For an entrepreneur, closing a first round of financing is a major milestone. But what are you supposed to do next? After all, you won’t actually see any money for two, or maybe three months, while you wait for the legal diligence to be completed.
Still, there’s plenty you can do to move forward while your check is stuck in limbo, say Jon Stein and Eli Broverman, co-founders of online investment platform Betterment.
Recruit. “It takes three months to hire a strong candidate, so get out there the day you close your term sheet, if not sooner,” says Stein. He became a self-professed LinkedIn junkie, trying to identify potential hires. While he didn’t hire any of his LinkedIn finds, those early interviews helped clarify the ideal background and skill set for each role. Once the team identified the appropriate skills, they screened the list for the best cultural fit. “A culture is built organically from the people around you,” says Stein. “Early hires have to want to build a company, not just work at one. In particular, they have to believe in what you’re doing. We ask each candidate ‘Why Betterment? Why not another startup?’”
Find office space. “You need space that employees actually want to spend time in, where they’re comfortable,” says Stein. “It will pay long term dividends.” Your team will spend way too much time in the office, and the space itself will become a key component of company culture. That means more than buying a ping-pong table. Instead, ask yourself if the space is accessible by public transportation. Is there a comfy couch to crash on for the inevitable all-nighter?
In New York, “the biggest lie going is square footage for commercial space,” says Stein. “Every listing inflates square footage, sometimes by as much as 100%. You have to take out the tape measure and start negotiating a reduction [in rent].” In the end, Betterment found a building they liked and worked directly with a previous tenant to secure the space before it went on the market. When the space came up for lease, Jon didn’t wait for his investors’ checks to clear. He used his own credit to get that first lease.
Choose your benefits. These take a while to come online too, and now that you’ve got funding, your employees are going to expect benefits like health insurance. Betterment has a younger work force, so the company chose a high deductible health insurance plan. That can be a good option for those who don’t expect to need much medical care. Your employees might fit a different profile, but it’s still important that to have a good “fit” between your employees and your benefits.