Loading...
Answers
MenuWhat are the factors to consider when launching two to three startup projects/products under one corporation?
How do you structure that, so that investors can have the option to invest in only one or two particular products, and not just in the corporation as a whole?
Answers
It's best to keep everything in a single company to start with. Before going further with my answer, I'm compelled to tell you that launching multiple products *rarely* works and unless you have very significant prior success, most investors will take interpret diversification as a very negative signal.
So just wanted to provide you that warning. You should do nothing in the early stage to your corporate structure to optimize to sell or spinoff what the Company develops. The reason for this is that it incurs legal expense prematurely and often limits your choices instead of facilitating the desired optionality.
Investors almost always want "the whole hog" and also want to back a whole team focused on making a single product or service as big as it can get.
Let an investor or buyer drive a spin out discussion, not the other way around.
Happy to talk in more detail in a call.
If you are the sole leader in the startup, and cash is tight, this is going to be tough.
If you have capable leaders to delegate to, and have a sizeable warchest, this is possible to carry off.
The only way I can see multiple launches working is to have each treated like its own company. Each has its own leader, staff, budget and success/failure criteria in a specific period of time. You act as the cheerleader, focuser and resource-getter for each 'general'.
Trying to do it all yourself will lead to exhaustion.
On one hand you're trying to put all your eggs in one basket and then you don't want to share the basket. I believe it doesn't makes sense as long as the products aren't complimentary. You need to understand the equity trade-off that would happen in case of just product based investment or corporation based investment. Once clear with numbers and exit plans, it would hardly make any difference. If I may ask, if 2-3 products is what you're launching and 2-3 products is for what you're seeking investment as well then, how does it matters if an investor invests in all three or one corporation which comprises of all three?
You're going to be mad at me. Do one thing and do it well. FIRST. branch out after the initial launch and offerings but it's hard to have everything dialed in to multiple projects at the same time unless you have a seperate team devoted to each of those projects which means more overhead, less profit and a lot of juggling.
You CAN launch multiple products under one corporation. In fact I'm helping a tech firm do just that right now. but our main focus is on a single product with ancillary offerings to begin with. (we don't shut down the opportunity for monetization, but we don't advertise that we are everything to everybody either).
Once the first phase is performing at a rate that the firm is happy with, the focus will be able to shift to another product launch and offering while the first is still performing.
I hope this helps. Feel free to speak with me more in depth!
I personally wouldn't advise it - simply from a liability point of view, it seems to me you are defeating the whole point of forming an entity. Furthermore, depending on the products - you may be able to offset taxes using multiple entities...if you're clever.
Related Questions
-
How do you get your first customers for a consulting business?
Back when I started LinkedIn wasn't as huge as it is now. I wish it was. I didn't have a large network and those networking sessions NEVER brought me any clients. I used to go to all sorts of them hoping to get clients. There were a couple of nibbles here and there, but never anything serious. The only thing that helped was reaching out DIRECTLY to people in my target market. That meant cold calls and cold emails. I'd sell myself while thinking about their needs. Once I got a few bites I'd build good rapport by keeping in touch, asking questions, repeating back what they were saying so that they knew I was on the same page and kept my promises. If I said I'd call them back next Tuesday at 2:15 I'd do so. Eventually I built trust with them without having a network, or an insane amount of experience. Oh and the most important thing about consulting is to LISTEN. When those first clients notice that you're truly listening and you're not selling the cookie cutter solutions everyone else is trying to sell them that's when you got them hooked. You start to understand their problems, fears, and see through their eyes and not just yours. A network will help, but in the beginning just good 'ol salesmanship will get the ball rolling.JC
-
What would be a good answer for describing the size of your company to a potential prospect who might consider you too small to service their account?
What an awesome question! Businesses are running into this issue more frequently that ever, good news is, it can be done. Having worked on projects with oDesk, Fox Television and Wikipedia and having a very very small staff, it's certainly possible. Here's how I say it in our pitches to larger organizations: "Tractive West provides tailored video production services to organizations of all sizes. We have developed a distributed workflow using the latest digital tools. We leverage our small creative and management team with a world wide network of creative professionals, that means we can rapidly scale to meet the demands of any project while keeping our infrastructure and overhead lightweight and sustainable." Cheers and best of luck.SM
-
How to turn a niche seasonal business into a all year round business?
Thanks for reaching out. Do you want to meet in person? I am in San Francisco/San Mateo location. Best, SeanSP
-
What is a fair rate of return on a $70K investment?
An agency is an instant cashflow model business. Ugly to scale due to logistics of a team and the mess of being in a client-service business model. But easy to rapidly monetize. Make a phone call. Close a client. Collect the cash. (Yes, that's a bit over simplified). Your girlfriend shouldn't grab a dime from anyone before locking in her first client. An agency can be entirely self-funded and there's little reason to pursue funding. After she had generated her first $50,000 in clients (for example), she can supplement growth with debt financing. And, in no way, is the idea of your generous, retiring parents investing $70,000 into a first time business owner, when statistically most businesses fail ... a good idea. Fair rate is a flexible concept. If I was lending out $70k, I'd want to see 3x $210k back as a minimum. Irregardless of whether that is "fair"... it would be the minimum (for illustrative purposes) where the process of the due diligence and contracts and parting with $70k liquid in trade for a "maybe" $140k gain would be of interest.RT
-
19 year old with a start up idea that doesn't really know where to start.
Try and find someone your age that can code and persuade them to join you on your journey. It's either that, or learn to code. I've done both. Learning to Code www.udemy.com www.treehousapp.com + many other. Finding a Co-Founder - Go to meetups - Find a school that teaches computer science - Find someone on GitHub.com The truth is there's 100 ways to solve your problem, but it will take risk and based on your question it doesn't seem like you're willing to take any. If you believe in your idea, it may mean sacrificing school? If you're not willing to risk that, then why should an investor risk his capital on you? It just shows your conviction. Not everyone is suppose to be an entrepreneur. If you are, you'll need to step up and take action. P.S. I started when I was 17. Failed. Tried again at 19. Failed. Kept at it till I was 24. Won. Again at 29. Won. Again at 31. Still going (= Clarity). Just start.DM
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.