Recently, I have been having some interesting exchanges about startups with a new client of mine, a partner in a startup. My take on him is that he is very knowledgeable about the startup space. He appears to spend a fair amount of time educating himself about venture capital (VC) trends and other startup-related trends down south and generally keeps plugged in to that fast moving world. I have greatly enjoyed my exchanges with him, as our relationship continues to grow.
So, the other day, he asked me whether I intended to make startups a focus of my practice. That question has given me pause for a few days now. I still haven’t answered his email. Instead, I wrote this post. The reality is that in my 14 years of practising law (yes, it really has been that long), I have always dealt with startups. Always will. You see, back in the late 90s and early 2000s, when I started practising law, the tech bubble grew and burst—big time. But as it was growing, I was right there with some of my colleagues, acting for a number of interesting startups. Some flamed out fast. Some were wild successes. Just like now.
I’ve been asking myself ‘what’s different this time around?’ I think one of the big things that is different now is the growth of the Internet. That is significant for a couple of reasons.
First, the Internet WAS significant back then, of course. But I don’t think anyone could have predicted the world we live in now, where we are constantly connected with ever evolving, faster and better devices like smartphones, tablets and, of course, ordinary computers. This allows for startups and the hard working entrepreneurs behind them, to fairly easily study up on competitors, trends and other things relevant to their ventures. Competitive intelligence.
Second, because the Internet continues to evolve at such a torrid pace, more and more opportunities are presenting themselves to entrepreneurs. I just read a great piece by Boris Wertz, a seasoned startup investor, on the concept of vertically integrated e-commerce companies like Warby Parker. The Internet makes this business model possible, and lots of companies are on board. And that’s just one trend out of a zillion. The point is that the Internet is still very much like the wild west and it continues to get settled.
Another thing I think is different this time around is the sophistication of the entrepreneurs behind the startups I’m seeing and meeting. They have seriously upped their game; at least the good ones have. Perhaps this is driven by what they’re learning in their research, but I think it’s much deeper than that. It takes more to be successful at this stuff now. VCs and others in positions of influence and power are just way smarter. You have to be on your game if you’re pitching to these people. And the competition is much, much stiffer.
The final thing I find different is the current environment. We are seeing investors like angels and VCs getting into startups earlier and earlier in the game. We can’t read a newspaper without reading about the hottest new startup and the big cheque some VC wrote them.
And there are so many articles and perspectives out there about this space (in honour of my participation in Startup Weekend Winnipeg, this week I’ve made a point of tweeting (@arherstein) links to articles providing a variety of perspectives on startups, all of which you should also read). There is a trend going on in North America, and Winnipeg is starting to become a part of it. All of a sudden it’s hip to be a startup or to work with them. Guess I’m finally hip! Or does this mean I’ve always been hip? I really don’t know.
But I’ll tell you what’s not different. Good ideas are just that. Good ideas. What counts, what’s always counted, is, to borrow a phrase from the aging professional wrestler Brett ‘the Hitman’ Hart, the excellence of execution. Can you execute on your idea? Have you covered your bases, legal and otherwise? From a legal perspective, have you thought about incorporating, and if you are incorporating or have, have you put your mind to things like shareholders agreements and other key relationship documents? Have you protected your IP as best as you can, and have you sought out proper advice on that? If you’ve taken money from angels or
from friends, family and fools, have you done that in full compliance with applicable securities laws? Yes, VCs are concerned about your product or service and whether you have a solid minimum viable product (MVP) or a prototype of some sort. But any VC worth their salt will also want to know this other (kind of boring) very important homework has been done.
So, everything old is new again, and I’m still here. I plan to be here for a while.
*My firm, Pitblado Law, is pleased to be a Platinum Sponsor of Startup Weekend Winnipeg. We believe in the startup and my colleague Andrew Buck and I will be there this weekend (and beyond, if necessary) to work with the teams to strengthen their pitches, and hopefully, the businesses that survive the weekend.
About the author
Adam Herstein is a partner at Pitblado Law, a leading business law firm in Winnipeg, Manitoba. Adam practices in the area of corporate commercial law with a particular emphasis on information technology and intellectual property law. In that capacity, Adam advises creators and users of technology with respect to its use, protection and commercialization. His clients include companies involved in internet marketing, search engine optimization, IT security, software development, website development, providers of technology services, videogame developers and many other creators of technology. A good part of Adam’s practice also involves providing advice to business users of technology in industries such as financial services and health care. Adam was recently named to Best Lawyers in Canada for 2013 in the area of Information Technology Law. Adam is the chair of the Technology and Intellectual Property Law Section of the Manitoba Bar Association and a former director of IT.Can, the Canadian Technology Lawyers Association. Adam also writes and presents on technology and intellectual property law issues on a frequent basis.