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8 Great Mistakes Entrepreneurs Make John M. Mutkoski David V. Cappillo Michael H. Bison March 24, 2009 Rhode Island Business Plan Competition ©2009. Goodwin.

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Presentation on theme: "8 Great Mistakes Entrepreneurs Make John M. Mutkoski David V. Cappillo Michael H. Bison March 24, 2009 Rhode Island Business Plan Competition ©2009. Goodwin."— Presentation transcript:

1 8 Great Mistakes Entrepreneurs Make John M. Mutkoski David V. Cappillo Michael H. Bison March 24, 2009 Rhode Island Business Plan Competition ©2009. Goodwin Procter LLP

2 2 8 Great Mistakes Entrepreneurs Make (contd) 1.Failing to Pay Attention to Corporate Formalities Formation Stock Issuance Founder Agreements Give corporate and legal matters the same respect as your source code/lab notebooks/engineering documents

3 3 8 Great Mistakes Entrepreneurs Make (contd) 2.Complicating the Formation Process KISS Principle Choice of entity (corporation vs. LLC) S corp vs. C corp Where to incorporate

4 4 8 Great Mistakes Entrepreneurs Make (contd) 3.Refusing to Subject Founders Stock to Vesting Founders departure triggers repurchase of some shares by company 83(b) elections are critical Transfer restrictions – ROFR and IPO lock-up

5 5 8 Great Mistakes Entrepreneurs Make (contd) 4.Dwelling on Valuation Focus on winning before worrying about your share of the win A company never went out of business because of dilution

6 6 8 Great Mistakes Entrepreneurs Make (cont'd) 5.Failing to Raise Enough Money (for fear of dilution or otherwise) Everything costs twice as much as you think it will Everything takes twice as long as you think it will Management needs to run the business rather than be preoccupied with fundraising efforts

7 7 8 Great Mistakes Entrepreneurs Make (cont'd) 6.Spending Money Too Quickly Hire conservatively and purposefully (programmer vs. CFO) Consider equity compensation (with vesting)

8 8 8 Great Mistakes Entrepreneurs Make (cont'd) 7.Failing to Pick Advisors Who Add Value to your Business Investors Directors Service Providers and Advisors

9 9 8 Great Mistakes Entrepreneurs Make 8.Failing to Adequately Protect Your Intellectual Property Assets Rights of former employers Rights of consultants and other third party developers Lack of adequate trade secret protection (NDAs) Secure IP assets (restrict access, etc.)


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