Advice from Richard Cobb, Partner, Corporate at Michelmores who will be joining us at Venturefest to discuss how to attract investors and reward staff effectively.
As a corporate lawyer, I have had the privilege of helping numerous new businesses get going over the last 20 years, and watched a number of them move on to become the brands and businesses we recognise today. I thought I would share some of my experiences of working with successful entrepreneurs – and the importance of protecting yourself from too much naked ambition.
Every new business starts with an idea. In many ways the pure idea is the easy part.
The most compelling business ideas are often from those who have gained experience in an industry, then move on to develop a significant improvement in a product or business method. Many successful innovations have come from combining technologies – such as radio controlled aircraft and digital cameras in drones or using new materials to improve old products. Ideally this innovation can be legally protected – although in many cases it is ‘first mover’ advantage and speed to market that is the key to commercial success.
The naked entrepreneur would be so obsessed with the brilliance of their big idea, that they fail to take basic steps to protect their intellectual property in time, or at all. Like Leo Sayer’s father, who I am told arrived at the Patent Office a few weeks too late to register the first thermostatic kettle, or Frank Whittle’s jet engine, where the then RAF officer’s patent expired for the sake of £5.
Apart from patents, an understanding of copyright, design rights, trademarks and domain names is really important if you do not want your brilliant idea or business innovation to go to waste. Go to IP protection events, like our talk at Venturefest.
Successful entrepreneurs are willing to share the risk and rewards with others who fill in the gaps in their own expertise. Finance, marketing, HR and particularly sales are often gaps that need to be filled this way.
Hiring people is one of the biggest step changes in a start-up and needs to be done carefully, particularly if a new team member is also bringing vital financial resources.
Employment contracts for new staff and Shareholder Agreements for investors are invaluable in terms of protecting the company (and its founder) from a variety of ills when it is at its most vulnerable. Increasingly, the use of share options and equity in the business is a key factor, and the tax and control aspects of this need care.