The Eight Great Mistakes Founders Make (Part 2)

Last month on the blog we outlined the first half of Goodwin Procter tech partner Dave Cappillo’s recent Harvard Innovation Lab presentation, “The Eight Great Mistakes Founders Make.” Dave’s discussion focused on how to avoid the common missteps that entrepreneurs make in the early stages of a company's life cycle. In case you missed it, here is a look at Dave’s first four “great mistakes.” And now, here are Dave’s last four “great mistakes.” To follow along with the video of Dave’s presentation, scroll to the minute markers noted next to each mistake.

  1. Failing to raise enough money (for fear of dilution or otherwise) (41:22-42:37)
    • Things often cost twice as much as you think they will
    • Things often take twice as long as you think they will
    • Management needs to run the business rather than be preoccupied with fundraising efforts
  1. Spending money too quickly (42:38 – 44:18)
    1. Hire conservatively and purposefully (programmer vs. CFO)
    2. Don’t hire at too senior of a level too early
    3. Consider equity compensation (with vesting)
  1. Failing to pick advisors who add value to your business (44:19 – 51:30)
    1. Look for people with the right set of experience, right networks, right industry etc.
  1. Failing to adequately protect your intellectual property assets (51:39 – 1:00:40)
    1. Intellectual property is often a company’s only asset out of the gate
    2. Important for employees to sign an agreement that says the IP belongs to the company
    3. Carefully analyze founding team member’s agreements with former employers to determine whether former employers may have an ownership claim to relevant intellectual property

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