As a startup, you may have limited resources; if you do not, great for you! However, it does not change the approach to your startup from the beginning. Planning and being methodical about your first business steps may seem counterintuitive to what you hear about the startup world. Often the end goal for startups is to exit for the most money possible and there is a sense that it is a rush to the end. While time is money, you cannot inexpensively undo mistakes that are made at the outset.
When we talk to entrepreneurs about startup issues, some traditional issues around IP come up but that all comes from good foundational steps.
1. Create an entity
Choosing the right entity: LLC, S, or C corporation is important but the critical piece is forming an entity from the start for your operations. Never operate a business without an entity as it exposes your personal assets.
2. Proper agreements
Do not think that getting your beta or minimum viable product out there is the most important step. Good foundational steps like contracts for co-founders, employees, and contractors, particularly those working on product development, can make the difference during fundraising or exit.
3. Identify your intangibles
You don’t know what you don’t know when you are starting a business. Identifying your valuable assets that need legal protection comes from an analysis of all your ideas, processes, secrets, products, and so on. You may not have the money to protect it all from day one but having a strategy, commonly known as an intellectual property (IP) strategy, will impress investors. The first step is to identify all the assets that need protection.
Before you can really pitch your idea to investors or apply for an incubator or accelerator program we advise that you take stock of your valuable assets. I have never seen a pitch competition without questions on IP. The first step is to identify all your legal needs, including intangible and intellectual property assets.