Tolis Dimopoulos tackles the topic of when you should formalize your new business idea into a company. To Mr. Dimopoulos, the important considerations are how many people are involved with the idea and how far along the work towards fulfilling the idea is. More people increase the risk of a founder being frozen out; therefore, more people involved with an idea weighs towards earlier incorporation (complete with who owns what percent of the company around the idea). More work being done increases questions about who owns the intellectual property, which again can lead to bad consequences for the company (especially if a member of the team developing the idea gets frozen out).
Mr. Dimopoulos also notes that, while the temptation is to skimp on legal costs in formalizing your idea into a company, it's more important to find the right attorney. Even if you end up spending more, many lawyers are sympathetic to the needs of startups and will work on an alternative payment plan.
- Summary by FizzLaw Team
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When to Formalize an Idea into a Company