How to become a startup-friendly lawyer

1. What Lawyers need to
know about Startups
Dr Aniruddha Malpani
www.malpaniventures.com

3. Lawyers and startups
• Legal entrepreneurship –
LawTech is a hot area. How can
lawyers reinvent the legal
system ?
• How to be a startup-friendly
lawyer

5. Funded legal startups in India
• LegalRaasta (2015, Delhi, $1M): Online legal services provider
• LawRato (2012, Delhi, 100K): Online open marketplace for lawyers
• Vakilsearch (2010, Chennai): Online platform to search and book for professional legal
services
• Lawin1 (2014, Mohali): Online legal services platform
• LawFarm (2013, Kolkata): Online platform for legal services.
• Docket (2013, Bangalore): Online single window service for documentation
• MyAdvo (2015, Delhi): Online marketplace to book lawyers
• Legistify(2014, Delhi): Online platform to create legal documents
• HiGrit (2016, Delhi): Legal consultation platform
• StartupWala (2016, Pune): Online startup-centric legal services platform
• Wazzeer (2015, Bangalore): Marketplace for professionals practicing law and accounting
• Ruly (2015, Delhi): Rich listing platform, Q&A forum, fixed fee consultation and lawyer
booking
• Crux IQ (2016, Chennai): Intelligent contract analytics
• MyWardo (2016, Gurgaon): AI-based legal research assistant

7. Lawyers vs Entrepreneurs
• Taking risks is essential for startups
• But lawyers are taught to reduce risks !
• Startups have limited funds
• Don’t understand legalese. Complex and
boring
• Treat lawyers as a necessary evil and a drain
on their resources ( time and money)
• Rush job ( startups do everything at the last
minute !)

8. The startup-friendly lawyer
• Engage with founders early
• Explain the risks of non compliance
• The importance of documentation for
their protection
• Founders don’t understand the risks –
you need to show them how you can
protect them
• Offer to negotiate on their behalf – this is
your core competence !

9. Huge opportunity because of the
startup boom
• Be empathetic
• Be willing to educate
• Keep it simple !
• Be business friendly – try to enable and
not to block
• Don’t be adversarial with the counter-
party’s lawyer

10. Top Legal Concerns of founders
• Freedom to operate (Non-competes / NDAs,
regulatory environment, blocking patents, etc)
• Incorporation
• Capital structure and ESOPs
• Inter-se founders agreement
• Funding – seed, series A and follow on rounds
• Protection of IP
• Employment
• Shutting down

11. Need to reframe the lawyer’s role
• Business enablement NOT risk
management
• Help founders to succeed
• Scarce but secure resources . Be frugal !
• Personal stake in the outcome ? Sweat
equity ?
• Be part of the team, not just someone
they call when they run into trouble !

12. Common legal errors
• All legal work through DIY forms
• Being represented by the “wrong”
lawyer
• Ignorance of basic startup law
• Lack of a basic IP strategy/framework
• Unfamiliarity with regulations
• Ignoring threats by former employers,
cofounders, contractors, users,

14. Opportunities for Law-Tech
startups
• Practice management. Manage cases, clients,
documents, appointments,reporting, and
accounting.
• Electronic discovery
• Legal research . Digitised case law
• Document Automation/Assembly
• Legal platforms to connect clients with
lawyers.
• Speech to text
• Apps and WhatsApp for lawyers

15. Lawyers as founders –
Law-Tech Opportunities
• Big data analytics for analysing case law
• AI and ML for contract analysis
• Automation of legal writing using NLP

16. Lawyers are worried technology
will make lawyers redundant
• Platforms for succession planning – for
example , writing a will using online tools
• Online tools to assist with immigration
document preparation without a lawyer
• Online dispute resolution
• Chatbots. Do Not Pay, a chatbot which is “the
world’s first robot lawyer” to help people fight
parking tickets

17. Interesting areas
• Smart contracts and blockchain
• Democratise access to justice ?
• Cybersecurity failures. Hacking, phishing,
ransomware. Who should be held
liable ?
• Who do you sue for a faulty algorithm ?

18. Learning to empathise with
entrepreneurs

21. Risks an entrepreneurs
faces
• Be prepared for failure
• Learn to be resilient
• Can be a great journey - will
teach you a lot about yourself –
and about the world !

22. Lonely journey
• Lots of emotional angst
• Hard to convince your family that
you want to chuck up a safe job !
• Need to find support
• Other founders are the best source

23. The role of mentors and
coaches
• Mentor vs Consultants - big
difference !
• Incubators
• Accelerators
• Many parasites in the startup
ecosystem
• Advisory board

24. Key ingredient for success – Learn!
• To sell. Learn to tell stories
• To lead a team
• Get your hands dirty
• To be patient and persistent
• Work in a startup – the best way to
learn a lot very quickly !

25. Sources of funding
• Consultancy
• Job
• Bootstrapping
• Family and friends
• Customer-funding
• Crowd-funding
• ICOs

26. Ideas, Implementation and
Funding
• Ideas are a dime a dozen. Don’t fall in
love with your ideas – most are bad !
• Generate lots of ideas ! This improves
your chances of stumbling on the right
one
• Don’t worry anyone will steal your
ideas. Share them and ask for criticism,
so you can polish them !
• Passion is necessary but not sufficient

28. Common mistakes
• Ask for a NDA
• Use DCF for valuation
• Try to bluff
• Refuse to accept criticism and
feedback
• “ Wannabe entrepreneurs”

29. Red flags
• Only an idea, with no
implementation
• Hockey stick curve for revenue
• “ No competition”
• No skin in the game
• Too many buzz words, such as AI
and ML

31. Due Diligence
• Pre-negotiation
• Due Diligence Checklist
• Negotiation
• Term Sheet

32. Funding
• Negotiation
• Valuation
• Control
• Our preferred option - CCPS

36. Legalese
• Term sheets
• SHA
• Focus on areas of agreement
• Use standard templates
• Find a startup friendly lawyer

37. Whom do I fund ?
• Fall in love with the team
• LOI vs ROI
• Integrity
• Curiosity
• Humility
• Willing to teach – and to learn
• Paying customers

38. Bootstrapping
• Proves you can implement !
• Shows faith in yourself ! If you don’t
invest in yourself, why do you expect
investors to ?
• Guerilla marketing
• Your customers are your best source of
funding !
• If you can get paying customers, the
investors will follow !

39. Smart money vs dumb
money
• Not all investors are the same
• Do your homework before
accepting funding
• Treat the money with respect –
raising funds means taking on lots
of responsibility

41. Pearls of wisdom
• Beware of investors :
– asking how much return you can give to them
– not respecting your time
• Don’t push-sale your company, get investors
to come to you
• Follow up till investors give you an answer. If
it’s a No , ask why they rejected you
• Learn to negotiate - Don’t be too rigid and
don’t be too flexible

42. Pearls of wisdom
• Raising funding is no validation for a business
– only repeat paying satisfied customers are
• Don’t fall in the trap of vanity metrics
• “No”s are not a personal rejection . Think of
them as being a lack of meeting of minds
• Don’t compare yourself with the unicorns –
they are outliers !

43. Angels vs VCs
• Angels invest personal money. Come in all
shapes and sizes, because they have different
motivations
• When did they sign their last cheque ?
Interview their founders
• VC structure – GPs and LPs
• Institutional imperative – decision making by
investment committee

44. Bitter truths
• Most startups fail
• No one knows which startups will fail
• It’s a numbers game
• What goes up usually went down first
• All companies always need more money

46. Good lawyers know how to
create trust !