Building a startup venture that ultimately sells for a small fortune is the dream of almost every entrepreneur. That dream is not limited to entrepreneurs. Many professional service providers would prefer to work in the startup environment. They too dream of being part of a team that grows the startup venture to the point of acquisition or public offering. Unfortunately for the professional service provider, becoming part of a startup venture is not easy and it is not without risk.
Below, we discuss various steps to take to increase the chances of landing a job as a startup general counsel.
Network with Entrepreneurs
As with all jobs, getting a general counsel position for a startup venture is all about connections. Startups, by their nature, are run by a close-knit group of individuals. Knowing the members of the startup venture and having them understand your competency and the value that you can bring to the startup is of utmost importance. This begins with networking and meeting entrepreneurs. You can do this by attending startup events. Introducing yourself to key figures who often drive startup hiring, such as founders, angel investors, startup consultants, and venture capitalists. These individuals can provide you with the connections necessary to land a position with a startup team.
Increase Your Skill Set
General counsel for a startup venture must possess a unique set of skills. She must be able to deal with general legal issues, such as drafting and reviewing contracts, avoiding company liability, and employment laws. The startup venture, however, has special needs beyond these routine legal services. The most important legal competencies are:
Intellectual Property – The ability to work to secure and maintain intellectual property for the company is a primary concern. Often, intellectual property is the most valuable assets of the startup venture at early stages. Later, the most valuable asset becomes the company brand. As such, it is important to be licensed and proficient to practice patent and trademark law.
Business Transactions – Startups generally go through various stages of growth. To achieve the desired level of growth, the startup must generally employ all invested assets, revenue, and investor capital. Notably, undertaking investment rounds requires extensive knowledge of transactional. For example, the general counsel will need to thoroughly understand securities laws and the process for perfecting applicable exemptions. She will need to understand the primary provisions of a term sheet (including valuation) and investment agreements. She will need to be able to manage the due diligence process. All of this is a detailed and complicated area of legal practice.
Corporate Governance – Throughout the life of the startup venture, the business entity will evolve and develop. This generally requires reorganizing or reforming the business entity multiple times. Each time, the ownership and internal control structure become increasingly complicated. This is particularly true when there are multiple types of preferred ownership interest, each with specific characteristics for information, voting, and approval rights.
Taxation – Many decisions of the startup venture are driven by tax consequences. This is true during operations and during the public offering or merger or acquisition process.
Be Able to Express Your Value Proposition
Another consideration is the ability of the startup venture to provide in-house counsel salary for the general counsel. Early-stage startups rarely have adequate resources to compensate professionals at their industry-standard rate. As such, the aspiring general counsel must be willing to accept less or alternative forms of compensation. This might include lesser employee benefits and equity compensation in lieu of cash.
Further, the general counsel must be able to demonstrate to the startup members the value that she can bring to the business. Often, startup founders see attorneys as a necessary legal practitioner to hire during specific transactions involving the business. The professional service provider is merely a cost driver to the startup. Startups prefer to bring on individuals who can drive revenue or other growth variables. It is often difficult for them to understand that the attorney can provide on a day-to-day basis. The amount of value that the attorney can bring to the venture will vary depending upon the characteristics of the business. As such, the more specific the general counsel can be in describing her value to the firm, the better.
Be Willing to Accept Risk
In the same vein as accepting alternative means of fees like equity compensation, the attorney must be willing to accept a level of risk. Startups, by their very nature, are risky endeavors. Most startup ventures fail or never reach the level of growth or valuation desired. When this happens, the members of the startup tend to lose their livelihoods. Professional service providers to the business generally do not bear this same risk. They did not invest their personal savings or assets to make the venture a reality. If they lose their jobs, they can always return to their field of professional service with another firm in or another business. This reality will always separate the professional service provider (like attorneys) from the startup founders. Being willing to accept this level of risk can be the ticket necessary to be an integral part of the startup team. This may mean investing personal assets in the startup. Alternatively, or in addition, it could mean working without compensation (beyond equity compensation) for an extended period of time. This put the proverbial “skin in the game” that characterizes the founder of a startup venture. Unfortunately for the attorney, she is often programmed to avoid this type of risk.
LawTrades Knows Startups
The legal professionals at LawTrades are experts in all manner of startup venture. They can advise you at every stage of the entrepreneurial process from business formation to equity compensation all the way up to a public offering. Further, they can help prepare you to be an effective member of a startup team.