A business is a group of people. Before you start doing business, you must select your team.
A lot of the criteria for selecting your team will be based on your business model and your own strengths if you intend on being a member of the team yourself.
Your available capital (initial funding) will also affect your decisions for your initial team composition.
Most successful Internet businesses obtain financing. This is because ideas can’t be protected by copyright or patent. That means the only real way to protect your idea is to corner the market by being first and growing extremely quickly.
So one very important person to add to your team first is an expert in obtaining investment capital. This person will have experience in writing marketing plans and business plans. They will have contacts in the financing industry. They will have worked for several companies and successfully obtained at least one round of financing for every company in their past.
Be sure that at least some of their experience is in obtaining first round financing. Some experts specialize in launching new companies. Others specialize more in finding new financing for companies that have already exhausted funding from all of the angel investor sources.
This expert will help you identify if you are the right person for the next most important team member to hire or if you also need to hire your “genius.”
I use the word “genius” because a lot of angel investors use that term. Almost all angel investors look for two personalities to exist in any successful Internet business. The first is someone who knows business acumen. Usually, they will accept your funding expert as that person since he obviously knows enough business acumen to put together the business plan and get it in front of angel investors.
The other personality they look for is someone who has a “vision” and will be the driving force of the business. The realization of this “vision” is what they are investing in. This person is probably you, but you will decide that together with your funding expert. If it isn’t you and your “vision” is fuzzy or you aren’t personally capable of accomplishing your vision, then a “genius” is required. This is someone who can get behind your vision and can technically make it happen. It is often a programmer.
Many Internet businesses skip these steps because they think they can’t afford them. That is not a good reason to skip them. These steps are the steps that are required for you to be able to raise the capital you need to start your Internet business.
Both of these initial team members will cost you absolutely nothing. When you formed your corporation properly as we covered in a previous part, you created the method of paying these two team members. You will be paying them in shares of stock in your new business.
Typically, an angel investment expert will want an initial 10% share of your business if they really think it is a great idea and believe in your ability to execute it. That number can go up to 50% if they believe you will need to add a “genius” to your team.
The funding will also be paid for with shares or options to buy shares in your company. If you need to add a “genius” to your team, then you will generally need to pay them a combination of a salary and stock options or actual shares. So you hire them contingent on obtaining financing and simply use their name as your “genius” when you pitch angel investors.
If you look at the top 100 Internet businesses on the Internet, you see only 1% or 2% who skipped funding. Microsoft is the most notable. Bill Gates had adequate funding from his family and from an early partner. In nearly every other case, this is the route to a successful Internet business.
Don’t skip it!