Patent and how to start a business

[dailypress]

hi guys, can someone please briefly guide me on the necessary steps on starting a business?

1) patent
2) incorporation
3) investors
4) finding the right people

does the order sound right?

Are there any good books you recommend on reading?
What good websites do you recommend on finding investors?

Basically I have an idea, where do I start now? What are the first necessary steps that I need to take.

[trillianjedi]

That's a massive question that to be honest a forum really couldn't do 100% justice too. Much of your next steps will be specific to your business and not generic.

Couple of thoughts though:-

1) patent

What are you trying to protect? If you feel you have a technology with an inventive and patentable step or process then you should seek the advice of a patent attorney.

2) incorporation

A lawyer or accountant could help you here. There are tax implications that you need to understand in order to decide the nature of entity you should incorporate, if at all.

3) investors

General order is:-

1. Try a friends and family round first.
2. Create a solid business model and product/service that can show rapid growth
3. Go to some of the VC roadshows. Talk to them and find out what they're looking for. Most are looking for the same thing : (1) existing track record - you've flipped a company before or built a successful business (2) product that fits in with their portfolio and a space they believe in and (3) killer management team (or advisory board).

4) finding the right people

If you do take an equity investment the VC's may be able to help you here. That's part of your choice in which VC's to approach.

does the order sound right?

No, not in my opinion. Having succesfully raised VC finance several times in the past my key point of advice is don't dilute too early. If you have a good business you'll kick yourself later. The best way to procede is to build what you want to build and get it out to market - some trial customers or whatever you need. Prove the concept works and prove that you can make people pay you money for the product/service. When you reach that point it's just a matter of scaling the business, and the VC's will be (1) much warmer to the idea and (2) will take less stock.

Are there any good books you recommend on reading?

I would start with:-

Guy Kawasaki - The Art of the Start
Gladwell - The Tipping Point

What good websites do you recommend on finding investors?

Forget it - doesn't work. The only way in is personal introduction and personal meeting. In the absence of a personal introduction you can get in front of VC's/seed angels at the various roadshows out there. If you're in the UK there's a bi-monthly in Cambridge. Not sure on the US, but I'm sure they're out there. 5 minute elevator pitch type events usually - excellent way to hone your pitch and find out what needs changing.

Basically I have an idea, where do I start now?

Read Kawasaki's book and attend a VC/angel roadshow. Understand your competition and write up a pitch that you can do in 1 minute which shows that (a) you're amazing and (b) your product is different and better to the competition and will be the next Google and (c) you have credability.

If you can't do it in one minute you will never raise equity finance. 1 minute is, in my experience, the average VC's attention span, unless you're there by personal introduction (in which case they'll listen for 10).

What are the first necessary steps that I need to take.

Prototype it. You need a demonstrable thing, whatever that "thing" is. If you need to get outside help to build it, have your lawyer draft you an NDA (non-disclosure agreement) you can use. If you do later take up a VC investment, disclosure will come up in due diligence. If you do have a patentable process, lack of an NDA will screw you when it comes to filing. As soon as you tell anyone about it, it's published.

[dailypress]

trillianjedi, thank you very much for your advice. I will definitely read the book.

I think I have an interesting idea, but need a programmer/web developer. I think I should first patent the idea before anything.

I would like to develop the site myself as you mentioned and then look for VC however, I dont think I can do the programming myself. It is not simple HTML coding.

Having succesfully raised VC finance several times in the past my key point of advice is don't dilute too early

I read your post again and not diluting too early is another excellent point you mentioned. Unfortunately I learned the hard way! But hopefully I wont make the same mistake again.

Thanks again for your very professional, informative post.