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Between my other meetings today, I had the great opportunity to catch up with Reed Topham, a partner at Stoel Rives' Salt Lake City office.  Reed was also our legal counsel at DoBox, Inc. and I believe he was a crucial element in helping us navigate the startup waters. 

He knows what he's doing, and he patiently kept a newbie entrepreneur from coming apart or doing something stupid!  He also gets high marks for the day that we were closing on our first round.  The wires for our $1million in funding were coming in from all over the country and I was strung out - I'll bet he called down to accounting about every hour to see if the money was there (right after I called him to check!), all the while repeating "it always goes like this, don't worry, it will be fine, it's coming" and he was right!

As important as his patience and skill were to us, it is a funny comment that was made while we were working with the legal counsel for our large, New York based angel group that taught me a lesson.  Reed is admitted to the New York bar as he had practiced there before coming to Utah, but the "big bad" NY attorney for our angel group didn't know that! One day, after working through the deal docs, he told our lead investor, Rich, "hey, Reed's not a local yokel".  Rich cheerfully repeated the comment to me, which I dutifully repeated to Reed who was, as you can guess, less than overhwelmed by the "praise".

However, this small comment is IMPORTANT.  We're in Utah, we're a small state, <1% of the population, and we can get overlooked.  If the guys in the big markets work with your legal counsel and it's your "uncle bob" or a real estate attorney, or the guy who drew up your 2 page will, guess what, you're not credible!!!!  You can't afford a local yokel for counsel (and obviously that's what our investor's counsel expected).  Believe me, as long as the process is to get to final docs for a $1million round (much less a larger round), I can promise you it goes a LOT faster if you have experienced counsel in your corner.

You need world class attorneys who have done startup deals before, and there are only a handful of attorneys in Utah who fall in this class.  If you don't know who they are, ask around.  Anybody who's in the startup game can tell you and help you pick a firm that will be a fit for you.

Here are a couple of "lessons learned" that I jotted down to share about "service providers" (especially legal and accounting).

Pay for quality legal and accounting help (but the guys who get it will work out a cost you can live with)

Keep great records and great books

But don't pay for higher profile than you need (often a local business tax accountant is just fine, but you should have a big firm do your audit for credibility if you're raising money)

Read ALL the legal paperwork before you sign (and make sure your great attorney explains anything you don't understand.  There are a bunch of "industry standard" terms for the private equity business, but there are a lot of onerous ones too, that you shouldn't agree to!)

Wisdom according to my Dad:  You only need a contract when something goes WRONG (so write it accordingly)