Choosing the right venture capital investor can be instrumental for a startup’s growth, according to Adrian Rainey, partner at Taylor Wessing.
Speaking at an event, hosted by Tech City News, Rainey said it was important for tech entrepreneurs to pick the right VC to ensure their startup’s goals align with that of the investor.
“It is as much about you choosing the investor as it is about the investor choosing you,” Rainey said.
Rainey was joined on the panel by Mary Ellen Dugan, CMO at WP Engine; Laurence Parry, tax partner at Kreston Reeves; Ben Rose, insurance director at Digital Risks; and Jill Miller, research advisor at CIPD. The discussion was moderated by Emily Spaven, editor at Tech City News.
Parry agreed with Rainey, saying: “If you approach a VC and they’re not excited about you, go somewhere else. You want an investor who’s excited about you and what you do.”
Legal considerations
Aside from picking the right VC, Rainey spoke about the need to consider issues relating to share holdings and intellectual property in order to foster long term success.
“It’s an obvious point,” Rainey said, “but it needs to be in [place in] the company”. By ensuring that these two issues were considered at the beginning, Rainey explained that entrepreneurs would find it a lot easier to deal with legal in the long-term, particularly if they were looking to exit their business.
Entrepreneurs should also ensure that share capital is properly divided between them and any early employees.
All these points, Rainey added, would remove any unnecessary friction from the company, thus making it easier to work with external agents such as investors in the future.
Company culture
Miller commented on the impact that growth could have on the relationship between a founder and their employees; explaining why she believed it was important to establish clear and formal communication channels.
“In the early days, speaking to a founder is really easy. As the company grows, as an employee, you may start to feel like you don’t matter anymore and there’s less face-to-face time [with the owner],” said Miller.
“Be formal in your communications,” she added, noting that it was important for employees to feel part of the company and for founders to set time aside to speak directly to their workers.
Given the fact that working a startup is not a 9-to-5 job, Jill insisted that establishing the right work-life balance guidelines was essential for employee satisfaction, while Rose said it was easy for startups to be ‘bullied into’ accepting contractor’s fees.
Spending on marketing
Finally, the panelists moved on to discuss the importance of online presence and presentation.
Dugan, who urged entrepreneurs to think about their brand, said it was important for entrepreneurs to think clearly about their branding strategy.
“Perception is reality… make sure [your company’s] perception is as strong as it possibly can be and be very confident” Dugan concluded.