Entrepreneurs, people who undertake the risk of starting a new business venture, come in many forms and in every industry. Typically, though, entrepreneurs are associated with start-up companies that have the idea for the next big thing and look to grow their business quickly through raising funds with investors. If this you, and you are getting ready to start the next big company, be sure to take these 3 steps first.
- Choose the Right Entity– There are a number of factors that go into deciding whether to use a corporation or limited liability company (LLC) for your business, such as taxation, management, and ownership. However, entrepreneurs looking to raise money with investors have the unique factor of the need to sell ownership in the company quickly and efficiently. If you are planning to raise capital by selling equity in your company, you may favor a corporation over an LLC. While both a corporation or LLC can be used to raise capital with investors, corporations are usually favored because (i) statutorily it is easier to sell shares in a corporation than it is to sell membership interest in an LLC, and (ii) investors are more familiar with investing in corporations, and therefore, usually more comfortable doing so.
- Have a Co-Founder Agreement. If you, like many start-up founders, are working with others to create your business, it is very important to have a written agreement between all the founders. This agreement should include matters such as financial contributions, voting rights, the ownership structure for the company, and ownership of intellectual property. This will help ensure everyone is on the same page and avoid long drawn-out disputes in the future. This will also help with dealing with investors because it will ensure a united front by the founders and show the investors you are serious.
- Secure Your Intellectual Property. The last thing you want to happen right before that first investor writes that check is have him or her ask to see the trademark and patent applications that you do not have. For many businesses, their intellectual property is either their most important asset, or their only asset. Making sure your brand, inventions, and trade secrets are all protected is critical to the success of your business. You have to (i) assess your business’s intellectual property, include its name, logos, taglines, processes, methods, and products, (ii) identify potential trademarks, patents, and trade secrets, and (iii) then file trademark or patent applications, and create policies to safeguard your trade secrets.
We regularly assist clients structure their business to efficiently and effectively raise funds with investors. If you are ready to take the plunge into entrepreneurship, give us a call today at 305-222-7282.
For more information on starting your business, be sure to check out the Ser & Associates Entrepreneur Workshop Series , and follow us on Instagram, Facebook, and/or LinkedIn to learn more about how we can assist you and your business!