Starting Up the Start-Up: Pre-Incorporation Do's and Don'ts


The last installment of this blog series discussed when the creators of a new social media venture should take the step of formally incorporating their venture. This post will look at some key questions that often arise prior to incorporation.

Who’s on Board? Ideas for new companies frequently arise out of informal brainstorming and discussions, and as an idea begins to take shape so does the team that will likely work on it. Before you get too far down the road in setting out the business plan and execution steps, it makes sense for the team to discuss and agree on the commitments and expectations of all participants. Among the issues to be considered are the time commitments and financial contributions of each participant before outside funding is obtained.

Too Many Chiefs? There should be a clarity of expectations among the founders with respect to their roles in the venture. It usually makes sense to have agreement on who will be the initial CEO, but try not to commit to VP level and C- level roles for the other participants at this early stage. There can be a tendency to be a bit liberal with the handing out of fancy titles that may not be justified by the participants' resumes and track records. This is usually a mistake, because post-funding, investors are going to want to hire the best possible people for senior management roles, and it would be best if those positions were not already all filled.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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