From Tandem Case Studies

Venture Advisor Session with Company X

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Recently we met with a company that we’ll call Company X. For confidentiality reasons, we won’t reveal their name, but this particular company embodies the classic case study of a non-traditional performer trying to find an appropriate way to work with a government organization. It is such a classic example, we feel compelled to publish a few tips for our readers:

  1. Top Secret 200x200Find a Mentor – If you are developing technology that gets the attention of an agency PM and are not working inside of a standard relationship that has clear IP rules, you definitely want someone with experience to mentor you through the discussions. Government program managers are trying to get things to help the government with its mission – and may unintentionally provide you with advice that compromises your IP ownership. Understand that they are constrained in what they can ask you to do without a contract, and since they are mission focused they may attempt to be creative and suggest unconventional ways of working together, but they don’t always know what’s best for you and your company when making those suggestions. In the case of Company X, they were advised to tuck under a prime contractor. Of course that introduces yet another party with their own agenda. Young, eager non-traditional performers don’t want to be perceived as difficult, but they also may not have the experience to know when they might be at risk. As the saying goes, you need to pick and choose your battles, and that is exactly what a Mentor can help you with. The best Mentors can speak from direct experience having been through the same or similar discussions. Networking at Tandem events is, of course, a great place to find an appropriate mentor/advisor to help open doors.  Arlington County also has resources through its Biz Launch program where you could find a mentor with government contracting experience.
  2. Find a Co-Founder – Creating a product is hard. Creating a company is even harder. Working with a government organization outside conventional programs like SBIR is really, really hard – especially when you are doing it alone. When navigating this playing field, a co-founder with complementary skills can provide the sounding board that you need to make decisions given your unique set of circumstances. Co-founders can be brought in with very different roles. They can be full partners or they can be very lightly engaged with little to no day-to-day involvement, all the while providing a tremendous benefit as a sounding board for your specific set of circumstances. Just taking a look at a resource like https://www.cofounderslab.com/ will provide you with an idea of the different structures of co-founder relationships.
  3. Make sure to protect your IP – NDAs, IP assignment agreements and Non Competes are three of the most common Intellectual Property (IP) agreement types you will run into. It is critical that you understand your own IP, i.e. what you are building equity in, versus the IP that you are building for someone else. If you are employed by another company, all of your IP may be owned by them, so be careful. This is a great place to lean on your mentor, who will probably know when it’s time to engage an IP attorney. Despite taking precautions with standard documents outlining ownership of IP, unintended consequences can result when money starts changing hands and/or business relationships start to be formed. PMs and potential partners expect good business people to ask questions about the structure of business relationships and ownership issues, so be respectful but do not be bashful. After all, your IP is the core of your business. Have these conversations early, and be clear. Even though these may be uncomfortable conversations, having them early and being as clear and transparent as possible with put you in a position of strength, resulting in the best possible outcome for you and your company.
  4. Understand the end game – What are you trying to sell, and to whom are you trying to sell it? PMs are often functioning as brokers for new technologies that solve problems for someone else in their agency. While the PM may have the best of intentions, they can not fully appreciate the problem or needs of the end user. Getting to know the end user and developing true empathy around their use case is essential in order to build a successful program. Knowing who the influencers are, and involving them in constructive ways will be a major catalyst in building a successful program. As with so many other areas of your business, having a great mentor at your side will help facilitate this process. Mentors will often know the right forums to use for meeting influencers, which smart people to contact when gaining information, and what type of materials you will need to make a great first impression. Clarification of your own business goals also becomes very relevant during this process. For example: Do you want to sell your IP or keep it, and what type of role you expect to play in the resulting organization? A common phrase used around Government contracting and sales is Outcome Oriented. While it is generally referring to outcomes for the agencies you are working with, it is critical to keep in mind the Outcomes you want for your business so you don’t get pulled into making a decision that seems good right now, but in the long run will end up boxing you into a corner.