Start-ups / Equity / Business Tactics

NoQuarter

Does anyone have any good resources to learn about protecting your own interest, I suppose.
For example, you have a business idea and need to go through the seed capital/series A stages etc. I'm looking for resources on how to get yourself the best deal, ideas to fund raise / give away as little equity as possible / alternatives to giving away equity / buy backs etc etc.

Anyone know of any good resources out there about that kind of area?

Thanks

Duckett

there are some useful publications on the HBAN website that you should find useful......home work

NoQuarter

Great thanks. Not homework, sadly those days are long gone!
I was reading one article that I found in relation to option pools / term sheets and one of the slides said "Argue for smaller pool now and wait for a "recharge" --when dilution affects VCs as well". Can anyone dumb that down a bit?
Thanks

pedroeibar1

This explains it quite well

Homework never should be gone, not until you are dead.

NoQuarter

NoQuarter wrote: »

Does anyone have any good resources to learn about protecting your own interest, I suppose.
For example, you have a business idea and need to go through the seed capital/series A stages etc. I'm looking for resources on how to get yourself the best deal, ideas to fund raise / give away as little equity as possible / alternatives to giving away equity / buy backs etc etc.

Anyone know of any good resources out there about that kind of area?

Thanks

Recently I've raised money, through bank debt which I believe is the way to go if at all possible. Since then Ive been dealing with "Accelerator" programs who are really just VC's in disguise, but they have been coming to me asking me to apply. They give you a bit of capital eg 100K and give you supports but their end goal is making money from you through bigger finance if your successful. They can be good in terms of if you work with the right one they are probably the kind of people looking to buy you out down the line.

Dealing with them has reminded me whats its like with purely financial people, who will bluntly question everything with zero charm and interest in the story or excitement and feel of the business, and then how it is bringing these people into your company for chunks of equity and the damage they can potentially do. Of course they can help too, but fundamentally their ethos and thinking are going to be on a different page to the founder of a company. If you are dealing with VC's I believe a convertible loan note is the way to go, so only if you can't pay it back your converting the finance to equity.

NoQuarter

pedroeibar1 wrote: »

This explains it quite well

Homework never should be gone, not until you are dead.

Alas, don't I know it! Thanks, that's a very helpful site and definitely along the lines of what I'm looking for.

Deleted User wrote: »

NoQuarter wrote: »

Does anyone have any good resources to learn about protecting your own interest, I suppose.
For example, you have a business idea and need to go through the seed capital/series A stages etc. I'm looking for resources on how to get yourself the best deal, ideas to fund raise / give away as little equity as possible / alternatives to giving away equity / buy backs etc etc.

Anyone know of any good resources out there about that kind of area?

Thanks

Recently I've raised money, through bank debt which I believe is the way to go if at all possible. Since then Ive been dealing with "Accelerator" programs who are really just VC's in disguise, but they have been coming to me asking me to apply. They give you a bit of capital eg 100K and give you supports but their end goal is making money from you through bigger finance if your successful. They can be good in terms of if you work with the right one they are probably the kind of people looking to buy you out down the line.

Dealing with them has reminded me whats its like with purely financial people, who will bluntly question everything with zero charm and interest in the story or excitement and feel of the business, and then how it is bringing these people into your company for chunks of equity and the damage they can potentially do. Of course they can help too, but fundamentally their ethos and thinking are going to be on a different page to the founder of a company. If you are dealing with VC's I believe a convertible loan note is the way to go, so only if you can't pay it back your converting the finance to equity.

It's funny, I've heard the opposite said too re bank loans. I suppose it can depend. I will probably need some advisors (especially financial ones) so may have to give away equity at some point. If I do, I'd like to be well prepared on how a negotiation might go. For example, if they said to me hat they want my shares to vest (I've only recently learned what this means) then I would counter with a quicker vesting period etc. I'm looking for information like that, a resource for founders.

Also, it would be great to see any articles on building up a team. Reading about VC pitches, a huge focus is on the team. Team, team, team. Well I don't really have one. I'll need to outsource some software development and some other functions but I don't feel that I need a team so much. Except for if I got seed capital, I would need a COO. Is there any other functions that are must haves?

pedroeibar1

NoQuarter wrote: »

. Is there any other functions that are must haves?

After you get your cash you need a d@mn good accountant, someone who will tell you to stop mind the purse-strings, who will say 'Stop' or 'Do you realise what you are doing?' and you need to listen.
I went through DotCom Boom and Bust in the US and the money burn I witnessed in the boom was scary. The old rules of credit control were to distrust any company that had a fountain out front, or a CEO who had been granted an honour. For me the warning signal was designer cookies, exotic fruit and once 'We really need to see you, we will send our plane" (really!).

NoQuarter

pedroeibar1 wrote: »

NoQuarter wrote: »

. Is there any other functions that are must haves?

After you get your cash  you need a d@mn good accountant, someone who will tell you to stop  mind the purse-strings, who will say 'Stop' or 'Do you realise what you are doing?'  and you need to listen.
I went through DotCom Boom and Bust  in the US and the money burn I witnessed in the boom was scary. The old rules of credit control  were to distrust any company that had a fountain out front, or a CEO who had been granted an honour. For me the warning signal was designer cookies, exotic fruit and once  'We really need to see you, we will send our plane" (really!).

Hilarious. Hopefully I wont have to give up the lady I pay to walk in front of me throwing rose petals on the ground. That's a necessity in my eyes.