Starting the venture
What is this?
At some point in time, your primary focus will be the execution of the business case you developed. In this section we will scratch the surface of a few general topics that deserve proper attention when taking off. Consider this part as a last reality check and advice on these general topics from a start-up point of view.
Starting a new company means setting up a legal entity. Depending on the country where you plan to start, you most likely have the choice among a few options. The legal entity you choose will define important aspects of running the business such as liability, constraints on shareholder agreements, tax rates, required capital, and procedures in case of bankruptcy amongst others. In other words, considering the impact a legal entity may have, it is wise to scan the options available. You should pick one that suits your immediate plans, but limits your constraints towards the future. In case legal complexity is too high, it is a good idea to seek professional advice.
An overview of the different legal entities in all EU countries is given here. Click on the countries on the right hand side and you will see the available options.
Acces to financial support measures
When financing your business, it is important to know all options available to you. Governments and their organizations sometimes offer a jungle of financial support measures that entrepreneurs don't know about. The range is often wide: from equity participations over low-interest loans to warranty provision and tax exemption. Figuring out what support measures your business case would be eligible for may be a good idea. On the other hand, there's no such thing as a free lunch, most often there are strings attached. Before accepting support measures, try to get a grasp of the implications by talking to previous applicants.
An overview on financial support measures in all EU countries is available here. Click on the countries on the right hand side and you will see the available options.
Raising private equity capital
Raising private equity capital is hard. And when you're relatively new to the process it's easy to be confused by the process. There is all sorts of advice on the Internet about how to raise capital. Much of it is conflicting. We like the following post by Mark Suster very much. It gives hands-on advice on how to select, approach and pitch to (venture capital) investors.
Contracting with customers
Contracting with customers is a very context-specific matter. It subject to the country you are headquartered, the legal entity you have, your sector standards, whether you work B2B or B2C, and so on. There are a few pieces of general advice however. You will have to negotiate specific terms with customers and find the correct legal jargon "to catch the spirit" of the agreement you verbally made. You will have to make sure that your contract is compliant with all potentially relevant laws. You thus have to make sure that you are aware of what laws are applicable to your situation, in order to avoid negotiating terms that are in fact unenforceable. In case you work in an international setting, you have to tackle issues that arise from different legal systems. If you are facing a situation that is too complex, go find professional advice. Better safe than sorry.
If you start a company, chances are that you will be hiring sooner or later. Start by making up your mind on what specific tasks you want to get done by your future employee(s). If you have an idea of the potential job description, think of the skills and attitudes that your future employee(s) will need in order to deliver the results you expect. It is a good idea to double check whether the profile(s) you are looking are widely spread on the job market. In case they are not, you may need to reconsider the job description. In case you don't want to do the hiring yourself, consider hiring a professional recruiter, but bear in mind that it is generally expensive, and success is never guaranteed. Labor laws tend to differ from country to country on a wide range of issues, such as trial periods, firing terms, unions and social security. Make sure you understand the implications of all obligations you face towards your employees.
This Inc.-article gives you plenty of tips on hiring your first employees.
You can find more information on the legal framework around staff in EU countries here. Click on the countries on the right hand side and you will see the links with detailed explanations.
Contracting with investors
It takes money to make money. Investor contracting is again a very context-specific issue, and it can become very complex. Few rules of thumb can be discerned. However, it generally helps to separate equity and control to keep things simple. Equity is the claim on future profits, whereas control is the right to decide. Depending on the type of investor you face, the amount of control and equity aspired may significantly differ. For entrepreneurs it is important to partner up with an investor that has expectations and aspirations that are complimentary to their own. An agreement between the entrepreneur(s) and their external investors then has to be drafted within the boundaries of the applicable legal system. When facing professional investors, bear in mind that they have plenty of experience you may not have in drafting contracts. If it becomes hard to judge the potential implications of an agreement, go see professional advisor(s), and make sure they too have profound knowledge.
This paper will give you an insight in actual contracts between venture capitalists (VCs) and entrepreneurs.