When asked, I describe my niche as primarily representing companies whose founders, either by choice or out of necessity, aim to defer significant outside funding at least until after product launch and proof of viability. One might think of these clients like the proverbial ugly ducklings that, while ignored early, ultimately blossom into beautiful swans.
Why this niche?
Well, first, it is a huge portion of the startup business considered as a whole — precious few startups ever receive angel funding much less venture funding. I heard recently that of the 600,000 or so new businesses founded last year, barely 30,000 received any outside investment at all and significantly less were investments led by venture funds. My “niche,” so to speak, targets the vast majority of new businesses.
Second, the competition among business lawyers for the precious few clients fast-tracking to early-stage venture investments is fierce and, frankly, I’m at a competitive disadvantage. Not only is my “brand” not nearly as recognizable as the “blue chips” in the “big towers,” but the range of services I’m able to offer post-funding is a fraction of that provided by the full-service law firms that venture funds prefer. As I typically hand off a client to one of these full-service firms once the client closes a significant funding event anyway, it makes precious little sense for me to pursue work that lasts for such a brief window of time.
Third, everyone assumes that venture investors collectively determine the winners and losers among startups, but that is far from true. In fact, many venture investors may secretly believe that their return is determined by chance as much as by skill. (Witness, for example, thestrategy behind the relatively recent announcement that RightSide Capital will invest in up to 200 startup businesses each year, a heretofore unheard number of investments.) By limiting their efforts to the portfolio companies of venture investors, other lawyers leave many potential winners on the table.
Fourth, in my experience, the most creative and successful entrepreneurs are those who not only develop a novel idea into a great product or service, but are also creative in finding a way to defer outside funding. The legal work left in their wake is typically wider in variety and far more intellectually challenging than the fill-in-the-blank work many funded companies require. What I enjoy most about my practice is learning about each new business and then drawing on my judgment and expertise to craft a way for that particular business to succeed. Put simply, ugly ducklings are fun.
Fifth, the strength of my practice — my true competitive advantage, if you will — is ideally suited to entrepreneurs who require a high level of creative lawyering without accelerating the urgency to secure outside funding. My firm’s business model rests on the very idea that the terms of each engagement should be tailored to match the needs and resources of those who hire me. I have no committee to whom I answer and no bureaucracy to negotiate. My sole focus is finding interesting work for entrepreneurs who value my advice, and appreciate the flexibility that I offer.
In this sense, I have to confess that I’m an ugly duckling, too. But I like it that way.