Recently, I’ve been speaking at a bunch of AR/VR/MR conferences, sometimes on the dry subjects of legal entities, intellectual property rights, and getting your corporate house in order. I’m always amazed people show up for my talks. Down the hall, someone is showcasing a new head-mounted display, startling breakthrough in AI, or discussing the art of narrative storytelling in this new interactive medium. Meanwhile, I’m discussing the difference between a C corp, an S corp and an LLC. And, yet . . . people do show up, and, even more shockingly, they stay! Why? Because the visionaries are starting to understand that having an amazing idea and some great people is not enough to give your idea the best chance at success. You’ve got to lay the proper business and legal foundation or you aren’t going to be successful. The choice of the proper entity, and a lawyer who has your back with regard to protecting your intellectual property won’t make you successful. But, without those things, your odds drop precipitously.
So, here are a couple of bullet point sets:
Things you can’t do without a corporate entity:
- Get funded
- Hire employees
- Protect yourself personally
- Get some powerful tax benefits
Things you can’t do without THE RIGHT corporate entity:
- Get funded by most people/companies you want funding you
- Give your employees an attractive comp package
- Maximize your personal protection
- Get some of those tax benefits
Here’s a shorter one:
Things you can’t do without the right entity having all necessary rights to the intellectual property that underlies your business:
- Pretty much anything at all
So, yes, it starts with an idea, and it moves quickly to the right team. But, if the right legal advisor isn’t part of your team from early on, you can make some costly mistakes, and, when the investors come to take a close look at your documents, which they will, you won’t be ready or look ready! And, since investors base the largest part of their decision on the team you’ve assembled, if you look like you aren’t ready, that’s going to do some damage to your chances of getting funded.
So, here are a few things your lawyer can do for you:
- Figure out and create your corporate form
- Make sure the corporation owns all of the relevant IP
- Get your stock issued, and put together an option plan that will help attract good people
- Handle the contract aspects of hiring employees and bringing on consultants and advisors
- Negotiate and help close service contracts, licensing of related technology
- Open up his or her database to other professionals you might need to know
We know that, in the world of Mediated Reality, understanding the license agreements you’ll need to enter into just to work on SDKs or to deploy an enabling technology, or to set up your app or store, is critical to good execution of your plan. Your lawyer can decipher the code buried in the contracts and guide you through the decision-making process.
If any of this has made you think about lawyers in a new way, and you might need some advice, feel free to contact me. mleventhal@holmesweinberg.com