Tech lawyer Thomas Kulnigg, Partner at Schoenherr Attorneys at Law, maps out how to deal with the highs and lows of Venture Capital from a legal point of view.

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Reduce Complexity

Think carefully about when to go simple and when to go complex. Things tend to turnout differently than planned. During your voyage to the exit, it is important to find and maintain the right level of complexity.

Pick Your Battles

Is it really worth picking a legal fight? Sometimes, entrepreneurs must simply swallow their pride in favour of the big goals. Just like in the movie The Social Network, when the lawyer told the founder to pay for a settlement agreement: In the scheme of things, it’s a speeding ticket.

Careful With Your Crew

The main reason startups sink is the wrong crew. Remember that you will have to go through calm and storm. Define roles early on as well as ways to resolve conflict, including how to separate peacefully and with dignity. Chances that the leadership team remains the same from start to exit are low. And do not be greedy with your shares. As a captain, you ought to incentivise your crew members; share your success (via an appropriate incentive program) and your crew will reach for the stars.

Business Is Business

Founders need to find a way to separate private matters from business matters. It is good to work with people you trust, but the roles must be clear. The simpler the structure, the better.

Avoid 50:50

Founding a company as a duo is prone for stalemate situations. It is better to have a third person on board from the very beginning. If that is not possible, it is a good idea to define a process to avoid getting stuck in a deadlock.

Prepare for Exit

Exiting a startup is a long and often exhausting process. The human factor is always at play. Avoid shallow waters and anticipate currents. Many leaks pop up in an exit that could be dealt with beforehand – you need to be at least three steps ahead.

Overboard!

Usually, the ideal time to exit a startup is when the company is at its best. That moment is often missed. In the end, there is no right time to sell. There is only the right deal at the right time. But you must keep in mind that it is a give and take – buyers will always aim for the upside.

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