We’ve done our best to cover the most we could in our startup guide, but here are a few more questions you might have. If there are any we’ve missed, email us at info@startup-gurus.com or send us a message on LinkedIn and we’ll answer your questions as soon as we can!
How should equity be split between co-founders?
Splitting the company equally between co-founders might seem like the most logical choice, but is it a smart business decision? Maybe, maybe not. You need to decide early on who will be in charge of what, and based on the responsibilities of each co-founder, split the equity accordingly.
If someone has more responsibilities than the others, they should receive a larger share of the equity.
If you're struggling with this, you can check out an Equity Split Calculator in our Resources.
How should I value my company when approaching investors?
First, don’t pluck a number out of thin air. Depending on what stage your startup is at, you will have different metrics that you can use to justify your valuation. If you’re pre-sales for example, base your value on the physical assets your company owns, and realistic sales projections that are grounded in market research (market size, market wealth, etc.). Use this calculator to help value your company https://www.venionaire.com/startup-valuation-calculator/.
What does the CEO do?
The Chief Executive Officer leads a startup on both operational and strategic levels. They set the overall goals for the company and are responsible for evaluating progress and reaching said goals. A CEO also has to liaise with external investors, the board of directs and company management. If a startup was a ship, the CEO would be its captain. Remember the Shareholders appoint the Board of Directors, the Board of Directors appoint the Executive (including the CEO) - this is the reporting structure. It’s blurred in the early days when the Founder(s) may be the majority shareholder, only director(s) and fill the senior executive roles. But as further funding comes in this will begin to change.
Am I qualified to be an entrepreneur?
The qualities of a successful entrepreneur are the following:
Hard-working and passionate: Startups require a huge amount of work, so you need to be willing to put in the time, and inspire your team to do the same.
Able to assess and manage risk.
Be self-confident, but know your limits - if someone else could do the task better than you, they should be in charge of doing it.
Have an eye for talented, passionate individuals. A startup is nothing without a skilled and enthusiastic team.
Adapt to change, and always seek improvement.
Proactive, not reactive.
Focussed.
Where to find funding for my startup?
We covered this in our Funding your Startup chapter, but a good place to start is
friends or family, business loans or equity investors. Grants represent a good way to bring money in without giving away equity so have these at the front of your mind - Startup-Gurus retain professional grant writers who would be happy to advise on whether you qualify for grants and how to go about getting them. If you live in or near a city, check for any startup-related events, there’s guaranteed to be a few and they’re a great way to start building your network.
How do I know when to fully commit to my startup?
A lot of the time, startups are a started as a part-time project, but if you think it has potential, when is the right time to quit your day job and invest all your time into your startup?
First off, you need to be absolutely sure that you have an idea that solves a problem that people would pay to solve (by buying your product). Then you need to be certain that you are committed to putting in the time and effort required to make it work. Once that’s sorted, you need to figure out if you’re in a financial situation that allows you to forgo a salary for a while until your startup can afford to pay you. If you tick all those boxes, then you’re in a pretty good place to fully commit to your startup.
How much should I pay myself?
As little as possible. Money will be tight so you’ll need to direct resources to where they will make the most difference. That being said, do pay yourself enough to get by and remain committed to the business.
Where do I find a co-founder?
Many co-founders are childhood friends, went to college together or are work colleagues. But if this doesn’t apply to you and you’re looking for a partner (or two) to turn your idea into a startup with, then the best thing to do is get your idea out there. Chat to people, and chances are you’ll find someone who loves your idea and want to go into business with you.
How do I protect my idea?
Patents, trademarks, registered designs and copyrights can be filed for if you want to legally protect your idea from being stolen. This is definitely something you should consider if you have something proprietary. Patents and registered designs must be applied for before you go public with your solution, otherwise it will not be considered 'new' at the time of applying. This does not apply to trademarks and copyrights. Startup-Gurus retain a team of IP lawyers who offer a free consultation to determine whether you’ve got IP that can be registered and if so how - just contact us to set that up.
What is an incubator/ accelerator and should I consider one for my startup?
Incubators are organisations that are designed to speed up the growth (and success) of startups. They’re often a good path to capital from angel investors, state governments, economic-development coalitions and other investors.
The downside is that if you don’t choose the right incubator, you might end up getting a lot of bad advice, interference in management decisions and wasting money. It’s up to you to decide whether the mentorship is worth it for your startup. Here is a list of some of London’s incubators. Reach out to Startup-Gurus if you want help and advice regarding Incubators / Accelerator programmes, very often the terms can be quite onerous and we can help sort the wheat from the chaff