Mind of the Entrepreneur
Assets Management Construct

Of relevance about The Forum was that there was a gentleman - himself a company founder - in this group who was of the philosophy that every entrepreneur must separate the intellectual property ownership from the operating company. More specifically, the entrepreneur must legally organize at least two entities with legal personalities, and assign the ownership of the intellectual property rights over the assets for supporting an operating company to one of the two entities, and make the other entity the operating company. The intellectual property company should then license the assets to the operating company.

The rationale for the two-entity construct is that in the event that an unscrupulous person tries to use the law to sue and then seize the operating company, the only thing the entrepreneur has to do is to use the ownership power over the intellectual property company to vacate all the licenses and force the operating company out of business, and then start all over again. Of course, at times the mere realization on the part of the unscrupulous person that the operating company, which the adversary thought could be insidiously taken over, is just a white elephant can serve as an effective repellant of the unscrupulous shark; and the entrepreneur does not have to actually dissolve the operating company. However, the entrepreneur must be ready to dissolve the operating company if necessary.

Reiterating, the entrepreneur must be disposed to dissolving the operating company if necessary, and most times, it would be necessary to dissolve the company. The implication of this entreat is that the entrepreneur must not be psychologically attached to the operating company until an Initial Public Offering (IPO) has been made: Public Business Companies are treated more favorably under the bankruptcy laws than Privately-held Business Companies. The entrepreneur who has taken the operating company through IPO can effectively fight off unscrupulous shark(s) through the bankruptcy courts.

However, in the ventures for which the Exit Strategy for the venture capitalists include IPOs, the entrepreneur may find it difficult to actually attract that class of investors, if any form of assets management design is already in place. In such cases the entrepreneur may, offer to merge at a future date the intellectual property company into the operating company. Failing that the entrepreneur should seek investors amenable to such construct; the reality is that where such protection is not in place and an unscrupulous shark succeeds to destructively or

 
even just adversely impact the operating company, the entrepreneur could be facing a lawsuit from the investor on any basis the investors attorneys can construct.

In the case of the merger then, the entrepreneur may decide as part of the IPO reorganization of the operating company to merge the intellectual property company with the operating company. Yet, the entrepreneur should only allow such merger as a contractual commitment only to be effected about five (5) years after the IPO, because stock/membership price fluctuations are very common during the initial three years after the IPO and law suits are often filed by disgruntled stockholders. Quite possibly some of these disgruntled stockholders may be of the category of aforementioned unscrupulous sharks.

So far, the Assets Management design as presented is  simple two-company construct. However, this simple construct may not be efficacious in addressing the needs of every entrepreneur, because a careful and an analytical reflection on the construct, reveals the applicability only to situations where the assets can be protected with publicly enforceable intellectual property rights. In effect then, for assets that are protected by publicly non-enforceable intellectual property rights, such as Trade Secrets, the entrepreneur can not be protected with the two-company construct. 

Therefore every entrepreneur has to assess the assets management construct that is applicable to each specific circumstance of venture development, given that the assets for supporting a venture development effort may consist of both publicly enforceable and non-enforceable intellectual property rights. The recommended assessment is better based on the vision analysis dimension clusters as these clusters define the totality of innovation spaces within which the Intellectual Properties associated with the venture can be evaluated. In the simplest of cases: The case of dimension clusters for selection 1, as evaluated in the vision analysis dimension clusters; the assets classes are completely decoupled into intellectual properties of the class of patents for the Product Technology cluster, and intellectual properties of the class of Trade Secrets for the Manufacturing Technology and Marketing Tactics clusters, effectively invalidating the two company assets management construct.

In any case, irrespective of the applicable construct, the entrepreneur should endeavor to select for each asset-management company, a legal-entity that is either a pure Trust or a Business Trust in context of the features of these entities regarding founding the venture corporations, and should have such to be legally organized and have all assets purchases made through this asset management trust, and then have the assets leased to the venture-entity that undertakes  operating the business.