(Your Money Machine) Legal and IP - Russell Colbourne

 Programming Fact Sheet
Russell Colbourne : Your Money Machine

Season 5 Episode 7 – Legal and IP

17 May 2021

INTRODUCTION
Your business is Your Money Machine.  Starting or growing a business has been likened to assembling an aircraft midway through its first flight. Having started and exited from a number of businesses including an Airline, I know what it takes to get your business off the ground. In this show, I’ll share some of the stories and lessons I’ve learned over my 30 years of entrepreneurial business experience as a Chartered Accountant with companies like Sir Richard Branson’s Virgin Group.  During season 5 we’ll be following a structured path to building a globally scalable, investable business based on the Founder Institute Pre-Seed Accelerator flagship program that will create a logical roadmap to success.  I’ll take you through some real life business building examples including my recipes for creating high performing organisations and we will take a look at some the mistakes I made along the way and the lessons I learned from them.

This show won’t build your business for you – only you can do that, but I will show you how to build your business efficiently and effectively, so you won’t have to waste time and money doing things out of sequence, back tracking over work already done or making the same mistakes I and many others have made before you.

Summary
Today’s show answers how much does the law actually matter to your business and the key legal concepts that a Founder needs to understand. We will discuss the best practices in setting up a legal entity, how you can pick a law firm to work with, how you can identify and protect your intellectual property and how you can manage regulations. 

What You Need to Know - The What

#1 (Progress Checklist) At this point in the program, you should have the following business ingredients: (1) initial customer interest, (2) initial product progress, (3) a solid company name, (4) a recognizable design, (5) a Landing Page to market your solution, (6) a financial plan and (7) a professional company presentation. 
#2 (Design Materials) Upload your Design Materials. 
#3 (Advisor Interviews) Complete all Advisor Interviews. 
#4 (Capitalization Table) Develop an initial capitalization table (Cap Table) that shows the ownership structure of the business. 
#5 (Legal Concepts) Research legal concepts necessary to operate a startup. 
#6 (Law Firm Engagement) Engage a high-quality Law 
#7 (Incorporation) Incorporate a company 
#8 (Formation Agreements) Secure all of your Formation Agreements. 
#9 (Legal Templates) Secure standard Legal Templates from your Law Firm. 
#10 (Employment Law) Research best practices for startups with local employment laws. 

What You Need to Do - The How

• Listen to the Show
• Download the Show notes
• Follow the Podcasts and 
• Apply the principles to your business

#1 (Progress Checklist) At this point in the program, you should have the following business ingredients: (1) initial customer interest, (2) initial product progress, (3) a solid company name, (4) a recognizable design, (5) a Landing Page to market your solution, (6) a financial plan and (7) a professional company presentation. Upload all of the materials that you have collected to your File System. Provide a bulleted list of these seven ingredients ranking them from the one with the least progress at the top and the one with the most progress at the bottom. For each of the top two business ingredients where you are weakest, write a few sentences on your specific plans to improve over the next seven days.
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#2 (Design Materials) Upload your Design Materials. Collect, upload and provide a bulleted list of links to your Design Materials, including (1) a professional looking logo with your final company name, (2) a business card template for you and future employees, (3) a pitch deck template with a title slide and content slide format and (4) a professionally designed Landing Page. If any of the materials are not professional looking, work with a Design Resource to improve them. Order 500 business cards for you and any other key Team Members.

#3 (Advisor Interviews) Complete all Advisor Interviews. Meet with or call each of your Advisor Candidates for at least 15 Minutes. During this Initial Advisor Interview, discuss the Customer Problem and progress to date.  Collate a bulleted list of the notes and feedback from the calls and meetings under the name of each person. Rate each Target Advisor on a scale of 1 to 5 for the strength of your personal chemistry with the Target Advisor and for their ability to help the business. If any Advisor Candidate does not meet your expectations or needs, replace them on the Advisor Target List with an alternative and complete an Initial Advisor Interview with the alternative. Place the top ranked Advisor at the top of the list. 

#4 (Capitalization Table) Develop an initial capitalization table (Cap Table) that shows the ownership structure of the business. Provide a bulleted list of everyone involved in the business that you have discussed owning equity in the company and the amount of equity that you have discussed them owning, including your team and Advisors. Provide a second bulleted list of people that you may need to provide equity for over the next year, including future hires. Input the Cap Table details into a spreadsheet.

#5 (Legal Concepts) Research legal concepts necessary to operate a startup. Review concepts including granting equity, vesting equity, granting options and issuing common stock versus preferred stock. 

#6 (Law Firm Engagement) Engage a high-quality Law Firm if you have not done so already. Complete meeting with your various Law Firm Candidates. Collate bulleted notes on the interview questions with each firm. Evaluate the interview notes and the chemistry of working the legal team, and select a final Law Firm to engage. Sign an agreement for the Law Firm to represent your company, which is commonly called an "Engagement Letter”.

#7 (Incorporation) Incorporate a company if you have not formed a Corporate Entity yet. The standard process for incorporation, which may vary worldwide, involves engaging a Law Firm, getting corporate Formation Agreements, filing the Formation Agreements with the government and securing a Confirmation, or receipt, of formation. 

#8 (Formation Agreements) Secure all of your Formation Agreements. The Formation Agreements include all of the agreements to set up a company, such as the bylaws or similar documents, which govern how the business conducts itself. If you have a Corporate Entity, review the documents that you have collected and contact your Law Firm to get all of the remaining Formation Agreements. If you are forming a new Corporate Entity, acquire all of the necessary corporate formation documents from your Law Firm. Ensure that any dates and processes in the agreements reflect the actual way that you intend to run the business. Email your Law Firm with any questions and any proposed changes. 

#9 (Legal Templates) Secure standard Legal Templates from your Law Firm. Identify any legal agreements that you may require. At a minimum, you will need a mutual non-disclosure agreement, an intellectual property assignment agreement, a basic employment agreement, a basic freelancer agreement and a basic advisor agreement. You may also want a loan agreement to raise a Founding Round, or friends and family round, and you may also want specific agreements for your particular business, such as a licensing agreement, a sales contract or an advertising contract. Most Law Firms will have these agreements on file. Work with your Law Firm to acquire a set of key boilerplate agreements and Legal Templates for your company. 

#10 (Employment Law) Research best practices for startups with local employment laws. Discuss with your lawyer and your Working Group best legal practices to work with part-time and full-time Team Members, including yourself. Consider any regulations around minimum salary requirements, avoiding having contractors classified as employees, restrictions on the use of interns, length of trial periods, payment of taxes and social charges and steps to fire an employee or worker. 

Shows 

• Previous: Episode 6  – Branding and Design
• Next: Episode 8 – Go To Market

 
Written by Russell Colbourne, FCCA, GAICD
Your Money Machine

Russell is a CFO and Entrepreneur who has worked across a diverse range of industries over the past 30 years.  After a short service commission as a pilot flying Seaking Helicopters in the British Royal Navy, Russell studied business and qualified as a Chartered Certified Accountant (ACCA) in the UK. Since then he has been integral with the start-up of many successful companies and operations within larger organisations.  He has bought, sold and spun off business operations in the UK, Australia and the US. 

In 1994 Russell joined Sir Richard Branson’s Virgin Atlantic Airlines where he was responsible for a number of innovative services that were, at the time, ground breaking and helped revolutionise air transport.  From launching the world’s first limo boat on the River Thames to developing the world’s first handheld check-in device and implementing drive through check-in booths around the world, Russell has helped the Virgin Group deliver unparalleled customer service. In 2000 Russell was the first of the Virgin team to arrive in Australia to start a new low cost Airline, and within 8 months had built a team operating flights between Sydney, Brisbane and Melbourne.

Russell now works as a Part Time CFO for a number of SME businesses in South Australia.  He is the owner of www.chiball.com.au a health and wellbeing business, and www.feesable.co a crowdfunding website for educational costs. In 2019 Russell and his business partner Peter Hattam created Feesable which graduated from the Founder Institute Program in 2020.  He is one of the local Directors of the Founder institute Program in Adelaide where he lives with his wife and 3 teenage sons.  

To find out more about the Founder Institute program and how you can take your idea to a globally scalable, investable business, please see www.fi.co  The material used in this show is based on the Founder Institute program and is used with permission.

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