Pre-Incorporation Pitfalls to Avoid

Pre-incorporation pitfalls to avoid I frequently see founders making the same sorts of mistakes as different founders from time to time, so I'd like to share them with you now so you can avoid them

First of all, companies start by a group of people getting together and talking about a potential idea, brainstorming different ideas, and slowly an idea begins to take shape and a team begins to take shape around it It makes sense for people to be clear about who's on the team, who's not on the team, and what the different roles are and what the different expectations are As early as possible, I would make sense to get clarity around those things Second, entrepeneurship is a team sport, yet it's important that there be a leader, and that leader is the CEO and should have the biggest amount of shares among the people involved Third, the team is going to start talking to other people on potential funding sources, potential alliance partners, and it's important before you begin those conversations to think about whether preliminary patent protection should be filed for, and that's the time to talk to a patent lawyer before you start having external dialogue

The team is going to talk about the percentages that each of them hold, and that's fine, that's normal, but at the same time everyone should realize that those percentages are going to be diluted over time as investors come in and as other team members come in One of the things to think about when you're putting this team together is what happens if you end up not launching a company and there's some IP created that people want to exploit, and it makes sense for people to understand what's going to happen if there's no company Is everyone going to be free to go off and start their own company or is someone going to actually own certain pieces of it? So, these are the kinds of things to think about when you have a dialogue going very early on about forming a company, and if you get to a certain point and it looks like it's going to be real, it may make sense to just go ahead and form the company

Source: Youtube