Why Every Founder Journey starts with a Great Idea

So you've thought of a great idea,

but is it unique?

There is certainly something to be said for having an idea that gives you first mover advantage in the market.

But we wouldn't be too obsessed on an idea being truly unique.

Facebook is a great example - it wasn't the?first in its field ?and it wasn't the first to be?successful ?either.

A potentially interesting strategy is spotting a great idea from another market or geography and shifting it or realigning it to another area.

For example, Starbucks started when the founder brought Italian barista-style coffee to the US in 1971.

It could be said Whitbread did the same with Costa in the UK over 20 years later in 1995.

Whatever your idea, hopefully you are excited by it and it passes the?Ikigai ?test – bringing together your professional and personal interests and passions.

If not, are you sure you want to dedicate a substantial proportion of your life to this endeavour rather than another venture?

After understanding your 'why', let's consider the funding journey needed to make your idea a reality.

The Importance of Your Founding Team

CB Insights states that ,?"Not the right team" as the third most likely reason for a startup to fail, so making sure your team has the necessary capabilities and is suitably aligned is absolutely key.

Some investors have a strong desire to see an investee company have more than one founder, some are more relaxed with just having a single founder.

Most investors will like to understand the broader team though and would ideally like to understand the credentials of the founding team, any other identified team members and any advisors to the board too.

So, why do investors prefer to see a broader founding team rather than a sole founder?? Research shows :?

Teams with more than one founder outperformed solo founders by a whopping 163% and solo founders' seed valuations were 25% less than teams with more than one founder.

If you know you need a co-founder but don't have anyone in mind then worth considering joining?Startup School ?- a free online service from Y Combinator.

They are offering a 'Founder Matching' service to help founders find a co-founder or two. Alternatively, take a look at?jumpstart .

Many founders are still working full time in their 'pre-entrepreneur' job at the point they raise funding on the basis that they will quit when they close their funding round and then work full time in start-up.

This is fairly common and most angel investors won't be disturbed by this at all.

Advisors / NEDs

In respect of board advisors / NEDs, investors may be encouraged to see one or more individuals support your board and management team, specifically to cover areas of any perceived weakness in your management team.

As an example, if your founding team consists of a director responsible for marketing and another responsible for operations but you intend on outsourcing development efforts, then having an advisor with a strong technical background would be a serious benefit.

This article? provides some great narrative around the different types of NEDs.

Adding to The Board - Investor Directors or Board Observers

Sometimes, during funding negotiations, your potential investors will insist on:

1. An ability to appoint a non-voting "Board Observer." A board observer will have the right to attend all board meetings and receive all board packs and other similar information but not participate in voting.
2. Joining your Board as an “Investor Director”, though this is relatively unusual in early stage transactions. This means that the Investor Director will be come a statutory director and should be registered on Companies House as such. They will have the fulls rights of a Board Director so you should consider carefully before giving this right to an investor.

This article ?has a cautionary tales on board dynamics in VC-backed businesses.

Want to read the rest of this article?

We've included just a snapshot of the full article above. To read the rest, including the following content, head here :

• How to split equity amongst founders?
• Choosing a name and all about the branding
• To incorporate or not?
• Decide on a funding strategy
• Web, marketing and comms
• Obtaining SEIS or EIS advance assurance
• Angel investors: finding & preparing to talk with them
• Valuation
• All about funding rounds
• A word about warranties and disclosure
• A summary of the critical path.

Further freebie! Founder Collaboration Agreement Template

If you've not yet done so, we strongly suggest you invest an hour to negotiate and document a?Founder Collaboration Agreement .

Download your free?Founder Collaboration Agreement Template now.

An hour completing this template could save you from being part of a nasty statistic - that 65% of high-potential startups fail due to co-founders falling out.

About Sam Simpson

Sam is Co-Founder & COO at FounderCatalyst , an exciting and disruptive play into the UK legal tech sector, underpinned by a superb technology platform.

Trusted by founders, investors, advisors and funding groups, FounderCatalyst quickly and professionally creates all of the legal paperwork and helps manage investor engagement.

"All I can say is ‘WOW!’, the FounderCatalyst team provided copious assistance to prepare my SEIS and EIS advance assurance submission.?

HMRC replied the very next day with our advance assurance."

Chloe Sweden, Founder and CEO,

The Green Shoot Inst. Ltd

Sam's specialist areas include SEIS and EIS advance assurance, investor management & negotiation, and successfully closing funding rounds, so if you have any burning questions book a quick chat.

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