£1bn raised in startup funding on SeedLegals
Break out the cake and let’s celebrate – UK founders have raised over £1bn on SeedLegals! It’s a huge milestone f...
There were no tricks, only treats for founders at this special Halloween event co-hosted by Spice Startups and SeedLegals on 28 October 2021 at Arboretum, London. Here’s a recap of the stories founders shared and the Q&A.
‘Whatever your personality, no matter how introverted, as a founder you’re going to have to get up in front of people and talk about your company. Years ago, I was working at a company doing 3D graphics. We were doing well, about 10% of people online had our plug-in.
‘We were asked to present at a big conference in the USA so I prepared a demo to blow everyone away. I was determined to do the presentation myself – partly because I knew how unstable the software was. Then I found out there would be 3,000 people in the audience. And to encourage speakers to stick to the strict three-minute time limit, the possibly-slightly-boozy audience would be armed with whoopee cushions and toy guns to shoot speakers with ping pong balls.
‘Despite the stress, I finished just under the time limit and the engine didn’t crash. Since then, whenever I get up on stage, I remind myself that it can’t possibly be as bad as that time in the US. And no-one has a ping-pong gun!
‘Whenever you’re daunted about a presentation, remind yourself of how well you’ve prepared and practised, how much worse it could be, and then you can relax. And to be extra sure, have everything triple-backed up to make sure there’s zero chance of a blue-screen-of-death.’
‘The Bad Leaver‘ is a nightmare situation for startups that unfortunately we’re asked about too often at SeedLegals.
‘If a founder wants to leave, we always ask: did you sign a Founder Agreement? If not, it’s going to get messy. The worst bad leaver we’ve encountered was a CTO who ended up in jail for drug offences who was to be charged with murder. Awkward. To avoid this nightmare, always sign a Founder Agreement!’
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‘The landlords of our first office were going to tear down the building so we had to move out. We moved nearby to a fancy office with free lunches – this raised our team’s expectations and we knew the our next office had to be amazing.
‘We had some spare cash and were thinking about diversifying our income. One of our sales guy was keen to start a new project. He proposed we rent a building he’d found and turn it into a startup hub. We could rent out desks, sublet floors, hold events and so on. We knew nothing about this market but it seemed a smart way to diversify. We held a vote: to do up the building and create a startup up, or to just rent a nice ordinary office in Aldgate. It came down to one vote: it was decided that we’d go with the building to sublet.
‘The building needed a lot of work but we were happy to invest. My co-founder (who was actually my partner) and I were focused on the core business and didn’t monitor the project. £300,000 went before we even noticed. We put a stop on the spending when it hit half a million. But we were still confident we’d be able to rent it out straight away.
‘Filling the building proved difficult. There were three WeWork spaces nearby and companies who were interested pulled out for all sorts of reasons: one person didn’t like the location, the landlord of their old place made them an offer and so on. Eventually, we rented it out at cost to MakersAcademy.
‘That’s not the end of the nightmare. We’re no longer in that building but we’re still in discussions with the landlord for ‘dilapidations’ – changes to the building – and we’re likely to lose our deposit.
‘Think about price before you diversify. We followed a dream, trusting one charismatic person but we didn’t keep control of the spending. Diversification might be good for a bigger company but there’s a reason why startups focus on being great at one thing.
‘Just because things are going well for you, don’t live in a bubble – you could still make a very costly mistake. But if you do make a mistake, it might turn out to be your biggest lesson.
Paulina’s book, ‘Laid Bare: what the business leader learnt from the stripper’ is out in November.
‘When I’d finished my Computer Science degree, I decided to find a co-founder. I went on AngelList and met a guy at a pub. We had a pint together and decided then and there to start a business together. You already know this is going to end badly so the first lesson here is: don’t start a business with someone you’ve only had one pint with.
‘Our product was an app that helped you decided what to study at uni. It wasn’t great but with an accelerator, we managed to raise £150,000. The next year was the biggest struggle of my life. It never felt like it would be a success. We didn’t have a clue what we were doing. I was arguing every day with my co-founder and in despair at what I’d done with my life.
‘After 18 months, we realised we had a tool, not a business. The company was going nowhere. At this point, we had £80,000 in the bank. One of our contacts at big company asked to talk to us about a partnership. At the meeting, it turned out they wanted to buy our company. We were excited – this would solve everything!
‘We entered the acquisition process. The price was good: investors were happy because they would make back 20%, and my co-founder and I would make a significant amount of money. I started house-hunting, dreaming about the life I’d have.
‘The acquisition process was stressful but we focused on the silver lining: how much money we’d earn. Six months passed and we’d mentally checked-out of the business. The final day arrived – and the acquirer pulled out. It was all over. All that money we’d mentally spent would never arrive. It was gut-wrenchingly painful. We’d have to fundraise, or try again for acquisition, or pivot.
‘The lesson here is: a deal isn’t done until you have the money – don’t spend imaginary money before it’s in your bank.’
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Here’s a few of the questions asked by attendees, and our speakers’ responses:
Paulina: Many good things are born from frustration. For example, at my company, our financials are totally transparent. This was because I was frustrated by how this worked at a previous company so I driven to create something radically different.
Joe: I started Landscape after a nightmare experience. During a truly rubbish funding round, I met lots of time-wasters and people who wanted awful terms, so I started a site where you can review investors. You can take a look at landscape.vc
Anthony: There are sliding doors moments where your life splits into parallel universes – you have to assess opportunities as they come along. For example, after I’d sold a previous startup, one of my co-founders threw a party and if that hadn’t happened, I’d never have met Laurent my current co-founder.
Paulina: I like the Lean Startup philosophy, to be in close contact with your target market. If your idea is wanted by the market, then it’s time to pivot.
Anthony: As your company’s ‘fearless leader’, your team will expect you to know what to do and to lead them. You risk losing the trust of your team if you mess up a pivot or ask them for suggestions. If you know what to pivot to, this is an easy problem to solve. If you don’t, it’s going to be more difficult – there’s no easy answer.
Joe: It can help to switch your narrative: tell the story that the pivot is something you want to do, not have to do. And get used to pivoting, it’s likely you’ll have to do it again!
Joe: I know a guy who sold 50% of this company at a VC round…
Anthony: I’m always thinking about new features, wondering whether we should or shouldn’t build them. I’ve found that I get my answer when I see competitors build the feature I was thinking about. If my reaction is ‘meh’, then that’s how I end up glad I didn’t commit time and money to build it myself.
Paulina: We rented one building – and you know how that turned out. But the guy who suggested we rent that building wanted to rent three or four…
Lucky founders at this event received ‘treats’ such as special offers on SeedLegals services, freebies from Tally Market and, in exchange for a one-minute pitch, two confident founders took away Dream Factory vouchers for headshots and video content creation.
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