This was an earlier IEEE Boston Entrepreneurs’ Network panel presentation I chaired that covered –
- Why business alliances are important to entrepreneurs, early stage companies and investors?
- How strategic alliances can be used and structured to obtain first funding directly or indirectly?
- How they are used and structured to gain credibility, to leverage sales growth and to penetrate new markets?
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Finding a co-founder or recruiting a core team is hard work. It is a long, dragged out process and you have the right to be picky and should be picky. Ultimately, choosing a co-founder is like choosing a spouse. A business partnership truly is a marriage. You will have to make compromises when it comes to money, ideas, scheduling and so much more. Look for someone who can bring something different to the table, if you are more tech-savvy look for someone who is business oriented. A successful partnership is one where each co-founder has their own area of expertise and when you combine those two separate areas you’ll find you have yourself a successful duo. Don’t jump the gun and enter into a partnership just because you like what you see right of the bat. “Date”, get to know who your potential candidate is and if they share similar views, if they’re trust worthy and loyal. After a few months of feeling them out – then take the next step and propose a business plan together.
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Negotiating pay raises and better employment terms is a touchy topic in the business world. At times, its often hard to know when it is and is not appropriate to renegotiate you’re employment contract. Aaron Sacker* a VP sales accepted a position that offered less in terms then he originally wanted, however out of pure necessity Aaron Sacker took the job and relocated himself and his family across the country. Two years later, after victory was achieved and Aaron Sacker had mastered his new position, improving the company along the way, Attorney Robert Adelson helped him re-open negotiations that were originally denied in the initial employment contract. Due to Aaron Sacker’s success with his current company, more promising opportunities were presented to him. However, because of Aaron Sacker’s devotion to his current company and role as a key player Attorney Adelson and him decided to re-negotiate his employment terms with his current company before choosing to accept another offer. Aaron Sacker knew the value he brought to the company and with the help of Robert Adelson, voiced this to his employers who agreed, and did not want to risk losing Aaron Sacker. Re-negotiation, in those circumstances, offered the best course or both sides.
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Negotiating succession plans protects the first-time founder’s interests and gives opportunity for a professional CEO to lead the next phase of growth for the company. Founder CEO succession often calls on venture capital investors that have the proven ability to sustain infrastructure and organizational growth. VCs effectively communicate, interface, and energize investors, directors and the media. Negotiating CEO succession allows investors to use their experience in scaling ventures to liquidity, before investing millions of dollars to fuel the next stage of growth. First-time founders that seek capital need to recognize that founder CEO succession is likely, and sometimes inevitable; because of this, it is imperative to negotiate succession plans. First-time founders should build a strong board that includes independent, tech-savvy directors. Investors should not overload the board, rather it is best to have an independent majority of industry representatives who can empathize with the founder CEO and a minority of VC members who can offer input but not control the direction of the firm. In taking investment, and negotiating CEO succession plans it is prudent to choose character over cash, time should be spent evaluating past investments, experience and judgment. It is also important to ask questions: what input would the founder have? What would be the composition of the board? Founders should be looking for mutual respect amongst their investors and other members of the board.
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Restricted stock can be offered in lieu of cash to deliver immediate value with a strike price much less than current fair market value. For senior recruits, technical or executive, you want to offer more to beat the competition – restricted stock does this. Robert Adelson, a Boston employment attorney, negotiates executive compensation; in April 2012 he worked with executive Steve Miles to set up a vesting schedule to later grant him compensation in the form of stock.
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