The process of becoming a good or great entrepreneur comes down to one skill: how quickly can you identify the next hurdle, get over it/under it/through it, and get onto the next problem to solve. For early stage entrepreneurs, there are a lot of random hurdles, and most of them distract from building your business (product, revenue, talent, [investment]).
If you’ve never been through it before you can drown in task lists, few of which build your business. And that becomes slower and more difficult when you’re looking for hired experts to hire that specialize in things that you don’t know about. Accountants? Advisors? Attorneys? Oh my.
All people that you probably need or could use, but how do you determine which attorney is actually good at what they do and can help set you up for the highs your business is heading?
Here are a few things to consider:
This is a hired professional. Like any other person you’re hiring for your business, you should be comfortable with them. When things go wrong, do you feel like you can call them, email them, or text them (be careful with attorneys and texting), is this person going to get back to you and help you solve the problem quickly and efficiently?
Does this person work with other start-ups? Who? Can you talk to them? Did those companies do what you want to do? Check references.
If you’re looking for investment, you should be thinking about compensating people with equity/stock/shares in the company. If you’re thinking about equity, you should be thinking about vesting that equity over time.
If you’re thinking about equity and vesting, the attorney you’re interviewing should know about an 83(b) election. If they don’t, then run. They’re not a startup attorney.
In conjunction with checking references, find out what other value this person can provide. If they are representing similar companies, how does that help you follow the same path? Make sure they are able to add value by helping you have more opportunities and avoid more pitfalls. Experience matters.
The last thing that most people worry about with attorneys is cost. They are expensive. But if they work with startups, they probably know that you are likely to have limited funds.
Here are three ways that attorneys frequently work with startups:
Deferred fees. This means that when you use them, the amount you owe them will be growing, but you likely won’t have to pay until certain things happen — like raising a round of capital or hitting a revenue target. Those bills can get big. Ask for updates. Reduced fees. You’re getting billed for the time you use with your attorney, but not at their full billable rate. Fixed fees. You usually pay up front, but a set amount. You want a contract? That’s $X. You don’t get billed more or less — you pay for the project and you know what it’ll cost.
Most firms that work with startups have one, two, or three of these programs. Larger firms also frequently have “emerging growth,” “startup,” or other programs that might be a fit for you. Ask.
If your startup attorney can steer you to avoid pitfalls, set you up with a structure to grow, and be responsive to your existential concerns, then they can become one of your startup’s best friends.
Has this been helpful? Let us know — ic3401@sciencecenter.org.
