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Whether you’re looking to reinvent banking, become the next Jeff Bezos, or solve the challenges associated with prescribing specialty drugs (which is what my company does), there are a few essential steps every founder should consider. The time from ideation to funding to launch is very exciting, nerve-wracking and stressful for any founder. That said, a blueprint for success can help mitigate some of the most common challenges associated with getting a business off the ground.
As a founder and new CEO, you need to focus on the question of how. How do I get venture capitalists to listen to me? How do I attract funding? How do I protect my intellectual property? How do I hire my first employee? Through my own experience with my company, I’ve learned that each of these daunting questions can be addressed by taking the following steps.
In many ways, your lawyer is your first investor. It can be tempting, particularly in the early days when capital is low, to cut corners. Don’t! Hiring a qualified and experienced startup lawyer will immediately set the company up for success. Only work with law firms that have dedicated programs that focus on early stage companies. Your counsel will handle all the incorporations and necessary paperwork for you, such as the 83(b) form, which you need to file within 30 days of establishing your organization post-incorporation. Your lawyer will even help identify and fill out the necessary new-hire documents.
You can’t start your company without laying the legal groundwork. If you try to cut corners at this stage, you will likely be exposed through your investors’ very thorough due diligence. Worse yet, you could set a term sheet, but fail investor due diligence. You even run the risk of suffering irreparable damage to your brand as a result of litigation. Simply put, it’s just not worth the risk. Once the legal foundation is laid, you can start thinking about how to get your idea venture-backed.
Get Your Pitch Together
There are two words that are essential to turning a good idea into a business: pitch deck. Averaging around 10-15 slides, the pitch deck tells your story and will ultimately determine whether an investor is willing to bet on you and your big idea. If investors believe in you and your idea, you’ll get funded — but they won’t make that wager if you don’t provide everything they need to know at the onset. With that said, there is a very specific formula for a pitch deck that should cover your vision and the problem, solution, total addressable market, business model, go-to-market road map, competition, team and use of funds.
Not only do you need your slides to be perfect; you need to tell an engaging and inspiring story. As you’re developing your deck and practicing your pitch, understand what you’re asking for: capital. Many entrepreneurs are anxious about asking for money. But, if you don’t ask for it, you won’t get it. This is no time to be timid. Get a strong pitch deck together, deliver an inspired presentation and close by asking for what you need.
Your view from the boss’s chair should be relatively high level and strategic. However, you will likely need to roll up your sleeves in the early days. It was nearly 15 months before I made my first hire at ZappRx. This forced me to learn and understand what to expect from all facets of the business. For me, this meant spending time speaking with physicians and functioning in a sales role. It meant becoming a product expert so I could get a demonstrable MVP together. It meant learning about pretty much every other role that’s now occupied by multiple people.
Because of this “dive right in” mentality, I was able to hire the best people when the time came. I knew enough to be perceptive across numerous business functions and recognize when someone knew what they were talking about and could add value to the business. It’s not enough to go an inch deep and a mile wide in today’s hyper-competitive landscape. You need to go a mile deep and a mile wide if you want to take a truly differentiated approach and field a team that can help you nurture your idea into reality.
As a founder and angel investor myself, I can assure you that these steps, which may seem like table stakes, are often overlooked or poorly executed. There is simply no excuse for letting a great idea die on the vine because you didn’t hire a lawyer or take the time to polish your pitch deck. My company is now six years old, and I attribute much of the success of the business to the time and energy invested early on in these foundational activities. There is certainly more to it, but this is a solid place to start if you have a great idea and want to turn it into a business.
January 8, 2019 at 08:56AM
Forbes – Entrepreneurs