You’ve got your idea, you’ve assembled a team and set your goals. All you need now is some funding. Easy, right? Not quite. Running a start-up is hard and attracting the right sort of funding is even harder.
One man who could help you is Jason Trost, CEO and co-founder of social betting start-up Smarkets. He pitched his company at last year’s GeeknRolla and has been running Smarkets three years. This is what he hoped someone had told him before he set out on the start-up path…
Get a lawyer: “Once you’ve got your great idea and found your co-founder – which is probably the hardest decision you’ll make as astart-up, you want to find a lawyer”. He recommends Chris Grew at Orrick as well as Barry Vitou and Danvers Baillieu from Winston & Strawn.
Getting noticed: “By far the most important thing when meeting VCs is the introduction,” says Trost. “Spend a lot of time meeting networking with investers and founders. If you’re new to the space you need to find who the key people are.” For a who’s who of the angel investors, he says you could do worse than look through GeeknRolla’s investment panel…
Have a tough skin “People think you hear “no” a lot but I don’t think I heard no once from VCs – they just don’t email you back. ‘Interested’ basically means ‘no’,” says Trost.
Raising money: You many have to choose between the types of funding available. Straight-forward equity financing is different to convertible note financing, which is faster but converts to equity at a later stage.
Hiring: Trost says “The first hire you make is the most important decision you make outside of choosing your co-founder – we spent six months finding somebody.” Most important attributes? “Look for people who are do-ers and closers – the most important thing in start-ups is doing, not theorising.” Salaries vary a lot, but Trost gave the ballpark figure of £20,000-£25,000 a year and equity share options range from 0.01% to 10%.
Office space: It may be over-run with students most days, but Trost says the British Library – with its free wifi – is a great place to work for early-stage start-up with no fixed abode – he worked there for three months.
Networking: There’s tons of different events in London: Seedcamp, Barcamp. open Coffee, DrinkTank… And it’s important to have nice business cards. I’d spend time on it and make sure a professional design it.”
Marketing: “Think about it a lot sooner than you think you need to”, The key is look for patnerships where you can send people traffic an they give you revenue.” Start-ups should, he says, be able to explain their business in one sentence.
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