Professional Advisors
There are five commonly used types of professional advisors:
- Patent Lawyers
- Accountants
- Commercial Lawyers
- Technical Consultants
- Business/Management Consultants and Interim Managers
Patent Lawyers
Patents are valuable because they provide a business with a competitive advantage and are often used as a key input into business valuation. They are most effective when supported by substantial know how and, in some cases, may confer a legal monopoly. How a patent is drafted can make the difference between a hugely valuable business and a failure. It is also worth noting the distinction between patent lawyers (who write patents), and their close cousins, patent solicitors, who can advise on patent litigation.
| What should a patent lawyer do? | What should a patent lawyer not do? |
|---|---|
| Patent lawyers draft patents. They advise businesses on the best way to present their inventive claims in order to have the widest scope and the highest chance of a successful grant. | Patent lawyers are not patent examiners. It is not their role to assess whether an invention has merit either in inventiveness or in commercial value and their willingness to accept an assignment is not an endorsement of an invention's quality. |
| They also advise on other forms of Intellectual Property, such as registered designs or copyright | |
| They will normally handle the administration of an IP portfolio, corresponding with the various national and international patent (or Intellectual Property) offices and alerting the patent holder of any actions they need to take. |
Accountants
Accountants are there to provide an accurate picture of the business as a financial entity. This may be management accounting (accounting which supports internal decision making), or financial accounting (that which supports external evaluation of the business). A business needs access to both to raise finance, but in the early stages, finances may be simple enough for the two to be combined.
| What should an accountant do? | What should an accountant not do? |
|---|---|
| Accountants help a business to meet its administrative obligations (tax, for example) and keep track of its financial position. | Accountants can advise on the financial implications of strategic assumptions. They are not trained to assess the likely validity of those assumptions. |
| Specifically for early-stage technology businesses, they should be able to advise on and manage relevant specialist areas such as R&D tax credits. | As with other specialist expertise, their view is just one element of a strategic picture. |
| Accountants can provide the credible historical financial data which investors will request during the due diligence process. |
Commercial Lawyers
Commercial Lawyers will draw up the agreements used during a fundraising round. This may include the investment agreement, shareholders agreement, employment and options agreements, and financial agreements such as loan or debenture agreements.
| What should a commercial lawyer do? | What should a commercial lawyer not do? |
|---|---|
| The role of commercial lawyers is to anticipate future problems and minimise their effect by providing a suitable contractual framework. | Lawyers are not there to take a negotiating position. They are not signatories to the documents and will not be bound by the agreements. |
| They should advise and inform the negotiating parties in a deal. |
Technical Consultants
Major investors will often engage a respected technical expert to assess the IP and technical potential of a business as part of the due diligence process. They may ask the business to cover these costs, or deduct them from the funds invested in the business. Securing the support of known authorities in a field, either as members of the company's senior team or by commissioning independent reports from them, can reduce the level of technical due diligence subsequently required.
| What should a technical consultant do? | What should a technical consultant not do? |
|---|---|
| Technical consultants can help a business understand the technical developments within its field and choose the most effective technical development route. | Technical consultants are not well placed to assess whether the market will respond favourably to any particular technology, and are not skilled at providing wider strategic insights. |
| They can also provide credibility to outside parties, their involvement acting as an endorsement of the company's technical prowess. |
Business/Management Consultants and Interim Managers
New technology businesses are often founded by technologists who need a wider set of commercial skills to secure investment. It can be difficult to attract high quality staff in the early days of a business. One answer is to use consultants or interim managers to provide the necessary skills on an 'as-required' basis. Often venture funds, angel networks and business incubators can recommend appropriate people or organisations.
| What should a business consultant do? | What should a business consultant not do? |
|---|---|
| Business consultants provide the skills that a more mature business would access through its employees. The difference is the contractual framework: the young company minimises its overheads by using them only as required. | Interim managers and consultants may are paid to synthesise the views of specialist advisors (IP lawyers, technical consultants etc.) into a coherent business plan. However, it should always be made clear whether a party is being engaged to provide professional services or to take executive decisions. |