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Important Things To Be Kept In Mind By The Startup Founders

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Introduction: Startup Founders

Are you a New Startup founder? Are you willing to make yourself fully aware of a few important things which most of the founders don’t remember during the initial startup? Yes, This blog is oriented towards the minor Mistakes that should be kept in mind after founding the startup. The growth and Success of a business and Startup depend on the planning and everyday innovative work that exists in the Startups, and the business plan of the Startup with the right financial plans can avoid the money blunders which most Startup founders do.

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The founder needs to focus mainly on the Problems occurring in the business and the right solution to them, the idea behind the problems must have value and create meaning for the everyday problems and its solution. The founders should not regret their decision but work on the part of learning from the past, learning new things from past experiences, Mentors Networking, Advisors, etc. plays a great role in innovative thought and exploring great ideas from within. 

1. Decide the right Investor 

The founders should be very careful about the right investor while deciding on the business. The right investor can only go through the ups and downs of the Company in the market and can help in the growth of the Company. Getting funding from the wrong investor might give you shock in the coming days. 

The investors should be the person who strongly believes in you and your decisions, the important thing is that most Startups fail during the initial stage of their growth, so it should be kept in mind that if the startup or business fails during its initial stage, you and your investors should be having peace in mind. In case you are finding for the Angel Investor be sure that the inexperienced one will stay in imaginary expectation and demands the same. The Angel investor is a private or seed investor who provides high-value of financial backing for Entrepreneurs or Startups.
 
The Startups should choose the right one which results at the end of the business, having a good relationship and the right understanding of the experience of the investor is very important especially during the first couple of years. It would be great if you would find out a Portfolio Company, especially one which had failed in the past. A Portfolio Company refers to a Private or Public Venture Capital firm, or private equity firm that holds an interest. (A private equity firm is a company that provides financial backing to the private equity of Startups through various strategies including back out, growth capital, and Venture capital, they help in investment with specific Strategies. 

A Buyout refers to the acquisition of Control of a Company, if Buyout occurs the Company mostly goes private. So, before confirming the investment funding make a comprehensive appraisal of both the VC investment and Angel investment.

2. Focus on the Mental and Physical Health

The Employees are the one who plays a key role in the growth of the business, and the Founders should keep the focus on it on a priority basis. The Business's internal growth culture and mindset cannot exist in the ill and exhausted mind, good mental and physical health only can bring innovation to the Company and innovations are the base for the growth of a Company. Make the work-life balance of your business Employees and yourself.

3. Manage your Financial Resources

The investment should flow in the right manner, the Founder must take their Startup so seriously as it's going through the lifetime, and your services should be based on bigger and long term plans. The right management of funds in the Startup and Business plays a key role in its growth of it. Plan your investment very carefully as every investment should create a milestone for the growth of the business. If you have a Professional financial advisor, who is having the right understanding of the Business and its plans then there is a need to share the right financial plans, no matter how raised your funding is, until and unless your management is proper it's going to fail.

4. Be Conscious of the terms and Conditions

The Startups must have tightly drafted agreement terms and conditions from the very initial stage of their growth, so that the Bad investor deal could also reach some value to you, instead of converting the investment into a bad deal. While you are providing equity to the investor who has made less funding might be dangerous to you in the coming days, as it would become difficult to generate funding in the future for your Company.

For detailed information from our Expert team on how to make investments and confirm deals, share your query in the comments section. The funding that provides you great interest such as avoiding the Anti-dilution provision which could be a deal-breaker for you.

5. Test the Quality of the Product and Services

The Verification of the product and services that are going to launch through your Company is very important, proofread very carefully all the terms of services and how efficient it would be and the comparison of the same with the market value plays a very important role in the growth of the business. Until and unless your business is growing with the right mindset of scaling the challenges before the launch of the product.

6. Have a tightly written Founders Agreement 

Suppose you have chosen to form a Company with your friends, with the amazing idea you and your three other friends started the Company, so at the very beginning while Singing of Founder's agreement make sure that the provision of the agreement is tightly written and the Clauses such as “Reverse Vesting” which refers to the case that if each of your friend who is having equal one-fourth of the Equity percentage of the Company, cannot leave the Company in a year and in case anyone leaves within a year they will not be able to retain any equity in the Company and even if any of them are leaving after one year they will be able to retain interest for the time proportional to the period they stayed in the Company.

7. Exclusivity (Clause) Agreement

The Founders should keep the Exclusivity agreement in their agreement, but that should be for a very short time, it should not extend more than a week or month, however, for the long term investors this agreement term is very important.  

8. Find out the right Partners

At the time of partnering with a Corporate business, it would be very important to find out the right one, partners who have failed in their previous businesses, you have to be an internally innovative mindset and work culture with such investors, and be able to promote it with a strategy and strong with the innovative mind with the Startups. 

 The innovative mind only could be helpful in the management of relationships with your Partners along with keeping pushing for the growth of the innovative idea. 

You have to be sure that the Potential partner has no other collaboration with any other Partners if there is a try to come out of it or equip to deal with the other business too.

9. Measure the Competition 

The Competition in the Market for the product and services you are offering plays a great role in the Company's growth and development. The businesses which are already providing services in the market such as Tech startups which are hugely competitive market can be difficult for the new investor until and unless the Services of the Company have an innovative mindset and new ideas for the business. The outer view of the Competitor often disguises others, be careful and make every effort to do something new in the market. You have to show the best option available which is not with your Competitor as you cannot fool your customer at the first sight, be the Customer Centric and have a great relationship with the Customer which is the way to get a massive advantage.

Think you and your friend is having close relationships and similar mindsets and have the same level of Startup spirit as yours, would that help? No, working with Co-workers and keep moving forward in ups and downs, and having perseverance is the required thing for Businessmen, focus on other key elements when you are selecting the near and dear, and don't keep them in your professional life until they are fair for your professionalism. Additionally keep the adverse time in mind, such as what if they leave your business in the coming days and how can it affect your business and personal life?

Conclusion

The Founder agreement plays an important role in the Company's growth along with the meeting of the right Partner, takes time in finding out right partner, even single Startups work well nowadays. Always, keep in mind that failure also gives with it, a lot of creativity and innovation if you bear it and adopt it.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.

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Author
Ravikant Rai
Hi, I am Ravikant Rai, a Technology Lawyer, who graduated with B. A. LL. B. (Hons.) from the school of law and legal affairs at Noida International University I have two years of experience writing about law as a freelancer and aspiring lawyer. In addition, I have experience writing, Content creation and researching legal information. Various articles on business and corporate law, cyber law and cyber security have been authored by me. I currently work in technology deals, corporate, fintech, and cyber law, etc. I have written documents on a variety of subjects, including software licensing, license to use, terms of service, privacy policy, cloud computing service, data security, confidentiality, and data protection, as well as shareholder and founder requirements.

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