Many a time, entrepreneurs, in their rush to see their ideas take form, miss out on getting their legal affairs in order. Look at it as a necessary evil, if you will, but there are certain agreements that an entrepreneur simply must not ignore.
1) Founder Agreements
Depending on the choice of entity, and without prejudice to the camaderie among the founders, it is essential to execute a founder’s agreement. If the chosen form of the entity is a partnership, ensure that your partnership agreement is in place. This contract sets out in clear terms the understanding that the partners must have in order to run the desired business. Typically the clauses include the capital invested by the founders, owner of the intellectual property and whether it may be licensed, terms relating to issue of shares at a later point in time, exit clauses, and other specifics that can clear any potential ambiguity. While it’s all good to say that an oral agreement is more than enough and business is based on mutual trust, some entrepreneurs have learnt the importance of this document the hard way. It is not unheard of that companies close operations and write away an idea forever because of founder disputes on IP or because of differences on how an exit opportunity must be valued.
2) Charter Documents
Charter documents include the Memorandum of Association (MoA) and the Articles of Association (AoA) that contain the basic information regarding the Company. The MoA contains information relating to incorporation details, share capital, members’ liability, etc. The AoA contains the regulations governing the management of the Company like information regarding general meetings, Board of Directors, proceedings by the Board and details on voting rights. .
3) Trademark License Agreements
Such an agreement is necessary for a company and its founders so that the company owns a trademark (or has filed an application with the trademark registry). This contract sets down the rightful owner of the IP, his protected rights and the rights that will be offered to the user of the brand. An agreement of this kind is useful for start-up companies dealing with products and services (restaurants, food business, clothes, etc) as they look to build a brand. In some cases, an entrepreneur may opt for the franchisee route to market his products or services in which case the considerations are different from vanilla company brand owners..
4) Employment Agreement
It is necessary to establish the rights and obligations of employees and this can have varied benefits. If the company is working in an area that uses heavy IP or human resources, it is crucial to include IP protection clauses, non-compete and non-solicit clauses in the employment agreements. At a later date, it assists an entrepreneur in that he is not entangled in an IP theft or competitors poaching his talent. Note, even if the founder is appointed as a managing director (MD), it is good to have an agreement in place. The new Companies Act provides that the terms and conditions of appointing an MD must be stated in the board /shareholder resolution itself. Compliances with newer laws such as prevention of sexual harassment at the work place, trading in securities, prevention of corrupt practices and so on make this exercise of compliance a good corporate habit.
5) Share Subscription
This agreement sets out the details regarding the ownership of shares, and the resulting representation rights of each of the shareholders along with the terms and conditions in the event of a future exit or sale of shares. This lists out the conditions required in the event of termination, the obligations of an investors and other shareholders at the time of raising a round of capital and at the time of exit during a capital event. ,.It is the document that binds all activities inter-se shareholders and governs the shareholder rights in a play of capital. The practices and considerations in negotiating and finalizing this document is an art as well as a craft that is becoming very sophisticated and requires due consideration from the Founders .
This is an edited version of an post originally posted at yourstory.com, by Harini Subramani, a Consultant at J. Sagar Associates. You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms, by giving credit with a link to www.startupcommons.org and the original post.
History has been written. Narendra Modi has led BJP right into the Indian Parliament; this time as a ruling party with a clear cut majority. I analysed what lessons startups can learn from his way of doing things. Here are eight steps to learn from Narendra Modi’s way to grow your startup business into a great company.
Step 1) Know the pain existing in the market.
Every idea begins with a problem it is trying to solve. In India’s case, it was the poor governance, corruption, and slow development. People had had enough of it. Rising unemployment and red-tapism had sapped people’s energy and drained their money. Big-companies didn’t want to move here due to political instability and the government dragging its feet on crucial issues. Anna’s movement has already shown Indians the true face of the government. Narendra Modi has crafted all his promotional pitches and activities around these problems and promised people to deliver solutions for them.
Take away: “Have deep understanding of your market, understand the problems and craft your product/service according to it.”
Step 2) Set up credibility
Building a great company is a marathon, not a sprint. Many founders try to scale the untested solution, even when the processes and plans are not at place. The best approach for scaling is building credibility in the existing market; it may be small, but it matters. People will recognise you by what you have already done, and then only listen to you. Modi already has set a great example of planned governance in Gujarat, the star state of India. He has a long record of being a volunteer in different activities, since his childhood. The RSS also helped him in building a strong image. He also was a star performer in the eyes of industrialists due to his development record Gujarat thus big corporate houses backed his funding. The paid promotion came afterwards.
Take away: “Start small, but start now. May be your initial footprint will be smaller but it will help you understand the market well, and will set up your credibility in the next markets, a been there and done it approach.”
Step 3) Assemble a great team
A company is an abstraction of a people working together. The team behind Modi’s win deserves an equal appreciation. The BJP has made a great team, including experienced leaders like Rajnath Singh, Dr.Murli Manohar Joshi, Sushma Swaraj, and Arun Jaitley to name a few. They all were assigned specific roles, where they gave their best. All were engaged in multiple rallies, meeting round the clock and didn’t rest even after the last turn of polls. All the candidates of the party played their roles in getting the 272 (majority) mark.
Take-away: “A team can make or break a company because the chain is only as strong as its weakest link. The first step to business is selling your dream to your team, if they aren’t convinced, your customers definitely will not.”
Step 4) Be the Face
We mark Virgin Group by Sir Richard Branson, Facebook by Mark ZuckerBurg and so on. Be the face for your startup, and represent it to the public at large. While the Congress party did not declare any PM candidate, people had already guessed who it would be. Being bold matters, the first step the BJP did was to choose a PM candidate. It was a tense period for the party, and most of the times we try to avoid such situations. But the BJP took it boldly and made Narendra Modi the face of BJP for 2014 general election although it resulted in internet conflicts, and Nitish Kumar withdrawing his support. We all now know how important and powerful the decision was.
Take-away: “Be a leader, or find someone, have a uniform tone, take the ultimate responsibility, be the face for people; people are interested in stories.”
Step 5) Start Early
Don’t wait for the perfect climate, just go and break things. The BJP had started its election campaigns long ago, Modi appeared in numerous places giving speeches about his dreams for India and Indians. He started using social media as early as 2009, which gave him a clear cut advantage in later stages. When you start early, you learn a lot in the go, the stakes are small. Mark started Facebook within a month of getting the idea. The first version was crappy, but what it is today is definitely a revolution.
Take-away: “Start from where you are; don’t wait. The perfect climate is an imaginary event.”
Step 6) Utilize all media
“Abki Baar Modi Sarkaar.” This slogan has reached every nook and corner of the country. Modi utilized all channels for marketing, whether they were internet based like content creation, tweets, social media, you tube videos etc. or paid like newspaper, TV ads (even in cricket world-cup, the famous 20 second ads), distributing merchandise to local people and business, and reaching them via non-traditional methods like ‘Chai pe charcha’.
Take away: “Find all the media channels you can to promote your startup, meet more people, choose free marketing channels in the beginning, and remember No Press is bad press.”
Step 7) Develop Evangelists not just Supporters
I am sure your Facebook wall and twitter feed are filled by posts from Modi fans in the past one year. Create a brand people love to share, create a viral loop, the ultimate goal of a marketer is to send his message beyond his first set of audience. Modi successfully did it; his messages were floated all around social media in no time. All his supporters praised his views and ideas, and shared them with their peers. It made sure that if Modi could not directly reach so many people, his message was sent to them via his supporters.
Take-away: “Build a brand people want to talk about, you can also artificially inject viral loop in your product/service (remember Dropbox’s famous referral program?)”
Step 8) Be an Executer
This is the key. No matter how great your plan is, how cool your team is, everything will go down the drain if you aren’t a good executer. Each and every thing in BJP’s election campaign was well planned in advance. They had employed different in-house and external agencies for maintaining the campaign. Modi himself did many rallies on a single day, at the age which is set as a date of retirement by our government. He appeared in TV interviews, and yes everything appeared planned, and was executed well on time. The operations are the core of any business and should be taken care with the ultimate responsibility. Jeff Bezos planned and executed Amazon in Indian market so well that it has started capturing major market share within a year of its launch in India.
Take-away: “No one remembers a great marketing plan which never crossed the boundaries of a paper or a board room, you have to come out and execute, may be you will fail, but you will learn to grow.”
This is an edited version of an post originally posted at yourstory.com, by Ankit, a 21 year old Student-Entrepreneur from Indian Institute of Information Technology and Management (IIITM), Gwalior. You can get in touch with him here. You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms, by giving credit with a link to www.startupcommons.org and the original post.
After more than fifteen years selling to Latin American markets, including five years living in Canada, Myriam Lazarte began organizing LatAm Conference StartUps as part of a successful startup ecosystem. Her job is not just about translating words or language. It’s about translating culture: business attitudes, customs, ways of thinking.
Thanks for joining us Miryam. Could you start by telling us why you took the challenge of launching the LatAm Startup Conference?
Because a wave of startups is coming in Latin America, and I want to see them succeed. They don't have to move to North America to go global -- not unless they want to. LatAm is booming right now and I want to see Canadian investors come down and realize they've got to write some cheques if they want to take advantage of this wave.
What outcomes do you expect for this first edition of LatAm Startups Conference?
We will measure the success of this Conference by how many startups get the funding they need to scale and go global.
I know that you appreciate so much how Canada is developing its startup ecosystem. Are you thinking of copy this model into Latam? If so, why do you think it will get success?
Every country must innovate its own startup model based on local conditions. It would be foolish to try to impose a foreign model in LatAm -- it wouldn't work. That said, there is a great deal LatAm startups can learn from successful Canadian entrepreneurs and investors. The LatAm Startups Conference will feature two days of talks by Canadian thought leaders in this area. It's an opportunity for startups to learn more about how to scale their businesses. It's also an opportunity for North American VC and angel investors to discover what great investment opportunities LatAm now offers.
For startups specifically, what would you say are the biggest strengths of Latam?
Technology is increasingly democratic and global. The cost of entry to write code, to prototype the next breakthrough in green-tech, or clean-tech, or bio-tech, is much, much cheaper than it was even five years ago.
LatAm inventors, coders, tinkers, and entrepreneurs can now create startups with relatively little seed capital. World-changing ideas will come from Latin America. I tell investors: Get a head start and discover LatAm now before everyone else does.
In what areas would you say Latam is well developed?
Latin America is booming. The region is playing catch-up with the developed world, but it won't be more than 5-10 years before the major players in LatAm take their seats at the table with Europe and North America. VC and angel investors curious about this phenomenon should consider attending the LatAm Startups Conference.
Where is the highest growth expected in the nearby future?
Software. Green-tech. Clean-tech. Bio-tech.
What are some of the major organizations driving the startup community
Startup Chile, of course. Startup Brasil. Also privately-funded incubators/accelerators like NXTP Labs in Argentina. Wayra, too.
For whom does Latam offer great opportunities at the moment?
Latin America is producing tons of great startups, world-changing innovations that go nowhere fast because they lack the capital to do so. Angel investors would be well-advised to add a LatAm startup or two to their portfolio.
Are there any people / skills specifically that are wanted in Latam?
Capital! Bring us your tired, your weary, your dollars. We will put them to good use, and give you great ROI in return!
If there was one thing you could say to entrepreneurs from other corners of the world, what would it be?
You don't have to be based in Silicon Valley to succeed.
NewCo Factory, the public accelerator from city of Helsinki, is one year old and we wanted to talk with them to review what has been an intense year full of activities and challenges. Due to their amazing results, NewCo Factory is amongst nominees for "Best Service Provider" category by Nordic Startup Awards, an event to recognize and celebrate the startup ecosystems based in the Nordic region.
This time we talked with Jaana Pylvänen, a startup advisor in NewCo Factory. Her strengths are in building professional, committed teams which have clear strategy and capability to test the innovative concepts with customers. Jaana has Master of Econ. and she has long career in Nokia Networks as recognized innovation driver and execution focused project leader in all the continents. Jaana has also experience in running design oriented business in three continents and passion for digital marketing.
What is NewCo Factory and Why did you start NewCo Factory?
NewCo Factory accelerates growth business in Helsinki. It is a public service with intention to increase entrepreneurship to new audiences, such as people with lot of international business experience and university education. There is a growing need to get advice and coaching on your business ideas, team building and commitment as well as for MVP validation in the market. This development phase of a startup contains a lot of risk, which leads to lack of private interest from financing and/or advising.
32 startups in your Acceleration Program, 5 foreign startup companies moved to Helsinki, 100+ persons work in NewCo Factory startups, 70 persons work in co-working space, 111 startup events organised – 1020 persons attended, 95 persons coached for sales or investor pitching, 650 person profiles in Statup Commons web community, Startups raised early stage funding 1,7+ Meur, NewCo Startups finalists in many European statup comptitions (code_n, Apps4Europe, Red Herring TOP 100 Europe etc). Amazing metrics after one year of hard work: very active community, attracting international people, job creation, etc. Which is your secret?
We are target focused, execution driven and willing to make a difference. Our people are professional, with long career in international business. It does not bother us if all the pilots do not succeed, it is better to try and see, what is working and then scale that. It is also beneficial, that we do not have much money, so it means we have to concentrate on actions we can do ourselves. All activities and materials are only in English, which enables people with very little or no knowledge of Finnish to join us.
What methodology are you presently using to support startups?
We are still on piloting phase, but our idea is to utilize lean type of methodology, where startup should test they business scenarios with customers. We are focusing on the strengths of the startups teams and developing the team as committed and professional as possible, not forgetting the agile methods.
What stage do you look for companies at?
We are looking for the startups, which have committed teams with competencies in producing the MVP within the team, i.e. in Phase 0 in Startup development phases. The company does not have to be registered yet, but we require a shareholder agreement between the corefounders.
You are part of a great startup ecosystem in Helsinki. What makes it unique?
Helsinki and metropolitan area is very small in size of geography and population. We cannot compete internally, but we rather focus on networking, partnering and helping the others to succeed. It is vital for an ecosystem to work. If you give, you will receive.
What advice would you give to entrepreneurs considering an accelerator?
Test your first ideas with potential customers several times, before you start to build our product. Typically entrepreneurs are building the solutions for themselves, but real, paying customers might have different problems, which require a solution. It might take a lot of time to understand the need for the pivot, if you build your product on one customer only. Accelerator can help you with building your solution, work in organized way, help you with pitching, and funding.
Is there a “bubble” of startup accelerators?
I think that accelerators are the schools for entrepreneurship, can we have a bubble of that?
There's a clear shift towards crowdfunding in startup scene. What are you doing to adapt it in NewCo Factory?
We are considering crowdfunding with each of our customers separately. The readiness of the team, solution and funding for that particular industry need to be carefully considered as well as with all the other funding options.
Apart from the move towards industry specific (‘vertical’) accelerators, do you see any other big trends?
There is big trend to fish for the best startups from the accelerators to the neighbor cities and countries and utilize public funding as a bate for the reasoning.
Which is the best accelerator in the world?
That depends on what you are looking for, but we can be very proud of our accelerators in Helsinki.
Spain Startup - The south Summit. A unique meeting Point For Best Talents from Mediterranean, South of Europe and Latam
Southern of Europe is in luck what comes to startups. Spain Startup Summit is coming again with a different name “Spain Startup. The South Summit” but with the big conviction of attracting the best talent from Mediterranean and, for first time in this edition, Latin America in order they meet the leading investors and most innovative companies from around the world.
We are used to hearing that great startups in Europe come from nordic countries, United Kingdom or Germany and the thing is that Spain Startup organization is discovering amazing startups in countries such as Portugal or Spain, where the need to create growth economic is really important to overcome the current crisis: “It is amazing the quality of startups here in Marbella and how Lisbon Startup Ecosystem is growing” said Alex Barrera, co-founder & editor of Tech.eu, who is presenting South Summit event in different places with Sofia Benjumea, co-founder of Spain Startup Summit.
Last edition took place in Madrid on 9-11th October with a great impact in terms of attendants (4000), companies participating (+30), investors (more than 350 from 17 countries) and big corporations and now Spain Startup. The South Summit has just launched a new competition again in Madrid on 8-10th October where they expect to improve the latest results and consolidate their position as the leading startup conference in the South of Europe. The application process is open and the registration will be open until the 18th of June.
We at Startup Commons are really happy to see how initiatives like Spain Startup share with us the same startup ecosystem approach, building a platform to make more effective and easier connections and access to global resources, regardless of where you are.
Daniel Arroyo is very clear. Only through entrepreneurship has managed to enjoy what he really likes. In his case, from San Diego building software for the startup 3DaGoGo, a marketplace in commitment stage for proven to print 3D designs. Daniel occasionally blogs at danielarroyo.net.
Describe 3DaGoGo in under 50 words
3DaGoGo simplifies the complex world of 3D printing software into a simple 1-click-print experience, making it easy for anyone to print an object on a 3D printer from any computer or mobile device.
Tell us the 3DaGoGo story. How and why was this project born?
3DaGoGo was born out of frustration when Drew (our CEO) wanted to create a customizable medical device using 3D Printing technology. We saw both the potential and challenges of this amazing technology and started working on solving the problem of failed prints by creating a marketplace of “proven-to-print” designs. It soon became clear to us that the problem had to be tackled at its core: The overly complicated software chain used to get a design into the printer.
We are now part of the Betaspring technology accelerator building a software platform that simplifies this software from over 120 settings into 3 (printer, material & quality) and allows 1-click-printing over the internet with a beautiful user interface.
Everybody is crazy with 3D. How does 3DaGoDo see 3D revolution? Where do you see many opportunities for startups?
Disney expects a 3D Printer in every home in about 10 years. We believe it should be sooner. While not everything will be manufactured at home, we see a future where a big portion of the things we use are going to come to us in the form of digital files that can be brought to life by a 3D printer. A world in which making items that are highly customized is only a few clicks away. Toys and replacement parts will be available for sale in online storefronts for under $5 in digital format and with options to customize them.
While it is still a bit early to start building solutions for the general consumer in this space, the infrastructure land grab has already started. We see huge opportunities for innovative startups with middleware or infrastructure software in marketplaces, 3D file creation tools, 3D design processing and validation as well as printer drivers.
The hardware opportunities abound as well. These machines should be made simpler to use with less maintenance, more durability and better resolution. There are plenty of innovation to be made in these areas. Also bringing other 3D printing technologies like powder-based printers to the under $1,000 is something we’re looking forward to as well.
What is the most challenging part of building 3DaGoGo?
We are working with highly sophisticated and complicated software while at the same time offering an extremely simple user interface. Making it simple for the user, always means making it 3 times harder for us. There are plenty of product discussions where the easiest way out would be to just make it a little harder for the user so that we can build faster and with less complications. We strive to avoid making these trade-offs and in almost every case choose to make harder on ourselves instead.
What technologies have you used to build 3DaGoDo? What was technically the most challenging part of developing 3DaGoGo?
It’s a broad range as we use a few open source projects as a base for our efforts. Most of our web and api server code is written in PHP accelerated by the Phalcon framework. We provide slicing capabilities using Slic3r which uses Perl. Our printer controller interface is built in Python since OctoPrint used that and we’re based on it.
Thus far the most technically challenging part has been to make Slic3r reliably and scalably run in the cloud. This was a software program made to run on a computer and making it run on a sever that can process 1000s of requests was not an easy task.
Are you receiving the support of any mentor for your startup? If so, how is the relationship with him/her?
We are part of Betaspring, a technology accelerator in the US and have also graduated from SpringBoard Connect. We are receiving plenty of mentorship along the way.
In some cases advice is contradictory with our views or with other mentors. It’s the job of the team to take ALL advice into consideration, carefully think about it and respectfully discard what doesn’t make sense in the context of the team’s values and beliefs. In addition we’re in a complex and relatively unknown space, so often the advice is related to parallel industries or analogs and have to “translated” into our situation.
We have found great mentors and advisors that believe in our vision and the potential of our industry. The challenge is to narrow down the list of mentors and advisors to those that would enjoy and benefit from the relationship as much as we do.
What kind of partnerships are you achieving or building?
We’re working on partnerships with 3D Printer manufacturers. We see ourselves as the solution that would allow them to grow out of the current early adopter, super-hacker types that enjoy tinkering with open source software. The next wave of consumers that just want to experience this technology is patiently waiting for our solution. They don’t have the time or interest to spend whole weekend trying to figure out how to successfully print one object.
We want printer manufactures to focus on solving the hardware problems of 3D Printers while we help them delight their customers with software that is easy, beautiful and intuitive.
In addition, we’re forging deep relationships with the current open source community that has developed most of the software used today. We ourselves complementing their mission by adding a layer of simplicity to their offerings so that they can reach a previously unimaginable number of people.
You are based in San Diego, California. What’s the startup ecosystem like there?
It’s not Silicon Valley (nor does it need to be) but it’s growing and very vibrant. There are many new startups popping up in the downtown district. I have been involved in San Diego startups since early 2011 and I have seen tremendous growth. The entrepreneurial network is amazing, full of people willing to help, meet and discuss their ideas. However, the overall business community is still dominated by big corporation (mainly biotech) and capital is hard to come by.
If you could come back to the past, what would you do differently in your startup?
We’re still early and while we have done some mistakes, I don’t think that I would really would have wanted to do anything different as they have all taught us something and taken us to where we are. If anything, I wish we had started earlier, but that will always be the case.
Your big mistake?
3DaGoGo has yet to make it (and I’m sure it will). Nothing thus far as been a catastrophic mistake.
Personally, I wish I had started working in startups way earlier than I did. I have always been an entrepreneur though it took me a while to fully realize it. While going to college in Spain, I made software for Real Estate Agents, a web platform for movie theaters and accounting software as freelance. I then took an 11 year detour into the world of big tech corporations (Nokia, Qualcomm) only to return to what makes me happy in 2011.
What one piece of advice would you like to give to those who want to transform an idea into a business?
Start today, not tomorrow or next week. TODAY!
Start by telling everybody about your idea. Recruit cofounders, mentors and advisors. The more people you tell, the more real it becomes. Never forget that ideas don’t make a business, execution does. The sooner you get to the execution part, the sooner you’ll know if you idea is any good.
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