The House That Jack Built: Spending Startup Cash
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For all you entrepreneurs looking to raise that initial seed capital, in short a good prototype, simple business plan, and a solid team are -in my view- what’s needed to help raise your capital. So, let’s fast forward to the early days just after your initial raise. You did it! The term sheets have been agreed, contracts signed, and the money is in the bank. It’s a fact- you are now officially an entrepreneur!
Once the adrenalin dies down and you start to remember what sleep feels like again, it’s time to get down to business. I can only comment on how I felt just after raising my funding, but I would describe it as like my first day at a new school with my final exams in the afternoon. All the planning and discussions of what will happen “once we raise the money” are now real- that first day finally arrived. The funny part about these feelings are that, if you already have your prototype and small team, it doesn’t change much. This is why going back to the previous article- the prototype stage and team members are so important.
For me and Brndstr, we were well prepared and setup. All our domains had been secured, emails setup and alpha versions finished. We also had our draft designs and branding for all logos and corporate material- it just needed polishing and finalizing. These were actually the first tasks I tackled. My view was once we had a confirmed look and feel of the business, the more we saw it and mentioned it, the quicker it would become real. For anyone who hasn’t experienced it before- calling up someone and saying you are from a company name that you and your team created is kind of wild, especially when you’ve left out all the vowels: “Hi, its Simon from BRNDSTR.” #Epic.
In my opinion this was a great boost for the team and also helped bring it all to life, but don’t spend a lot of time and money at this stage. It’s the fun part, but remember you have a company now and there are other jobs to do. If you haven’t yet tried it, a great start would be to check out 99designs.com. Next, formation of the company and legalizing everything. You should have already recruited a lawyer to draft your term sheets and contracts, if not then make this your first task.
Everyone I have spoken to has their own opinion of where and how to structure the formation of your company. My advice is do your own research and feel comfortable in what you decide. It’s very similar to building a house- the plot of land, location, size and cost is the most important part of the project. The same applies for your company; take advice outside of your founders and spend time making the right choice. Once decided, get the wheels in motion but don’t let it consume you and your resources, because there’s a lot more to do.
Laying the Foundation
NewCo. LLC is now setup, now what? Hold up! Let’s rewind. This sounds like a very straightforward and quick process, but it’s not as easy as you may think. Depending on where and how you structure the business, it can take a long time. A key bit of advice is to see this setup as one of your three juggling balls. You’ll need to keep an eye on it and guide it in the right direction, but there are other elements that also need your attention.
One of your biggest reasons for raising seed capital is to recruit new members of the team and develop what you have on paper or the product at prototype stage. Anyone will tell you that good, talented people are hard to find. I know it may be exciting and that you’ll be keen to start developing, but make sure you bring the right people onboard. These people are vital to the success of your business during the startup stage. I found that choosing the right software to help power your business from day one is great plus. Tools such as Asana, Basecamp, HipChat and Pivotal Tracker are just a few. Setting these standards from the outset will benefit you later.
As I have mentioned before, I can only comment on what I have personally experienced and specifically in the arena of a tech startup. What I do believe though is that if you follow a few key basics you are well positioned to succeed. I have learned that there is no rule book, but taking advice and listening to people’s experiences helps 100%- ultimately you are now the decision maker so the buck stops with you.
Over to you fellow ‘treps- good luck in your formation and once again congratulations on the funding. Let’s do this!