Winning Is Just the Beginning: What Next After Receiving A Seed Fund
Lalit Basnet - Jul 11, 2017
According to Ryan Carey, (author of Effective Altruism handbook) , “Amidst all the ideas pitched by an entrepreneur to venture capitalists, roughly 1% of entrepreneurs that aspire to obtain venture capital obtain seed funding”. Many questions arise after all the hardwork and dedication that an entrepreneur puts forth in building a Minimum Viable Product (MVP) & convinces an investor to invest in their idea. Questions like, What next? What should the venture capitalists expect from the entrepreneur over next 6 months to invest on their idea? These are some of the questions that deludes young entrepreneurs from our country after having winning seed funding in an accelerator program.
Entrepreneurs fail to circum to the fact that winning is just the beginning for startups. Nothing is for free, and the fund that the entrepreneur is bound to receive is the hard earned money of the investors who believed in the the rosy picture that was painted while convincing investors to raise the seed fund. After countless followback with the investors, the entrepreneurs still does not get the fund, eventually leading them frustrated and making them drop on the idea that was once deemed profitable.
So, where do these entrepreneurs miss out, and what are the initial steps to be taken after having receiving the seed fund. NEHUB lists out the immediate “To-Do-Lists” for an entrepreneurs after just having won the seed money:
- Going Through the Terms & Conditions (T&C)
Agreeing to the T&C and aligning with it is the single most important thing that an entrepreneur must do after receiving the seed fund. Although an ideator is in need of the seed funding, they must initially understand the legal perspectives and dissect the key provisions mentioned in the T&C. Further work must only commence after it is fulfilled.
- Further Validating the Idea
MVP is not a product but a process, hence an entrepreneurs although assured of seed fund must bootstrap and validate the idea without financing. Investors might have been drawn into the portrayed business concept, but winning seed money calls for immediate action hence entrepreneurs must work on further validating and polishing their idea.
- Creating a Work plan
Entrepreneurship is not a lone voyage, the success of startups depends much more upon the management team and not just the idea. Hence it is of absolute essence that team of like minded entrepreneurs create a robust short term and a long term work plan. Work plan that is initially formed during the pitching process would be the ideal foundation to work upon. Identifying the team's core strength and developing Mission and Vision statement are the first and foremost things that an entrepreneur must focus on in Startups. Similarly, planning the growth rate, finances, marketing and other key components are vital. A concrete work plan is a key aspect an investor looks towards.
- Follow up with the investor
Following up and keeping the investors updated about the developments on the dea is crucial. To the investor, this constant perusal signifies the dedication towards building upon the idea. If stuck upon an issue, the investor might be useful for technical guidance. Just so to be on the same page after having developed a work plan, an entrepreneur must explain their work plan to the investor.Therefore an entrepreneur in the initial phase must never hesitate to follow up with the investors.
- Registering company and legal procedure
Upon complying with the T&C, an entrepreneur must work registering the company. Aligning with the legal procedures in Nepal, an Article of Association and Memorandum of Association are the two most important legal documents that an enterprise must fill before legally registering their business. Legally registering a company also provides a safe heaven for the investors to invest, as it is much more safe to invest in legally registered company.
These are the 5 immediate “To-Do-Lists” for an entrepreneurs after having won the seed money. Following these steps help a startup reap the benefits and not be left stranded with expectations.