Pre-Incorporation: What to do???

I have talked with several student and alumni founders over the past few weeks about pre-incorporation issues.  I am writing this post to hopefully capture some of the key issues to consider.  The order here is not particularly important.  Please note that I am not addressing the juicy business issues like is there a market, do customers care, is there a good product/market fit, etc.  I am rather addressing the boring, but oh so critical few things that you best consider at time zero.

1.  Is your business idea legal?  Ok, this sounds pretty basic, but I have been hit with questions from more than one team that involve business ideas that are not legal.  I try very hard not to give a definite answer on this, but rather say “have you talked with a lawyer about this?”.  For example, if you want to sell craft beer on line in all 50 states via the internet, make sure that it is legal in all 50 states.  That can be a HUGE task when all 50 states are in question (as they all have different sets of laws and regulations).

2.  Is your business subject to regulation? Again, pretty basic, but not always obvious.  Regulatory issues require research and understanding.  Just look at all the issues Uber and Lyft are facing with taxi regulations.  Look at the issues facing marijuana growers in states where that is legal. You must know the regulatory framework, and then decide how to operate within it or how to change it.

3.  Is your product subject to FDA approval?  If yes, you better have someone on your team who understands the approval process (or have access to a good consultant who does).

4.  Do you have any clue how your business will make money?  Perhaps you do – GREAT.  Perhaps you are just building a user base and worrying about monetization later – NOT AS GREAT in my view.  Regardless, I hope you know what the revenue plan is.

5.  Who are your co-founders?  This is a tough one.  I talk with many students who need a co-founder with a certain skill set.  Tough to find a trustworthy co-founder.  That is the stark reality.  This requires a real search, and perhaps a soul search.

6.  What is the equity split?  This is critical to nail down as soon as you have a team of co-founders.  There is no magic formula for the split.  And I have already written about the importance of pre-incorporation agreements.  See that post here.  But i would like to share a simple pre-incorporation agreement.  I did not write this form, but it covers the key items: equity split, roles and vesting of shares.  I am a fan of pre-incorporation agreements as they level set all the founders and get them discussing the tough questions immediately.

Add more thoughts in the comments and I will edit the post to include them.  Thanks!

Ithaca Infographic

As I mentioned in my last post, Entrepreneurship at Cornell and Tompkins County Area Development recently hired Development Counsellors International (DCI) to promote Ithaca as an entrepreneurial hub.  The engagement is working out well.  As part of the work, DCI developed a cool Ithaca infographic that is worth sharing.  You can view it Ithaca Infographic.

Enjoy!

Shameless Promotion of Ithaca

Over a year ago I posted on how entrepreneurial the Ithaca Mayor, Svante Myrick, is.  Here is that older post from August 2013.

Today I spent the day with Mayor Myrick in NYC spreading the word on how awesome Ithaca is for startups.  Development Counsellors International (DCI) arranged the tour, and we hit 7 media outlets, including Crane’s, Fortune, BloombergTV, Fox, The Street and the New York Business Journal.  My Cornell office (Entrepreneurship at Cornell) and Tompkins County Area Development hired DCI to conduct a systematic PR campaign.

So, I am sticking to what I wrote in 2013:  our Mayor is an entrepreneurial guy and he gets the value of startup creation and how it clearly impacts the local economy.  It was great to have a day where we did most of our interviews together and each heard the other’s perspective.  We literally did no rehearsal, and yet there was complete agreement on all points made.  Nice win!

Here is one of the video clips from The Street.  I will post up other stories and/or video as they come out.

Cornell Alums Ranked #7

A just published PitchBook ranking puts Cornell #7 for number of founders that received VC funding from 2009 through the end of July 2014, based on the founders’ undergraduate programs.  See link here. Great result!!  And our eship ecosystem at Cornell and upstate NY as a whole continues to grow.

Go Cornell and go upstate NY!

Cornell Entrepreneurship Kickoff 2014

Cornell students are returning the campus.  Freshman drop off is today.  Lots of nervous looking faces!  

The return of students means the return of student focused entrepreneurship events.  To keep on top of the activity, I suggest you subscribe to the Entrepreneurship at Cornell (EaC) listserve.  Just go to the EaC website, scroll down to the bottom and enter your email address.  You will then receive emails sent to the listserve including a weekly digest of events.  Typically between 3-5 emails are sent to the listserve each week.  

One upcoming event that I wanted to highlight is the Cornell Entrepreneurship Kickoff 2014, which is September 9th at PopShop in Collegetown.  Here is the FB page for the event.  The Kickoff is going to highlight eLab (our student business accelerator).  And there will be a pitch off event for student teams interested in applying for eLab too.  It will be a high energy event so attend if you are in Ithaca!

Enjoy the weekend.