copyright © 2010 clean tech accelerator choosing and working with your service providers an guide...

Copyright © 2010 Clean Tech Accelerator

Choosing and Working with Your Service Providers

Choosing and Working with Your Service Providers

An Guide for the Entrepreneur

Copyright © 2010 SV Accelerator

SV AcceleratorSV Accelerator

• We advise entrepreneurs and interface with investors

• Enterprise and consumer software / Internet companies, looking to expand into Clean Tech

• Operate out of Silicon Valley

• Operational experience in management of technology

• Technical expertise in in EE, CS, Mech E, Materials Science, Chemical Engineering and Biotech

• Expertise in technology law (patent and transactional)


(Some) Services You Need(Some) Services You Need

• Financing (angel, VC, credit, govt grants)

• Incorporation

• Contracts (investments, employee agreements)

• Patents and other IP

• Banking

• Real estate / office infrastructure

• Finance & accounting


Provided ByProvided By

• Angels, VCs, government agencies

• Attorneys (Corporate, transactional, IP)

• Accountants and book keepers

• Commercial bankers

• Grant writers


General Thoughts on Service ProvidersGeneral Thoughts on Service Providers

• Substantive competence

– Must be selective, don’t assume reputation = competence

– Ask questions regarding domain expertise

• Be aware of fit

– Are you an appropriate client for this firm

– Size/revenue appropriate?

– Goal appropriate?


Service: Patent FilingsService: Patent Filings

• Objective: Obtain "crown jewel" protection on company's technical innovations

• Whether available patent protection is narrow or broad, patent filings are usually necessary

• An item on investor checklists, regardless of ultimate breadth, validity and enforceability


Patent Filings: OptionsPatent Filings: Options

• Large national/international law firm

– Some are $1B revenue

– Morrison & Foerster

• Boutique patent law firm

– Weaver Austin

• Solo practitioner

– Many “retired” from the other types of practices


ProsPros


– One-stop shopping


– More technical specialists

– Some work with small clients


– Low cost

– Usually work with small clients


ConsCons


– Focus on litigation and other high-revenue projects

– May be scale inappropriate for a startup


– Lack of cross-disciplinary understanding (corporate, transactional)


– Uneven substantive competence


Patent Filings: Case StudyPatent Filings: Case Study

• UC biotech faculty member

– UC Office of Technology Licensing issues

– Informal advice - document lack of responsiveness from OTL

• Engaged large law firm to file a patent

– Came to us about a year later

– Complaint – not prioritizing his issues, using “last few brain cells at the end of the day”


Patent Filings: Case StudyPatent Filings: Case Study

• We reviewed the case, saw some substantive problems, but more important process/project management problems

– Also saw inappropriate bill items based on abandonment of patent application (law firm’s fault)

– Probably not dishonest, merely disorganized

• Poor billing processes

• Size inappropriate client, but similar problems can be seen at smaller firms


Patents: Bootstrap or Angel StartupPatents: Bootstrap or Angel Startup


– Generally competent, but may be too large for you

– Can a specific department work effectively with you?

• Don’t accept a blanket statement on this

• Boutique law firm (specializing in patents)

– Usually appropriate


– Must have excellent recommendations


Patents: VC Funded/Fundable StartupPatents: VC Funded/Fundable Startup


– Make sure patent group has specific technology expertise, and quiz them on this


– Can be a good choice, if they communicate with your corporate and transactional attorneys (billing issues)


– Might actually be too small for some startups

– Should have pedigree from a well-regarded firm


More on Client Fit: Finance & AccountingMore on Client Fit: Finance & Accounting

• Clients: Five art school faculty members, teaching abroad

• Service provider: Large accounting firm

– Needed accounting/tax preparation while working abroad

– Fee was flat rate $2K per person – not major revenue source



• Clients were assigned to the most junior associates

– Lacked relevant knowledge such as foreign residency tax issues

– Lacked experience and authority to fix the situation, such as bringing in other team members

• Clients too small for partners to care to intercede

• Classic example of size inappropriate client



• First failure in project management chain

– Should never have taken on this client in the first place

– You cannot rely on the service provider to make this decision correctly for you

• Our advice, post hoc – if you care about the University’s money, demand a full refund

– The firm cares little about making $10K, they will care little about writing it off


Another Case Study: TrademarkAnother Case Study: Trademark

• Client: “Swan” baby clothing designer

• Service provider: TM department at large law firm

– Filed Swan trademark registration and received first rejection due to existing “Swan outerwear”

– Conducted extensive legal research to distinguish trademarks

– Completely cost inappropriate for small client


Another Case Study: TrademarkAnother Case Study: Trademark

• Switching cost for large corporation is high (think Pepsi)

– And large corporation has already considered this

• For new, small clothing designer, switching cost is ~ 0

– Should have advised name switch, and/or TM registration for “Swan baby” clothing instead of “Swan” baby clothing, not extensive legal research

– Law firm agreed to write off bill item, but why was it executed in the first place?


More on Choosing and Working With Service ProvidersMore on Choosing and Working With Service Providers

• Seek input for referrals and vetting of service providers

• Once selected, ask for past and current client recommendations/feedback

• Seek out service providers that are appropriate for your company and stage

– As your company grows and/or its needs change, you may need to replace even a good service provider

– Consider having them work with/supervise a larger service provider


More on Choosing and Working With Service ProvidersMore on Choosing and Working With Service Providers

• In all cases must be aggressive and organized about project management, don't rely on them!

• Regularly monitor progress and quality of work, don’t be afraid to bring in a third-party for input

• Review bills thoroughly and ask for explanations


Questions?Questions?

Robert H. Lee

[email protected]

Deepa Ravindranath

[email protected]

+1.510.427.2049 (California)

copyright © 2010 clean tech accelerator choosing and working with your service providers an guide...

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