The Don’ts of Starting a Start-Up

Do, do, do, but how about a dose of don’t, don’t, don’t?

Don’t partner with associates without a shareholders’ agreement!

You might be best friends now, but don’t tomorrow decide on something you could put in writing today.

Don’t give equity to someone working freelance for you!

Give equity to someone working full-time and make sure you have a clawback clause in case that person bails on you.

Don’t give up equity for rent, legal advice, or anything that you could pay if you had the money!

Incubators are the best, except if they ask for more than 5% of your business.

Don’t give more than 1% to your advisors!

And make sure their equity is tied to objective, duration, or specific tasks.

Don’t ignore how important good human resources is!

It’s a startup dilemma. Money against talent. Be cheap at first but quickly ramp up your quality of hires, even if it increases your cash burn.

Don’t wait for your product to be perfect!

Wait for customers to tell you whether they would pay for it, and if they pay for it, what needs to be improved.

Don’t cold-email the entire team of a VC fund you are reaching out to!

It’s frustrating and annoying as the team figures out everyone received that email and now no one wants to answer it. It also makes it look like you decided to get rid of your email.

Don’t bullshit VCs!

They will see through the bs, smile at you, and tell you they’ll think about it. They see 10+ entrepreneurs every day. Be genuine, sell them on a vision not a future.

Don’t rush VCs!

They will see as a sign you are not getting traction with other VCs, even if you are. But if VCs are slow to answer, send them a friendly reminder with any key data points, hopefully positive, since your last encounter.

Don’t accept money that would dilute you more than 30%!

Rather ask that same investor how they foresee the next round with the entrepreneurs so diluted.

Don’t include a purchase option for a strategic investor!

You would be exiting the VC route. You will never be re-finance-able.

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