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Long range planning & testing 1 of 2 products in huge markets; incorporated one. Should I grow both?

Visionary type that after about 18 months am currently in final stages of testing a product within a huge market I know I can win. I have a solid background in designing breakthrough software for top tech companies and am located in a major tech hub with lots of access to investor networks and capital. I have a notebook of ideas with breakthrough patent-pending products.

I also have a formal background in entrepreneurship and am a self-taught engineer. I'm more or less an innovation machine and it's my greatest strength which I can provide on a repeated basis. Currently, I provide consulting services and can self-fund to get initial traction of first 100,000+ users over the next half year or less. That is the goal. Money and time are tight.

I recently incorporated. My problem now is that there is another tech advancement I want to capitalize on. Eventually, I wanted to streamline it as a product in my family of products for the first company. The second of the two big ideas is gaining traction in the marketplace, but it's still off point. I'm afraid some of my ideas are catching speed in the marketplace, but my angle is a big area of the market that is not being served -- usually the case with most of my inventions.

Currently, I am doing all of this solo and plan on growing Users and Sales and a Team alone for the next several months, generating some revenue and growth, then look for investor funding. I probably will patent a few ideas in the meantime as I am growing a team, finding partners that fit into the culture, and also investors.

I don't want to lose out on big market ideas....I'd like to test the waters with several apps in several areas with the protection of several patents. Should all of this be done under one companyor more than one company?

I want to take risks using my corporation as a vehicle...Long term should I do all of it under one umbrella and split up the projects into separatecorporations? I know some companies like Alibaba have done that. Is it very practical or feasible? Again I believe though they are related that the companies should operate independently of each other.

Any advice would be greatly appreciated. Thanks!!


5 Replies

Chicke Fitzgerald
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Chicke Fitzgerald Entrepreneur • Advisor
Game Changing Strategist, Advisor & Technologist | Board Candidate | Zigging where others Zag
Initially I would not complicate things with multiple entities. While it makes it easier if someone wants to invest in one and not the other, that investment is what will likely make you focus on one versus the other.

More than one company means more than one tax return and more than one business license, etc. etc.
Richard Reed
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Richard Reed Entrepreneur • Advisor
Director of Marketing at Labdoor
This is always a difficult situation when you have multiple competing projects making demands on your time. I'll take a risk on commenting without having any context for your situation which makes commenting challenging as the previous commenter has a very valid approach from one perspective. I'll offer a contrarian view as to whether you do this under one entity or multiple entities, as much of this depends on your long term capital requirements in the various businesses. If you plan to self-fund or have an investor who shares the vision and you are comfortable with an overall stake in multiple business ventures, then such a strategy may be possible. The problem comes in later though if you need to raise outside capital, as building a valuation model will be very challenging because the investor candidates may have a focus on only one industry and may not share your vision across multiple business plans. For example, a hardware focused investor may not see the value in an enterprise software business and you may then be faced with a difficult choice of attempting to spin out that business to a separate entity or lose the investment opportunity. While more expense and complication in the beginning, setting up separate entities solves this problem and also will be advantageous for recruiting purposes as employees may be concerned about joining a thinly capitalized venture that has limited traction (as a new organization) and is pursuing multiple business models. The list continues for challenges such as allocating budget across business plans, how to manage resources, etc. All of these issues may cause stresses to your employee, partner, supplier and investor relationships.
Peter H. Antoniou, DBA
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Peter H. Antoniou, DBA Entrepreneur
Managing Partner at Pomegranate International
Hi, Since you are at the beginning stages, I will keep them all under the same company - it is easy all the way around so you do not complicate things with transferring funds from one to another. As soon as any becomes financially viable, spin it off as a separate company wholly owned under your current company so you will be able to take advantage of consolidated financials at the end as well. The purpose is to gain traction in the market at this point. Best Regards, Peter H. Antoniou, DBA Partner Pomegranate International T: 760 740 0258 - 818 508 9877 F: 760 740 0259 - 818 508 6712 www.pomegranateintl.com
Martin Omansky
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Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
Dear Anonymous: Let's begin at the beginning. What makes you think that you can get patents on software? Last I heard, the USPTO was not easily granting patents on software. Have you talked to an IP attorney about this. If you haven't, I can refer you to one. On your main question, I am of two minds on this, but I would prefer that you make some money for yourself and others with your first product, and then add products after that using the same corporate umbrella.
Rajiv Menon
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Rajiv Menon Advisor
Founder at Informulate
OP,
I don't know you but just based on your post, I'd first challenge you to challenge your own assumptions. From what you've said, you've not actually taken a single product to market and generated revenue? I'd put all your available time and energy (but not ALL of your money) on the first home run. Once you have funding and traction, then think about the other stuff. As a repeat founder and advisor, its all too easy to think of ideas, its a completely different beast to win in the marketplace. Not to hurt your feelings, but I felt you need to hear this. Steve Jobs, arguably the world's most successful innovator: "People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying no to 1,000 things." Message me if you need advice/mentoring.
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