The startup scene is exciting - it’s innovative, progressive and inspiring. It also comes with a lot of pressure to succeed, especially if you’re a founder or work in upper management. In this article, we’ll offer some practical tips that can help your startup succeed by making it more attractive to investors and potential employees.
These tips come from our friends at SeedLegals, who’ve helped over 35,000 companies start and grow their businesses by simplifying the tasks mentioned below. SeedLegals combines automation with help from dedicated experts to support startups on their growth journey.
The tips covered below are tried and true for many successful startups in the UK.
First things first: make sure that the legal framework is in place to protect the founders and the company from the get-go. When the essentials like company ownership, IP ownership and founders’ roles and responsibilities are clearly set out in writing, it’s easier to avoid or swiftly manage disputes. Plus, investors like to see that these documents are in place before they’ll invest in your company. Founder agreements include:
You can get customised founder agreements quickly and affordably on SeedLegals, along with over 90 other legal documents for your startup.
SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme) are UK government initiatives created to encourage economic growth. SEIS is for early-stage companies and EIS is for medium-sized businesses.
These initiatives give private investors a big tax break when they invest in high-risk, early-stage companies. Two out of three UK angel investors only invest in startups that are SEIS/EIS compliant, so it’s helpful to get this sorted if you want funding from investors.
To do this, you can first apply for SEIS/EIS Advance Assurance, which shows that your business is eligible for SEIS/EIS. Investors will have more confidence to invest in your startup if you have SEIS/EIS Advance Assurance.
After you receive an investment, you’ll then have to issue SEIS/EIS Compliance certificates to your investors so that they can claim their tax relief.
Funding makes the startup world go round. To successfully grow your startup, you need money. That’s why raising funding is one of the most important things you’ll do. The process can be very tiring and expensive for founders, though. It takes a lot of time to find, pitch to and negotiate with investors. Optimising your fundraising process will help you save valuable time, energy and money while you secure the funds you need to grow.
SeedLegals has a variety of services designed to help you raise startup funding effortlessly:
Make sure you know all your options when it comes to startup funding. Do your research on the types of funding you can get and decide what will suit your business most.
This one’s important for both employees and founders. Share option schemes are a way to give employees, advisors and directors equity in your company so that you can attract, retain and reward talented employees.
Share options convert into shares (company equity) after a certain period of time. They act as an incentive for employees to work together towards common goals, knowing that they’ll be rewarded when they hit certain milestones or a specific period of time passes. Employees can sell their shares later on for large sums of money if they are worth a lot. It’s a great way to build cohesion and reward employees while getting everyone to care about the company’s success.
If you’re a job seeker, find out if your potential employers have share option schemes because they can be an excellent added benefit.
SeedLegals helps companies set up their share option schemes and manage them over the long term. Employees also get a log in so they can monitor their options themselves.
Does your startup spend money on developing new products and services? If so, you might be able to claim tax relief through something called R&D tax credits - another helpful scheme from the government to encourage innovation.
To qualify for R&D tax relief, you don’t have to invent a brand-new product or process. You can also claim if you’re improving existing technology and - get this - the project doesn’t even have to result in success for you to claim. Your project might fail, but you could still be eligible for R&D tax credits because you’ve contributed to solving (or attempting to solve) ‘technological uncertainty.’ A wide range of business activities qualify, from creating new recipes to developing AI software. Your company could claim back up to 33% of the money you spent on R&D in tax relief.
You can learn all about the qualifying criteria and how to claim R&D tax relief in this R&D tax credits guide. SeedLegals helps startups put together their R&D claims. It’s worth talking to one of their experts to find out how your company can benefit from the scheme. They’ve created thousands of claims with a 100% success rate so far.
So, what are you waiting for? You can get started on these five practical tips right away to set your startup up for success. If you don’t want to use a software service to help you with them, you could also ask your lawyer and accountant. Whichever you decide, getting these essentials in place ASAP can really benefit your company.
