legal, funding, business-structureI was given advice from Denis (on this list) that before even to bother trying to get a prototype working, it’s best to first find potential buyers for the intended product and then try to get funding and only then to proceed in making a prototype.
Given this, I was wondering that if in the end we find the concept is not workable either due to science (not our fault) or due to the start up falls apart for whatever reason (our fault), can the early adopters come after us? How to protect ourselves from VC’s and angels if a start up doesn’t work out? Especially since we have nothing other than an idea at this time that we are trying to sell and we ourselves have never seen it work?
What does everyone do?
Thanks
Two words: Execution wins.
Very few successful startups were first to think of, build or launch the idea. Those who went before may be frustrated, but they have no grounds to complain.
One reason why the lean startup approach is attractive to startups is that it’s a way of having better ideas - where “better” means, easier to turn into revenue. Finding a promise that resonates with a willing market is golden.
The best way to protect your opportunity is to give away your idea. If you focus on customers while everyone else is focusing on competitor analysis, technical architecture, stock option programmes and other drag factors, you’ll win.
In all likelihood you’d incorporate with limited liability so technically your problems end with the company’s failure. However, empirically you’d take a hit to your reputation (though in some cultures failure is seen as educational).
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