Megan Hannum is a rockstar—a partner at FundedBuy & a venture consultant to Comcast ventures. Megan has worked with hundreds of startups and accelerators to get them set up efficiently and optimize their operating expenses so the founders can properly focus on their product.
Here's what YOU (Dreamers & Doers) wanted to ask Megan:
Q: Do you have any advice on incorporation, time frames, costs, etc. ? [ Nat Fong ]
A: Incorporation, there are a few variables to think about here:
What kind of business are you running... is it one in which you plan on taking outside investment? Or one in which you plan to self fund, is already making money, or an agency? How you structure the company in your initial stages affects your ability to (a) receive outside funding (b) tax benefits .
Geographically where are you operating the business? Often times a DE incorporation is the most friendly but that can depend on your specifics.
Costs/timing—everyone needs a good deal lawyer, but there are smaller boutique firms that will not charge you an arm and a leg as you are going through this process and I find them to be much better than using something online, more hand holding especially if this is your first business.
Q: I'd love to know your opinion on cofounders splitting equity, especially 3+ cofounders. Some are contributing with cash, some to business, some with more hours available to work on it, etc.! What are some general tips? [Danielle Fankhauser]
A: There are many variables to that equation and its all specific to your circumstances
Any more than 3 co-founders is definitely something you want to get straight and on paper before the business really takes off. You need an effective parting ways strategy for if/when that time comes that parties want to part or join the business. It becomes crucial for when you raise outside money and your cap table.
What is each potential founders background + what do they plan to focus on specifically for the business? You want to avoid too many cooks in the kitchen which only gets more complicated as you grow. Are there complimentary or overlapping skill sets? You need to spend a lot of time here asking yourself the hard questions and being honest with each persons intentions -- If someone wants to be involved but does not have the same time commitment or dedication, you may want to consider bringing them on as an investor or advisor instead
Q: What are some standout skills startups look for in nontechnical candidates? [Tiffany Yu]
A: It depends on the positions they are hiring for, how well-funded they are, and how junior or senior the role. The earlier on the more general the role, everyone is sort of wearing a million hats and being scrappy to get things done -- you could be doing a couple different roles in one.
The more funded and established they get the more they need to shift directions into building teams and looking for experts in the areas the need the most. Most *SMART* teams focused on technology build out will focus on getting their engineering teams as tight as possible and only then when the product and infrastructure is in place, they start to hire their first operations, marekting & sales roles
In general everyone loves a good attitude, work ethic/reputation, proactive mentality, ability to ask for help and know what you dont know, passion & knowledge for product / market, team player.. when you start to scale up, more so on experience, background, expertise/area but above all cultural fit.
Q: Do you have any thoughts or insights around best benefits for companies and payroll systems? Are there ones you love that can grow with you? Would you start with one and switch to another when you scale? [Sashka Rothschild]
A: This is probably the #1 area we save companies the most time and money. It used to be that there were maybe one or two really good options for a startup in NYC but in the last 2-3 years given Obama care, there have been a ton of new health care startups that have come up in the market, some of them good, some of them really good marketing plays but extremely bad plans and services
Geographically -- Are you employees all based in nyc or are some in other markets?
Demographics for underwriting—age, sex, nature of the business?
Overall --- you want to make sure that as you are growing your team and hiring you are offering the most comprehensive plans to your employees and they are taken care of. We do a full on analysis for our companies to compare costs and coverage so we can fully walk you through your best options and educate you on why one plan is going to be best suited for you than another.
Q: How do most startups handle ramping up their staffing, vendors, etc. in financial projections immediately after closing a Series A round? [Chaya Cooper]
A: As far as recruiting, if you have closed a proper financing round and the business is growing its perfectly fine to bring in very cost and startup friendly recruiters to help build your team.
For example, through FundedBuy, we are partnered with a technical recruiter who specializes in working with devs and engineering. They take 20% first year salary and have been very successful in placing candidates for our companies.
For nontechnical talent, we take 10% first year salary—think marketing, sales, bd, opps, admin etc —which we curate from our network and when you give the green light for an intro it's up to you to do your internal processing. If you hire them, we are paid, all based on contingency. One thing I would STRONGLY advise AGAINST are recruiters who are asking you for equity off the bat. Personally I think its bad business, its bad for your cap table and there are much better options -- that should be your last resort.
Q: Where do you see the most interest from VCs currently? Where are the holes in innovation and what do you predict to be the next big sector of development? [Lori Tiernan]
A: It depends on the fund, their interests, stage, sector and mandates to deploy capital. I will tell you one thing: there is no shortage of early stage capital being deployed. There are tons of new funds every day coming up. I am a nerd and some of my favorite funds include Lux Capital, IA Ventures and recently my friend just formed OS Fund, which I think will LONG term be huge.
Q: Do you see companies skipping the friends/family/angel route and going straight to VC if they have enough personal funds/savings/can bootstrap their way to the institutional stage? What are the pros/cons? In my personal network, I haven't seen many folks do so. If people skip the friends/family/angel seed rounds, are there other reasons for this other than limited personal funds/ability to bootstrap? [Gesche Haas]
A: Yes. If you can get yourself to the institutional rounds without jeopardizing your overall wellbeing then why not.
If that's the path you take, definitely make sure you put a heavy emphasis on your board of advisors. Part of the reason taking money from angels is a good tradeoff is they usually have your best interest at heart and love to make introductions for sales, future investors and generally want to see their investment do well. Having some of these key people involved early can great shape the way and speed at which your business comes together.
If you forgo that, I would urge you to focus on your board of advisors who can play that same advocate role and hopefully you are strategic enough to get a diverse group with some deep expertise that can help you and advocate along your journey. If you do take money, just make sure it is friendly and on a comfortable note that early on.
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