business towersLast week startups, entrepreneurs, and investors gathered from all over the Midwest in Kansas City to attend TechWeek KC. It was a prime example of how startup culture (and success!) is not limited to the coasts. The best panel, in my opinion, addressed the unique challenges that come with trying to close a large institutional client as a B2B startup, as well as processes and hacks to overcome these particular hurdles. What follows are the high points from that panel, as well as from my own experience in a B2B startup before transitioning to legal practice.

Challenge #1: No one gets fired for keeping the status quo. If you’re pitching your product or process to big boys like Amazon, Coca-Cola, etc., then let’s all assume that you truly believe it’s something of value to them. It’s amazing how, while you can perfectly see that your piece of innovation is going to change the game for them, your initial point of entry to the (prospective) institutional client often doesn’t seem nearly as excited. What you’re not seeing is the calculus going on in their head: what’s MY risk versus MY reward if I were to pitch this to my superior? Unfortunately for you, and your contact’s company, most people fear failure. They’d often rather not try than fail and face any potential negative consequences, especially embarrassment among coworkers.

Continue Reading Tips & Challenges to Closing Institutional Clients as a B2B Startup

footballFootball season is upon us again and, with it, the excitement, the thrill of moving the ball forward for a touchdown, and the agony of defeat.  Ups and downs like this are what most start-ups experience. In football, it is important to protect the ball, to play good defense, and to avoid penalties.  Similarly, start-ups need to protect their assets, defend their intellectual property, and avoid incurring unnecessary costs in the future.  Following a few simple “rules” can help your start-up do all of these things.

RULE NO. 1: Stop the rushing game and avoid “illegal formation” penalties. Avoid quick-fix company formation tools you find on the internet.  I know, start-ups hate paying lawyers. (This isn’t unique to start-ups.) You may like your lawyer, enjoy talking to her, appreciate the insights and ideas but, in the end, I know you’d rather not pay me for all of that (why can’t we just be friends, you ask). Why do smart clients nonetheless retain lawyers (like me) knowing full well we have to be paid? Because smart clients, like a good coach, recognize that starting a business is a process and that investment on the front end can lead to considerable savings on the back end.

Continue Reading End Zone Decisions For Startups—Avoid Penalties And Maximize Asset Value

Social media cubesIt seems like we hear about a new data breach every week. Thanks to one of the most recent breaches, you could be only ten dollars away from getting in touch with your favorite A-list celebrity. Instagram — the Facebook-owned photo sharing company — was recently hacked due to a flaw in the program. Most recent reports indicate up to six million Instagram users’ email addresses and phone numbers may have been made public due to the data breach.

While the breach initially appeared to affect only celebrities and verified accounts, it has now been shown to affect a much wider range of accounts.

Continue Reading Instagram Hacked: What to Do to Protect Yourself in an Age of Data Breaches

Labor People SilhouettesImagine having a great product that is created and honed in your company for years potentially walk out of your office unrestricted. This same great product could end up in the headquarters of one of your competitors when there are no protections set in place. The fear of losing talent and ideas is a very real concern for all employers, including startups. Accordingly, there has been an increase in usage of non-compete agreements by employers in all sectors to combat the potential loss of valuable confidential information and trade secrets.

Continue Reading How Should Startups use Non-Compete Agreements?

legal documentThinking about telling everyone about your latest and greatest genius idea? You’d better think twice. Telling others about your idea or invention is a “public disclosure” and could bar you from getting a patent.

What’s a public disclosure?

A public disclosure can be as simple as describing the invention in print, using the invention in public, selling or offering to sell the invention, or making it otherwise available to the public. Common ways for individuals to make a public disclosure include: Continue Reading N-D-A? Y-E-S

data securityYou are an entrepreneur. You have great ideas. Those ideas are going to change your industry. In most cases, to accomplish those goals, you are going to need help from others. How do you protect your intellectual property and data? You need to focus on protecting those assets in the contracting process.

Most developing companies rely on third party service providers. As an entrepreneur, you will likely rely on hosting and cloud solutions. While we advise that you consider business considerations first, you should also consider legal issues relating to data privacy and security issues. You cannot achieve 100% security for your assets, but there are many ways to protect yourself. You should also consider obtaining cyber-liability insurance for your company and you should ask your service providers whether they have it.

Continue Reading Protecting Your Data and Intellectual Property

startup moneyThe new business idea is coming together, the circle of friends and advisors is tightening and it’s time to pull the proverbial trigger on this thing. The questions arise, “who’s in?” “who’s out?” and “how do we set this up?” During the initial startup phase, it is important to keep key players involved, and maintain the flexibility to let them go if things aren’t working out.  Most startups don’t have the cash to pay salaries high enough to keep people involved, so a mix of compensation options is often on the table.  A common solution is restricted stock (or restricted units in the LLC context), which is equity that is subject to certain contractual restrictions on its ownership, typically including: Continue Reading Are You In or Out: Equity Incentives for Emerging Companies

Money puzzleThere are many ways to raise capital for your startup… and many potential pitfalls. While the initial conversation may center on “how much do we need?”, startup companies should also take some time to discuss “how do we structure this financing?”. Your startup may have short-term or long-term needs, may desire long-term investment and involvement from VC investors, may or may not know the valuation of the company, etc. The answers to these types of questions may factor in to choosing which capital-raising method works best for you and your company.

Before you can determine what approach is right for you, it’s helpful to figure out what the different options are and how they work. The list below contains a brief description of the most common methods by which a company can raise capital. Continue Reading Show Me the Money: Financing Options for Startups

PatentIntellectual property (IP) is a key component of almost every startup’s business. It can distinguish a startup from its competition, attract potential investors, and provide a foundation for future success. Because IP can be such an important part of a company, startups are often eager to disclose their innovations, technology and other IP when pitching their company to investors or when presenting to the public at events such as #TechweekKC. However, a startup’s failure to properly protect its IP prior to making these outside disclosures can have unintended and sometimes devastating effects. Below are just a few reasons why startups should strongly consider their IP protection strategy before revealing their IP to the public.

Continue Reading Why Startups Need to Protect Their IP Before Disclosing Their Technology

moneyFor startups looking to raise capital, crowdfunding looks to be a modern solution to capital-raising concerns. In 2015, the SEC issued a rule on crowdfunding (“Regulation Crowdfunding”), which exempts companies from the lengthy registration requirements necessary when offering a sale of securities, including a sale of the company’s equity to the public. Regulation Crowdfunding allows unaccredited investors to invest in companies and allows such companies to raise up to $1,070,000 in a 12- month period through a registered portal.

Here are a few of the risks startups should consider when deciding if crowdfunding is the right option to grow your business: Continue Reading Regulation Crowdfunding: Considerations Before Crowdfunding Your Startup