Cta.service.provider

Choosing and Working with Your
Service Providers

An Guide for the Technology Entrepreneur

Copyright © 2010 Clean Tech Accelerator

Clean Tech Accelerator
• We advise Clean Tech entrepreneurs and interface with
Clean Tech Investors

• Operates 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
• Financing (angel, VC, credit, govt grants)
• Incorporation
• Contracts (investments, employee agreements)
• Patents and other IP
• Banking
• Real estate / office infrastructure
• Finance & accounting


Provided By
• Angels, VCs, government agencies
• Attorneys (Corporate, transactional, IP)
• Accountants and book keepers
• Commercial bankers
• Grant writers


General 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 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: 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


Pros
– One-stop shopping
– More technical specialists
– Some work with small clients
– Low cost
– Usually work with small clients


Cons
– 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 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 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 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 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 & Accounting
• Clients: Five art school faculty, teaching abroad
• Service provider: Large accounting firm
– Needed accounting/tax preparation while working
abroad
– Fee was flat rate $2K per person - irrelevant on the
scale of the accounting firm


• 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 intercede or 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: Trademark
• Client: “Swan” baby clothing designer
• Service provider: TMdepartment 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: 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, or TM registering
“Swan baby” clothing instead of “Swan” baby
clothing (or amending application, 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 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 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?
Robert H. Lee
robert@CleanTechAccel.com

Deepa Ravindranath
deepa@CleanTechAccel.com

+1.510.427.2049 (California)


Cta.service.provider

More Related Content

What's hot (6)

Viewers also liked (8)

Similar to Cta.service.provider (20)

More from tapask7889 (20)

Cta.service.provider