Wednesday, June 15, 2011

Project Skyway—Episode 1: A New Hope

Tech incubator Project Skyway, welcome to Minnesota. What took you so long? When will all of your friends arrive?

Project Skyway, the new Twin Cities tech start-up incubator, held its inaugural bootcamp this past weekend at CoCo in St. Paul. As a member of the local tech start-up community, I was honored to be asked to participate in the bootcamp and given the opportunity to listen to aspiring tech entrepreneurs and teach them a thing or two.

On Friday night, the Project Skyway team, including visionary Cem Erdem and mover and shaker Casey Allen, mingled with all of the prospective Skywalkers (that’s what they call participating companies/entrepreneurs) and the glitterati of the local start-up tech scene. No, Cem did not wear a Darth Vader suit or claim that he was anybody’s father. However, Casey does remind me a little of C3PO, and one of the potential Skywalkers was kind of big and hairy like Chewbacca.

On Saturday morning, the Skywalker wannabees pitched each other’s deals. In the afternoon, the entrepreneurs participated in small group sessions with local start-up experts. Although I’m not bald, green, or pointy eared (yet), I played Yoda to a bunch of wide-eyed entrepreneurs, teaching these young Jedis the ways of the law. I was able to meet with all of the entrepreneurs from the 25 companies vying to be included in the final 10, and they didn’t have to travel to Dagobah. On Sunday, the start-ups were treated to advice about presentations and raising capital in the morning, and spent the afternoon pitching their deals.

The top legal issues for start-ups were abundantly clear—protecting equity and protecting intellectual property.

As novice entrepreneurs are prone to distribute equity like cocktails at the Mos Eisley cantina, much of the discussion addressed how to divvy up stock, how to force founders to earn that stock, and how to get the equity back into the company if one of the founders turns to the dark side and becomes a venture capitalist.

The intellectual property discussions centered on whether or not a software-based tech start-up should seek patent protection (always check with a patent attorney, but it’s probably not going to be worth the time and expense), and how to ensure that code developed by employees and consultants is, in fact, owned by the company. This discussion highlighted the tension between independent contractor software developers (whose tools are often incorporated into customer solutions or constitute proprietary platform technologies) and start-up companies, who are constantly drilled by lawyers, investors, and venture capitalists to own the technology.

Jedi mind tricks don’t work on VCs—“you will accept a $20 million pre-money valuation and non-participating preferred stock.”

The start-up teams were mostly comprised of men, in their late 20s, and based in Minnesota. Many of the business ideas were truly novel, and others provide solutions that are leaps and bounds ahead of their competitors.

I’m not sure how Cem, Casey, and their team are going to be able to narrow the 25 teams down to 10. Perhaps an inter-galactic battle looms. Cem, Casey, and the Project Skyway team have done their part. Now we all need to support Project Skyway and all of the Skywalkers. May the force be with them.

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