Lawyers: just another brick in the wall?

November 28, 2019 - Startup Life

Seed Up has now been in existence for almost 2 years. Seed Up? Our start-up which aims to offer sustainable and quality legal support to new companies.

Challenges and expectations

Initially, the mission was clear: to offer legal support from the very first steps of the start-up, which is essential for its development.

The obstacles were known, at least we thought so! A certain fear, even an aversion to being assisted by legal advisors: a service whose initial added value is not obvious, a prohibitive and not very transparent cost, a risk of being considered as of second importance compared to more mature clients.

The challenges naturally stemmed from such obstacles and could be summarized as follows:

– Convince, through examples and real-life experiences, that legal support is essential from the very beginning of the company’s creation. It does not necessarily have to be large, but it must lay the foundations for sustainable development;

– Provide adequate compensation that is in line with the model of a start-up, with its share of risk and uncertainty, and that allows the start-up to be comfortable in its relations with its legal counsel;

– A total commitment to start-ups, and a passion for their projects.

Working with talented entrepreneurs

What are the lessons learnt from these first 2 years?

The world of start-ups is an extraordinary world, made up of committed, courageous and demanding entrepreneurs, and which remains… a small world! Care should therefore be taken to ensure that proposals are suited to the concrete needs of entrepreneurs without presenting unjustified differences for similar services. Each proposal, while leaving room for negotiation, is personalized but is based on pre-established criteria such as the field of activity, stage of development, financing capacity and complexity.

The services required by start-ups are also indeed very complex: this complexity does not lie so much in the drafting of a model employment contract (quoi que!), but in what constitutes the mandatory path for start-ups, the fundraising. Swiss law has specificities and complexities that make it essential to have a lawyer specialized in start-up financing: “liq. Pref.”, “reverse vesting”, “cap table”, “non-compete”, “closing actions”, “contingent capital” are all barbaric terms that must be mastered to provide useful advice to a start-up in its negotiations. More generally, the challenges specific to the capital structure and the relations between founders and investors are key to the success of the start-up’s development.

A fundamental difference with mature companies, that we have been able to experience with Seed Up in the provision of legal services, is the total commitment that the start-up requires from us in its early stage phase: if a company of a certain maturity can accept its legal counsel to take a few days to answer, the situation is very different for an early-stage start-up, whose start of its business is a full and complete activity, to which the founders devote their whole days and nights: immediate reactivity is therefore required in order not to leave the founders in uncertainty; this situation is very different from an established company, for which it is rare for the operation to be dependent on the recommendations of its legal counsel. This is probably the main lesson we have learned over the past two years: the advisor’s commitment must be total in the initial phases of starting an activity. 

Learning to say “no!”

And you have to know how to say: NO!” No” to a premature project because it will be unnecessarily costly for the start-up and will encroach on the time available for other start-ups; “No” to the provision of a document that is not useful to the start-up: what is the point of charging fees for drafting general terms and conditions when the business model is not established, or an employment agreement when the start-up does not have the funds to employ staff? “No” to the provision of a “template” at a lower cost because the added value does not lie in the model but in the experience that accompanies its drafting and negotiation.

We have been fortunate enough to be able to support nearly 40 entrepreneurial projects since Seed Up was founded. Innovation is great in the sense that it often seeks to fill the gaps offered by the law, and our mission is to assess the concrete legal risk: we have always hoped that if the founders of UBER had come to consult us, we would have been able to present the risks of their project to them, but without sending them back to their studies on the grounds that the law did not offer any opportunity for such an activity.

Also, supporting our start-ups with the concern that they can focus on their core business has also led us to think about other services they may need with a single entry point. Quite naturally, we have integrated an accounting team into our structure. With dedicated offers, start-ups benefit from accounting support in line with their legal and economic strategy, another advantage for fundraising eased by bookkeeping in compliance with the law and the financial visibility requirements of any entrepreneur.

The best is to come!

What are the challenges for the future of Seed Up? We must maintain a constant commitment with our start-ups, favoring a close contact, while developing the number of projects we wish to support. In addition, since financing is the key to the development of entrepreneurs, we are working to institutionalize and formalize relations with investors that we frequently see operating on the market, in particular seed stage financing rounds. We are convinced that this will allow our start-ups to save a decisive amount of time, both at the time of fundraising and while developing their activities, thanks to quality investors who can bring real added value to the project.

A whole program, but it’s our passion!

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Alexandre Gachet

Attorney & Partner at Kellerhals Carrard - Co-Founder at Seed Up
Alexandre is one of the co-founders of Seed Up. He is allocating most of his time to the start-up scene, assisting founders and entrepreneurs in their journey!
Alexandre Gachet

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