Top 3 Tips For Start-Ups
Our Acuity Start-Ups team picks out three top tips for start-up founders to consider when launching, growing and scaling their business.
Author: Andrew McGlashan
Key Contact: Tom Saunderson
- Be proactive, not reactive
Start-ups often originate in the ideas-driven realm of academia. On entering the business world, however, there are many red flags and legal traps waiting for an unsuspecting entrepreneur to fall into. It’s hard to know what you don’t know, so be proactive. Investigate. It’s much easier to scope out potential issues in a short call before committing to a decision, than to unpick complicated missteps later on.
- Legal advice is not a one-size-fits-all subject
It’s tempting to re-use documents borrowed from other companies to save time and cost. But a document prepared for one company won’t necessarily cover all the areas your unique business requires – particularly if your enterprise is founded on innovative technology. Many founders run afoul of data protection and GDPR issues, for example. Be careful to make sure your documentation fits your business and doesn’t leave you exposed.
- Don’t give away too much equity too soon
A major part of the investment process is having that conversation about what is a fair equity split or dilution during funding rounds. If an early-stage investor takes too big a stake, this will limit later investment appeal. Even if an interested investor could be a great source of revenue or support, giving away a hefty chunk of equity at seed or pre-seed stage could eventually constrain your options. Fortunately, information that sets out ranges for a fair equity split at different points along the start-up journey is available. Always do your research or get advice before signing away a portion of your company.
At Acuity Law, our Start-Ups team is experienced in supporting early-stage businesses throughout the start-up lifecycle – from founders and shareholders agreements, investment rounds, early-stage employee and incentive schemes, EMIs, IP and data protection to commercial terms and conditions, and more. The team also has a wide network of investors, professional advisors and service providers that they are happy to share in order to help any start-up grow to the next level.
What’s more, our suite of custom-built products and services are designed for fast-growing businesses.
For more information about how we can help your start-up, or on any Acuity products and services, get in touch.