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It’s a sad truth that no matter how great your idea, how big your potential market, and how strong your team—your startup can fail. To give your company the best shot at really making it, it helps to know the most common mistakes startups, and how to avoid them. This presentation, from Early Growth Financial Services and SBL Counsel, covers the most common startup mistakes and provides practical advice to help you to avoid them. Topics include, how to set your funding objectives, proper resource allocation, better controlling your cash burn, protecting your IP and more
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Mistakes to Avoid When Starting UpTips for avoiding common
legal, financial, banking, & HR mistakes
Gadiel Morantes Ryan Johnson Emily Levin Ashley Bennett
Your Presenters
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Presentation OverviewUnderstanding the most common startup mistakes can help improve your chances of startup success
• Mistakes happen, but…• Common startup predicaments• Lack of preparation• Fundraising blunders• Financial issues• Lack of infrastructure• Hiring mistakes• Final thoughts• Q&A
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Resource Allocation, Financing, and Personal AttentionCommon startup predicaments
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Problem SolutionAllocation of Resources: You need resources to provide for development and marketing; you also need resources to protect your IP and position yourself for investment.
Carefully gradate each stage of legal protection that you need at each stage of your development so you can budget your resources accordingly.
Financing: You need to raise capital to fund your efforts, and the proper documentation to show your sophistication
Find trusted legal and financial advisors who can identify your current needs and provide the right time-tested tools to navigate the fundraising process.
Personal Attention: You appreciate the contract templates that some firms provide you, but you need a reliable contact that is willing to answer your many questions about how they are to be implemented.
Establish your need for personal attention and take the firm for a test drive to make sure it is the right fit by sitting down face to face, to see how well you are able to communicate.
Lack of PreparationWith proper planning, you can easily avoid the most common mistakes startups encounter during the early stages
• Business planning• Legal formation and
founders’ equity grants• Forecasting and expenses• Selecting business partners• Intellectual property (IP)
protection strategy
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Fundraising BlundersVC, angels, bank debt, crowdfunding…when you’re ready to raise funds, clarity is key
• Valuation• Funding structure• Funding objectives• Negotiating terms• Investor management
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Financial IssuesBusiness is money – so careful financial management and accurate financials are essential
• Cash management• Checks and balances• Cash burn
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Lack of InfrastructureTo build a thriving startup, start with a solid foundation comprised of practical and flexible systems and processes
• Accounting and finance infrastructure
• Banking infrastructure• HR infrastructure• Legal infrastructure
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Hiring MistakesBuilding the right team and keeping them motivated is crucial for success – not to mention it’s probably your largest expense
• Hiring slowly – identify, interview, accept
• Firing quickly – manage, evaluate, terminate
• Compensation
Equity Ranges for Non-Founders
COO 2% - 5%
CXX 1% - 3%
VP of Engineering 2% - 4%
Other VPs 1% - 3%
Directors 0.75% - 1.50%
Key Engineering Roles 0.25% - 1.50%
Final Thoughts
“It may seem counterintuitive to think that something as disruptive, innovative, and chaotic as a startup can be
managed or, to be accurate, must be managed. Most people think of process and management as boring
and dull, whereas startups are dynamic and exciting. But what is actually exciting is to see startups succeed
and change the world.”
-Eric Ries, The Lean Startup
