The capital is brimming with rising startup stars. Last week, seven up-and-coming fintech firms were selected to join the government-backed Future Fifty scheme, run by Tech City UK. The programme seeks out our most promising high-growth tech businesses and helps them get to market. More widely, the UK was recently ranked the most entrepreneurial nation in Europe.
James Codling, Paul Moravek
But despite there being more support and advice for entrepreneurs than ever before, starting out is always going to be tough. And we’re reminded all too frequently that, for every success story, there’s at least one startup that fails to get off the ground – having a great idea is not enough to make it big.
So whether you’re thinking of striking out alone, or already own an early-stage business, ensure you avoid these common pitfalls.
The early days of setting up your business are all-consuming, and finding time to get out and meet new people can drop to the bottom of the list of priorities. But the wider your network, the more traction your company will gain. Building relationships with other businesses and getting their buy-in can also be an effective route to increasing your marketing efforts, creating advocates who will spread the word of your business on your behalf.
In the early days, most entrepreneurs have to do the job of three or four people, but recognising your weaknesses from the outset and understanding where you need to recruit in talent is crucial. Be prepared to invest in the key positions where you need expertise, and don’t be afraid to trade up and hire the best people you can afford at the time.
While cash is fundamental to take an idea from drawing board to reality, it’s not the sole factor in realising your growth ambitions. Picking the right investors to back your business can bring the expertise you lack, contacts in areas you want to access and a willingness to get involved in ongoing operations.
When seeking investment, founders commonly resist offering a large enough equity stake in their company. However, offering a fair value share of your company is more likely to attract the investors that will ultimately help grow their business.
Any growing venture will look to add to its management team as it expands, but also consider bringing a co-founder on board, appointing a chairman or establishing a board of advisors as early as possible.
Doing so will help allay any investors’ concerns over your company’s leadership experience, and provide your business with strong strategic support. Furthermore, having an expert or well-established industry figure on your advisory team will also serve to increase your venture’s visibility and credibility.
In a competitive operating environment, a startup’s initial priority is survival. Entrepreneurs are often concerned with steering their business through the short-term, and as such, they often only worry about raising enough capital to keep them going for the first six months or so.
Entrepreneurs who seek to raise funding with a long-term business plan in mind are more likely to gain investor attention. Plan for peaks and troughs – and give your investors realistic expectations for the growth of the business.
James Codling and Paul Moravek are the co-founders of VentureFounders, the equity crowdfunding platform.