viii.c) is the holder, depositary or licensee of at least one patent relative to industrial invention, biotechnology, the topography of semiconductor product or a new plant variety, or even if it owns rights of computer programs, provided that such rights are directly related to the company purpose and activity of the start-up.

There is not yet in Brazilian law, a legal definition of the term start-up. There is, however, definition of start-up in infra-legal norms, that deal with emerging companies whose purpose consists in software development and services of innovation technology. It is dealt with in Article 3, item I, of Ordinance No. 721, of October 10, 2012, of the Ministry of Science, Technology and Innovation that defines it as “newly established enterprise in which products, processes or services are developed with innovative characteristics, guaranteed by research and development activities, with the purpose of insertion in the market “.

Thus, considering the approaches as to their most current use, we can define start-up as the individual entrepreneur, the individual limited liability company or the company, in the pre-operational or early stage of development of its activities, whose purpose is the production of innovative good or service and which, on account of this characteristic, holds the potential to become large corporations.


2.5. Legal Nature of Incubators and Accelerators                                  

It has been verified that the position of entrepreneur can be divided into three sub-functions: entrepreneur, risk capital investor and administrator[14].

As an entrepreneur, the businessman plans the venture and creates or expands the company, gathering and organizing the necessary resources and locating or creating markets for its products. As a risk capital investor, it contributes its own financial capital necessary for the operation of the company and assumes the risk as to the return of the capital invested. In the function of administrator, it directs its activities, establishes plans and production norms, as well as distributes tasks among the human resources that compose the company, coordinating them.

At the beginning of its activities (or even in the preparatory stage that precedes the beginning of the company’s activity), the entrepreneur or the entrepreneurial company may need incentives in one, two or three sub-functions described above, and can therefore seek help in the improvement of their ideas about products or services to be developed, the financing of their activities, or the organization of the production factors necessary to place the product or service in the market. Here we present the relevant role of incubators and accelerators.


2.5.1. Concept and Purpose of Incubators

The definition of incubator refers to the idea of an environment that provides the necessary conditions for the creation and development of a being to the time it is physically necessary to survive in its natural environment[15]. And it is on the basis of this concept that the biological meaning of the term is transferred to the corporate meaning: the business incubator[16] presents itself as a way of creating and developing the activities that the companies occupy, preparing them to survive in the market.

Commenting on the role of incubators in the United States, Sarah Klein (2015) defines that its purpose is to enable early-stage companies to explore, develop, test and refine their ideas. They seek to help in the development of a business model and provide shared workspaces, where the founders of start-ups can work and exchange ideas with each other. According to the US lawyer, in her country incubators usually receive little or no participation in the capital of incubated start-ups, and do not contribute capital and a large part are financed by universities.

The Italian legislature has adopted the concept of a “certified incubator” (incubatore certificato), which defines companies as “providing services to support the birth and development of innovative start-ups” and which, in short, have the following requirements: a) have the appropriate structure to host innovative start-ups, with reserved spaces for the installation of departments for tests, tests, verifications or research; broadband internet access system, meeting rooms, testing machines, tests or prototypes; (b) be managed by persons of recognized competence in the area of ​​business and innovation and who provide technical structure and permanent management consulting; (c) have regular collaboration relationships with universities, research centers, public institutions and financial partners that carry out activities and projects related to innovative start-ups; and (d) have experience in the support activity of innovative start-ups[17].

In Brazil, the National Program of Support to Business Incubators – PNI, Ministry of Science and Technology, launched in November 2000 the Manual for Implementation of Business Incubators[18], which conceptualized them as follows:

organization or structure that aims to stimulate or provide logistical, managerial and technological support to innovative and knowledge intensive entrepreneurship, with the objective of facilitating the creation and development of companies that have as a differential the performance of activities focused on innovation;

This notion of incubator brought by the new wording of the Law of Innovation can be dissected as follows:

  1. organization or structure: the incubator may be a public or private legal entity or structure within that legal entity. Brazilian law – unlike the Italian law which, as seen, has reserved this role for companies – has elected not to restrict the range of legal entities that can develop incubator activity. In doing so, the legislator has not dissociated itself from the diversity existing in our country that includes incubators linked to universities (for the most part), state and municipal governments, business associations, non-governmental organizations, etc.;
  2. which aims to stimulate or provide logistical, managerial and technological support: the incubator must support the incubated companies, providing them with physical space (for office, laboratory, meetings etc.), assistance in the circulation of incubator products and services, management orientation, both in the organization of business activities, and in the development of products or services[19];
  3. innovative and knowledge-intensive entrepreneurship: the products or services of innovation developed for the purposes of the Innovation Law (Article 2, IV), is “the introduction of novelty or improvement in the productive and social environment that results in new products, services or processes or which includes the aggregation of new functionalities or characteristics to an existing product, service or process that may result in improvements and in an effective gain of quality or performance”);
  4. with the aim of facilitating the creation and development of companies that have as a differential the performance of activities aimed at innovation: that is the essential role of the incubator, creating and developing companies whose purpose is the production of good or innovative service. Such a process of maturing companies to face the market usually lasts, on average, two years and usually no more than three.


2.5.2 Concept and Purpose of Accelerators

Accelerators are legal entities – usually companies – that act on the development of start-ups that are already out of the “incubation phase”, that is, they already have a product or service that is ready (or virtually ready) for marketing.

Like incubators, the accelerators help the start-ups to prepare for the competitive environment of the market, but have a different performance.

Its role in the development of products or services is less accentuated than that of incubators. They usually play a relevant role in guiding the business administration, assisting in the managerial development of the company, but its main function is usually the dissemination of products and services, the preparation of start-ups for the receipt of investments from third parties, and the contribution of resources (survival money or seed money) in start-ups, receiving in percentage (less common) share capital or an option to purchase quotas or shares to be exercised at a certain point in the future (most common).

Thus, the accelerator has similarities with the incubator, nothing preventing that

sometimes offers the same services that it makes available, but it differs from focusing on supporting companies that are already entering the market – already have a product or service launched, viable, and their business has the potential for growth – and by participating in order to prepare it to receive venture capital funding or at least to reach its breakeven point (when the value of revenues equals costs and expenses).

Davis A. Lewis (2011) understands that accelerators can be defined as “Entities that promote a late-stage incubation program that assists business companies that are more mature and ready for external financing,” or as “structures harboring a modified form of incubation, designed for graduate incubators (i.e. ended the incubation process) while entering the market. ”

According to Sarah Klein (2015), accelerators aim to promote the growth of existing companies that already have a working prototype and an initial traction in the market (consistent results and leverage potential) in order to prepare them for the initial capture of financing. They develop intense and structured programs lasting an average of three to four months, culminating in a demo day, to which the media and investors are invited to watch the presentations of the founders of the start-ups.

There is no legal definition of business accelerators in our legislation, but there is an infra-legal rule that conceptualizes them, even if it is focused on the specific field of start-ups whose purpose is software development and innovation technology services. The Ministerial Order no. 721 of October 10, 2012, of the Ministry of Science, Technology and Innovation, states in article 3, II, that the accelerators are “legal persons dedicated to the process of support to projects of entrepreneurs and nascent companies (startups) “, which act:

  1. in the selection of candidates based on criteria of competitiveness, project, processes and services;
  2. the initial financial investment in the selected projects;
  3. in the monitoring and counseling, for a fixed time, in the technical, legal and market aspects; and
  4. in the approach of entrepreneurs and nascent companies to potential clients and investors.

Given the characteristics mentioned above, we understand that the accelerator can be defined as a legal entity that assists start-ups with the objective of promoting their growth with financial resources, administrative support, technology and market advice and approximation with clients and investors, which, in return for this assistance, usually receive a minority interest in the share capital of start-ups (or the right to acquire in the future quotas or shares issued by them, by purchase option mechanisms or the conversion of debt securities into equity interest).



From the analysis of several contracts between start-ups and incubators and between those and accelerators, it was possible to identify their fundamental structure. The following are the main rights and obligations that usually appear in these instruments.


3.1. Contracts between Start-ups and Incubators

Contracts between start-ups and incubators generally have the following essential structure:

  1. contributions of the incubator: (a.i) provide space for work and meetings and infrastructure (technical and office), (a.ii) intermediate relations with entities of education and research that assist in the development of the purposes of the incubated company, (a.iii) assist the incubated company in its managerial and technological training with events, consultancies, access to teachers, researchers and investors, etc.;
  2. incubated start-up benefits: (b.i) pay the incubator monthly amounts for the use of the infrastructure, (b.ii) pay the incubator a value calculated as a percentage (usually up to 1%) of gross revenue during the incubation period, (b.iii) to pay the incubator a percentage of its revenue (usually up to 2%) for a period after incubation (usually 2 to 5 years), (b.iv) comply with the “Business Plan” developed and approved by the incubated company and participate in the events promoted by the incubator, (bv) present periodic reports of its activities; ( do not compete with other incubated companies.
  3. term of the incubation contract: between 12 and 36 months.

Thus, the legal transaction between incubator and start-ups is essentially an atypical contract that involves the provision of services and assignment of the use of movable and immovable property by the incubator, whose main consideration on the part of the start-up is the payment of (i) monthly fixed remuneration, (ii) variable remuneration over its sales, limited to a certain period of time, and (iii) costs and expenses with the utilized structure.


3.2. Contracts between Start-ups and Accelerators

The legal arrangements between start-ups and accelerators usually have the following structure:

  1. contributions of the accelerator: (a.i) make a financial contribution to the start-up through a contribution to the share capital or through a loan convertible into equity interests (in the case of a loan, this may be materialized in certain debt securities convertible into equity interest)[20]; (a.ii) assign the use of space and infrastructure (technical and office); (a.iii) offer courses, training, lectures and the like with a view to the managerial and operational development of the start-ups, (a.iv) to provide support and management advice, especially with regard to the placement of products and services in the market, provide advisory services (with or without additional remuneration) in the accounting, administrative and legal areas); (a.v) to facilitate the approach of start-up with consultants (commonly called mentors in this market), investors and clients; ( to conduct a demonstration day for start-up and its products (demo day) to investors; (a.vii) allow founders to acquire their interest in preference to third parties (right of first refusal); (a.viii) to dispose of its equity interests together with those of the founders of the start-up, should the founders so wish, in the event of a disposal of the start-up (drag along) control.
  2. accelerator rights (commonly envisaged, although not always jointly): (b.i) preemptive rights in the acquisition of start-up equity interests, in case of sale by the founders or in capital increases; (b.ii) the option to purchase start-up equity investments, linked to a term or condition, through capitalization of the credit arising from the financing made by the accelerator; (b.iii) veto on some important start-up deliberations, during the acceleration period, as on corporate reorganizations or assignment or transfer of intellectual property rights; (b.iv) usufruct over equity interests; (b.v) joint sale of shareholdings in case of sale of start-up control (tag along right); ( the right not to have its shareholding diluted economically, by including a clause providing for determination of minimum value of start-up valuation in capital increases; (b.vii) limiting the distribution of profits of the start-up, during the acceleration period (forcing the reinvestment of profits in the activity that constitutes the purpose of the company for the further development of its products); (b.viii) option to sell its corporate interests against the founders for symbolic value (in order to enable the accelerator to stop participating in the start-up at any time).
  3. accelerated start-up services (some, by their nature, assumed by their founders): (c.i) deliver, in consideration of the financial contribution received, equity interests (quotas or shares) or confer (by issuing a security debt or contractual obligation) to the accelerator the right to acquire quotas or shares representing the capital of start-up in the future; (c.ii) to pay the amount corresponding to advisory services in the accounting, administrative and legal areas, as well as costs and expenses related to the space used, when collected separately[21]; (c.iii) to submit periodic reports on financial, administrative, commercial, etc. aspects related to start-up activities; (c.iv) to be transformed from a limited liability company into a corporation following certain circumstances[22]; (c.v) during the acceleration period: do not carry out corporate reorganizations, do not distribute a certain percentage of profits (or all profits), do not give up your intellectual property and do not compete with the accelerator or with other companies being accelerated at the same time; ( to attend courses, trainings, lectures and the like with a view to their managerial and operational development; (c.vii) attend the day of the demonstration (demo day) and make a presentation of your product or service (pitch).
  4. Acceleration contract term: Usually the acceleration period lasts 12 months (certain obligations may last longer, such as the term for the acceleration of your credit in start-up equity investments, as well as other rights arising from the corporate relationship between accelerator and start-up).

Therefore, the legal arrangement between accelerator and start-up is essentially an atypical contract that involves legal relationships arising from association agreements, financing, service provision and assignment of use of assets.

If, in the contractual relationship between incubators and start-ups, the bilateral nature of the legal relationship (payment of remuneration in return for the provision of services and rental of space and goods), in legal transactions between start-ups and the legal relationship is close to that of an associative contract.

The accelerator does not receive payment in consideration for the services it provides, as is essentially the case with the incubators (although the value of the services may, as the case may be, be subsidized). It contributes resources in the start-up and acquires, in return, the right to participate in the share capital of this company, which is enforceable against its founding partners (which must, as a result, yield to the accelerating share of its corporate interest in start-up or his right of first refusal in the subscription of capital increase of the company). At the same time, both parties, the accelerator and the start-up, must actively collaborate in the development of the company carried out by the latter, putting into practice the benefits they have assumed in the acceleration contract (and above mentioned in summary form)[23].



The first step in the proper interpretation (and application) of contracts between start-ups and incubators or accelerators is to understand the underlying reality of the agreement.

On the one hand, there are the start-ups: companies in the pre-operational or early stage of development of their activities, whose purpose is the production of good or innovative service and that need assistance in several areas to develop their full potential and become large corporations.

On the other hand, incubators and accelerators: organizations that present their incubation programs or acceleration as solutions to start-ups, which will give the desired support in the development of your company, preparing them to enter the market.

The reality that gives rise to the entering of hiring and acceleration contracts allows us to trace the contours of their social function (article 421, Civil Code).

The social function of these contracts is related to their role in socioeconomic relations and the reasons, objectively analyzed, that lead the parties to enter into these contracts. The main objective of these instruments is to foster innovation and the consequent national economic development by stimulating entrepreneurship and optimizing productive activities. Contracts must, on the one hand, seek to enable start-ups to develop their entrepreneurial activities and, on the other, enable incubators and accelerators (especially those that are, more often than not, entrepreneurial companies) to have an adequate financial return , in order to stimulate their continued carrying out of their activities, as well as to encourage the entry of other economic agents in this sector. Under the terms of article 421 of the Civil Code, the social function limits the freedom of contracting parties.

There should thus be a balance between the benefits generated by start-ups and the incentives to develop incubator and accelerator activities.

The second relevant point to be taken into account in the interpretation of this type of contracts is the fact that they are usually presented as actual contracts of adhesion[24]. Incubated or accelerated start-ups undergo selection processes and, when they are admitted for incubation or acceleration, they sign the contractual instrument presented to them by the incubator or accelerator, with no margin for discussion of their clauses.

Given this characteristic, the rules of Articles 423 and 424 of the Civil Code[25], which determine (i) the interpretation of the contract in favor of the adherent (in the case of start-up) and (ii) the nullity of waiver by the adherent (start-up) of any right that results from the very nature of the business entered into, i.e., considering the atypical nature of the contracts, of essential rights attributable to start-ups that seek incubation or acceleration activities.

When looking for an incubator or an accelerator, the start-up has, in short, as an immediate objective, to develop its business activities, from the operational, administrative and/or financial point of view, at the end of the incubation period or acceleration, to exercise a company with more chances of success, being able, thus, to generate more wealth and to distribute it (medium objective). In order to achieve these results, start-up and/or its founders accept, in short: (a) pay cash benefits or assign a minority share of the start-up capital, as the case may be, and (b) participate in the activities promoted by the incubator or accelerator and follow their guidelines for a certain time.

Contractual clauses that prevent, after the regular fulfillment of the obligations from each party, the objectives sought by the start-up may have their validity challenged in light of the mentioned norms of the Civil Code. This can occur both in cases where the required start-up service is usual (customary), but the consideration offered by the incubator or accelerator goes beyond what can reasonably be expected in businesses of the same nature, such as when the consideration of the incubator or accelerator is in agreement with the customs of the market, but the provision to be offered by the start-up is excessive.

It should be noted that a complete standardization of contracts between start-ups and incubators or accelerators under penalty of invalidation of clauses that escape the common standard is being suggested. Incubators and accelerators are free to offer their programs and present the competitive advantages they have in order to attract the start-ups that they are interested in, and the margin for variation in the conditions of the legal arrangements is even greater if the two parties are entrepreneurs[26]. There must, however, be a balance between what incubators and accelerators are willing to provide and what they will receive from start-ups, since, even among entrepreneurs, it cannot be forgotten that (i) they are adhesion contracts, and (ii) the accelerators and incubators present themselves as organizations that aim to help and not harm the founders of start-ups in the development of the business.

Thus, although the contracts have to be interpreted according to the particular situation they regulate, for example, clauses that (i) determine that the intellectual property of the products developed by an incubator start-up are entirely the  incubator’s, (ii) determine that the incubator should receive a very high share of incubation revenues or for a very long term, or (iii) that attribute equity interests (or rights inherent to equity interests) that end up conferring the corporate control of a start-up to its accelerator.

In the examples above, (i) the social function of the contract would not have been respected and (ii) there would be a renunciation of the fundamental conditions of the business, since start-up (or its founders) would be eliminated from elements essential to their activity, intellectual property of the developed product, a relevant portion of their revenue, or the direction of the business activities. There would thus be a significant imbalance in the contract, between the rights and obligations of the parties, to the detriment of the start-up, revealing the abusiveness of such contractual arrangements.

Furthermore, in the interpretation of contracts of incubation and acceleration, the rules laid down in Articles 122 [preponderance of intention over the literal sense], 113 [interpretation in good faith and good customs], 114 [restrictive interpretation of the waiver], 157 [injury[27]], 422 [probity and good faith], 317 and 478 and following articles [excessive onerous], all of the Civil Code cannot be overlooked.



The promotion of innovation as a vector of the economic development of national economies is a consensus in the world. In recent years, there has been a strong legislative tendency in several countries to stimulate technological innovation through the promotion of entrepreneurship.

In this process, it is essential to create an environment that is favorable to the emergence not only of start-ups but of incubators and accelerators. These organizations, in addition to providing the founders with the necessary means to start and improve their activities, enable effective interaction among researchers, university professors, entrepreneurs and investors, contributing to the creation and improvement of products or services offered to the market.

Contracts between start-ups and incubators or accelerators as a means of participating in the programs established by these legal entities are atypical contracts since there are no specific rules in the law. Notwithstanding, the rules governing contracts in general are not applied, in particular those relating to contracts of adhesion, since in most cases incubation and acceleration contracts are more often than not of this nature.

In interpreting these contracts, it should be borne in mind that the purpose of incubators and accelerators is to assist the development of start-ups and contribute to innovative entrepreneurship.

Of course, if the incubator or the accelerator are companies[28] [29], they are only interested in incubating or accelerating if they can make gains that offset the expenses with the programs offered. The consideration obtained from the start-ups however, cannot lead to the appropriation by incubators or accelerators of the essential rights of the business that the founders or start-up companies legitimately and reasonably expected to reserve for themselves.



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BRASIL.  Manual para Implantação de Incubadoras de Empresas. Programa Nacional de Apoio a Incubadoras de Empresas – PNI. Ministério da Ciência e Tecnologia, 2000. Disponível em: <> Acesso em: 04/06/2016.

DOMINGUES, Paulo de Tarso. Capitalização de Sociedades. In.: Questões de Direito Societário em Portugal e no Brasil. São Paulo: Almedina, 2012.

ETZKOWITZ, Henry. Hélice Tríplice: Universidade-Indústria-Governo, Inovação Em Movimento. Porto Alegre: EDIPUCRS, 2013.

FERNANDES, Pedro Wehrs do Vale; e ROSMAN, Luiz Alberto Colonna. Financiamento da Companhia e Estrutura de Capital. In.: Finanças Corporativas: Aspectos Jurídicos e Estratégicos. BARBOSA, Henrique; BOTREL, Sérgio (Coord.). São Paulo: Atlas, 2016.

FERREIRA, Aurélio Buarque de Holanda. Novo Aurélio Século XXI: o dicionário da língua portuguesa. Rio de Janeiro: Nova Fronteira, 1999.

FERRI, Giuseppe. Manuale di Diritto Commerciale. 5.ed. Torino: Unione Tipografico-Editrice Torinense – UTET, 1980.

FONSECA, Rodrigo Garcia da. A Função Social do Contrato e o Alcance do Artigo 421 do Código Civil. Rio de Janeiro: Renovar, 2007.

FORGIONI, Paula A. Contratos Empresariais: teoria geral e aplicação. São Paulo: Revista dos Tribunais, 2016.

GOMES, Orlando. Contratos. 24ª ed. Rio de Janeiro: Forense, 2001.

ITÁLIA. Decreto-Legge 18 ottobre 2012, n. 179. Disponível em: < Acesso em 04/06/2016.

KLEIN, Sarah. What is the Difference Between an Incubator and an Accelerator?, 2005. Disponível em: <>. Acesso em 04/06/2016.

ENCYCLOPÉDIE LAROUSSE. Verbete start-up. Disponível em: <> Acesso em 04.06.2016.

LEWIS, Davis. A; HARPER-ANDERSON, Elsie; MOLNAR, Lawrence A. Incubating Success. Incubation Best Practices That Lead to Successful New Ventures. Institute for Research on Labor, Employment, and the Economy, University of Michigan, 2011, Ann Arbor, Michigan, Estados Unidos da América. Disponível em: <> Acesso em: 29/06/2016.

MERRIAM-WEBSTER DICTIONARY. Verbete start-up. Disponível em: <>. Acesso em: 15.06.2016.

MOREIRA FILHO, Aristóteles. “O Conceito de Inovação tecnológica na Lei do Bem: uma Contextualização da Taxonomia da Inovação”. Revista Direito Tributário Atual, n.º 30, São Paulo: Dialética, 2014.

PEDREIRA, José Luiz Bulhões. Finanças e Demonstrações Financeiras da Companhia: conceitos fundamentais. Rio de Janeiro: Forense, 1989.

POPE, Emily. The difference between a startup and a small business. Disponível em: <> Acesso em 15.06.2016.

SCHUMPETER, Joseph A. Teoria do Desenvolvimento Econômico: uma pesquisa sobre lucros, capital, crédito, juros e ciclo econômico. Rio de Janeiro: Ed. Fundo de Cultura, 1961.

[1] Master ‘s Degree in Company Law and Economic Activities, State of Rio de Janeiro University – UERJ, in progress; Post-graduate in Business Law with major in Corporate law and Capital Markets, FGV Law in Rio de Janeiro; Post-graduate in Tax Law at Brazilian Institute of Tax Law  – IBET; Bachelor of Law – State of Rio de Janeiro University – UERJ; Post Graduate Professor of Business Law  and in the LL. M. program in Corporate Law and Capital Markets of the FGV Law School in Rio de Janeiro. Attorney.

[2] Nevertheless, there are several successful Brazilian start-ups such as Buscapé (1999), one of the largest price comparison sites in Latin America and Easy Taxi (2012), which operates in several cities in Brazil and abroad.

[3] In Articles 2, III-A; 3rd, Sole Paragraph; 3rd-B, caput; 3rd-B, § 1st; 3rd-B, § 2nd, I; 3rd-B, § 2nd, II; 4, I; 15-A, Sole paragraph, II; 19, § 6th, III; and 22.

[4] On the subject, the concept of “Triple Helix” in the relations between universities, companies and government, developed by Henry Etzkowitz is interesting. Apud ETZKOWITZ, Henry. Triple Propeller: University-Industry-Government, Innovation In Motion. Porto Alegre: EDIPUCRS, 2013.

[5] The term company in “business incubator” and “business accelerator” should be understood in its legal sense, that is, with the meaning of an activity carried out by the business enterprise, in line with the legislative orientation provided by Article 966 of the Brazilian Civil Code.

[6] Schumpeter points out that development is defined as the “carrying forward of new combinations” of “materials and forces”, covering the following cases: “1) acceptance of a new product – that is of a product with which the consumer is familiarized – or new quality of a product. 2) The adoption of a new method of production, that method not yet proved through the experience in the field of the industry to which it is connected, that does not need to be based on a recent scientific discovery and can also consist in a new way of treating a utility commercially. 3) The opening up of a new market, i.e., a market where the specific field of the industry of the country in consideration has not penetrated yet, whether this market existed or not previously. 4) The conquest of a new source of supply of raw materials or semi-industrialized products, also without regard to whether this source already exists or must first be created. (5) The implementation of a new organization of any industry, such as the initiation of a monopoly system (as an example, the “trustification”), or the collapse of the monopolistic situation” “(SCHUMPETER, Joseph A. Ob. Cit., P. 93)

[7] The Innovation Law defines “innovation” (article 2, IV) as “the introduction of novelty or improvement in the productive and social environment that results in new products, services or processes or that includes the aggregation of new functionalities or characteristics to product, service or an existing process that may result in improvements and an effective gain in quality or performance. ” The so called “Law of Good” (Law No. 11,196, dated 11.21.2005) defines “technological innovation” (article 17, paragraph 1) as “the design of a new product or manufacturing process, as well as the aggregation of new functionalities or characteristics to the product or process that implies incremental improvements and effective gain of quality or productivity, resulting in greater competitiveness in the market. “

[8] Paulo de Tarso Domingues points out that “company capital is therefore, from the chronological point of view, the first form of financing of a company. This does not mean, however, that the company capital must be the main source of corporate financing by the partners, not even the main source of company financing by the partners”. (2012, page 445).

[9] Merriam-Webster Dictionary defines the term start-up as “1: the act or instance of setting in operation or motion; 2: a fledgling business enterprise “. Available at Access on 06.15.2016.

[10] Complementary Law No. 123, of December 14, 2006, as amended, defines in art. 3, as micro-enterprises those with gross annual revenue up to R$ 360,000.00 and as small ones whose revenue reaches up to R$3,600,000.00 per year.

[11] POPE, Emily. The difference between a startup and a small business. Available in: <>. Accessed on: 06.15.2016.

[12] Encyclopédie Larousse. Available at: <> Accessed on: 04.04.2016.

[13] Decreto-Legge 18 ottobre 2012, n. 179, converted to Legge 17 dicembre 2012, n. 221. Available in: <>. Accessed on 06/04/2016.

[14] José Luiz Bulhões Pedreira (1989, pp. 286/290).

[15] The term incubator is defined by the Aurélio Dictionary (1999, p.1097) as: “1. Apparatus for artificial incubation of chickens; brooder. 2. Biol. Apparatus intended to maintain a constant and suitable temperature for the development of eggs and culture of microorganisms or other living cells. 3. Med. Apparatus intended to maintain a premature infant in an environment of temperature, oxygenation and humidity. “

[16] Company here in its functional profile, according to the lessons of Alberto Asquini (see “Profiles of the Company”, Journal of Mercantile Law, No. 104, pp. 109/126).

[17] Decreto-Legge 18 ottobre 2012, n. 179, converted to Legge 17 dicembre 2012, n. 221. Available at: <>. Accessed on: 06/04/2016.

[18] Available at Accessed on 06/04/2016.

[19] One of the important services that the incubator can/should provide to start-ups relates to support in the development of the so-called Minimum Viable Product (MVP), which consists of the product with the minimum characteristics that allow it to be launched in the market with the objective of testing it, analyzing the return of the consumer and developing it.

[20] The simple mutual exchange of currency is not, of course, forbidden (provided the legal restrictions on the applied interest rate are observed), but it is not usually adopted, since accelerators usually intend to participate at some point in the company capital of the start-ups and obtain gains arising from the valuation of the companies they carry out.

[21] The most usual, however, is that the accelerator does not charge for these services.

[22] Typically, start-ups are usually incorporated under the corporate type of limited partnership or as individual limited liability companies (EIRELI), either because of the greater organizational simplicity or because they cannot enjoy the tax benefits of Complementary Law No. 123, dated 12.12.12 .2006 (Simples Nacional) if set up as a joint stock company. Investors, however, feel more comfortable investing in joint-stock companies because they prefer the shareholder liability regime conferred by that corporate type, as well as because companies are formatted (and taxed – see misunderstanding of the Federal Revenue Secretariat on IRPJ taxation of goodwill arising from the subscription of quotas in increase of limited liability company capital) more interesting for the receipt of investments. Because of the above, it is very common to insert a clause allowing investors (including in the case of accelerators) to require that the limited company become a corporation prior to the conversion of its credit into equity interests (thus, upon joining the company, will receive shares, not quotas).

[23] In the less usual hypothesis, mentioned in footnote no. 19, above, from the accelerator to the simple non-convertible loan to start-up equity interest, the associative contract characteristic cools down.

[24] Contract of adhesion is a contract in which its content is “pre-structured by one of the parties, eliminating the free discussion that normally precedes the formation in contracts”, in which “one of the parties must accept, in block, the clauses established by the other, which is already defined in all its terms “(GOMES, Orlando, Contracts, Rio de Janeiro: Forensic, 2001, p.109).

[25] “Art. 423. When there are ambiguous or contradictory clauses in the contract of adhesion, the interpretation most favorable to the adherent must be adopted. Art. 424. In contracts of adhesion, clauses that stipulate the prior resignation of the adherent to a right resulting from the nature of the business are null and void. “

[26] Rodrigo Garcia da Fonseca ponders that “[…] If a contract is made between a powerful company (sic) and a natural person, and is subject to the Consumer Defense Code, the situation is one. If the party have signed a contract that is governed by the Civil Code, the hypothesis is another. If two individuals sign an essentially commercial contract (or entrepreneur, to use the current terminology), the hypotheses continue to require differentiation. The same social function of the contract which under certain circumstances justifies an interpretation of the contract protecting the economically weaker party in a commercial or business contract between reasonably equivalent undertakings should deprive the court of any temptation to rewrite the contractual content. , pp. 70-71)

[27] The doctrine generally sees with reservation the application of rules on injury to contracts entered into by entrepreneurs among themselves, as is the case in a large part of acceleration contracts (as incubators, for the most part, are associations and not business companies, this situation tends to happen to a lesser extent in incubation contracts). Article 28 of the 1st Conference on Commercial Law of the Federal Justice Council states that “because of the professionalism with which businessmen should exercise their activity, business contracts cannot be annulled by the vice of the injury based on inexperience,” only admitting its application in the case of a “pressing need”. Paula Forgioni, on the subject, ponders: “The interpretation that can be given to art. 157 of the Civil Code when business between businessmen is involved. […] Such provision, if well-dosed by case-law, may prove useful for trafficking and avoid, for example, abuse of economic dependence. However, as we do not yet have solid case law on this issue, the application of the provision in the field of the corporate law must be careful, under the penalty of becoming an instrument of neutralization of competitive advantages. “(Business Contracts: general theory and application, Journal of the Courts, 2016, pp. 262/263)

[28] Incubators, as mentioned above, are usually non-profit legal entities, often linked to universities and can count on government financial support. according to data from the Ministry of Science, Technology and Innovation, between 2002 and 2012, incubators received R$ 53 million through PNI edits, R$ 5 million through investments determined by parliamentary amendments and R$ 68.4 million of SEBRAE investments (Parks & Incubators for the Development of Brazil: Impact Studies of the PNI: National Program to Support Technological Parks and Business Incubators / Ministry of Science, Technology and Innovation – MCTI, Brasilia: MCTI, 2015, pp. 26-31) Available at <> Access on 06.30.2016.

[29] By definition legal (Article 981, Civil Code), companies are necessarily constituted with a view to obtaining profit (economic purposes) and its sharing among the partners.

The Firm

The Firm

ROSMAN, SOUZA LEÃO, FRANCO E ADVOGADOS is a traditional law firm founded in 1964 by José Luiz Bulhões Pedreira (1925-2006) and Antonio Fernando de Bulhões Carvalho (1925-2009) under the name of “Bulhões Pedreira, Bulhões Carvalho e Advogados Associados”. Since its founding, it has practiced actively in multiple areas of the law, with a particular focus on corporate and tax law, as well as providing legal advice to national and international companies, other law firms and government agencies, predominantly in the area of Corporate and Income Tax law. Other significant areas of practice are commercial, administrative, financial and banking law.

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Operating in the principal areas of the law, both in providing legal advice and in litigation, that include corporate, bankruptcy and corporate reorganization, consulting and litigation in civil law, tax, insurance and reinsurance, mediation and arbitration, capital markets, M&A, contracts, real estate, administrative law, intellectual property, the establishment of foreign companies in Brazil, registration of foreign capital before the Central Bank of Brazil, labor law through an associated law firm, the professionals of the firm help clients navigate the complex legal and regulatory universe of Brazil with its own peculiarities but increasingly integrated into the international business community.

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Our attorneys have experience accumulated over many decades in the various areas of the law in which they practice and operate and in the business sectors in which our clients are involved. They also are committed to the continuous improvement of their skills, which distinguishes them in the community in which they operate, enabling each professional to render services of the highest possible standards to their clients promptly, sensitive to the clients’ needs.

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