Flytenow, Inc.: Regulatory Challenges in the Sharing Economy

The founders of Flytenow, Inc. (Flytenow), a tech start-up dubbed the Uber of the skies, faced a crisis when the U.S. Federal Aviation Administration determined that Flytenow's customers, namely private pilots, would be violating holding out regulations if they used the service. Flytenow had just completed a three-month mentorship program at Y Combinator, the most prestigious Silicon Valley-based new venture accelerator, which had already helped start Airbnb Inc., Reddit, and Dropbox. The news came on the eve of the company's most important funding round. Should the founders go ahead with their planned funding pitch, or develop a new strategy to address the sudden regulatory barriers?

This case is suitable for a graduate-level business course on intellectual property and other legal aspects of business and innovation, particularly for students interested in entrepreneurship. This case introduces the major areas of the legal environment for innovation and new ventures, and their relationship to early stage decisions and product and business development. It can be used to introduce students to the following:<ul><li>Business regulation, particularly the role of agencies and the potential impact of government regulation in heavily regulated industries, and how to anticipate and deal with regulatory requirements and barriers, which have been particularly evident in the new sharing economy</li><li>The importance (particularly for entrepreneurship students) of understanding and preparing for legal and regulatory challenges to their proposed businesses. Such challenges should be integral to business plan development. In addition, potential investors should anticipate regulatory risks as part of the due diligence process</li><ul>

• business law, government regulation, venture capital, startups