Ok, probably dramatising it a bit here, but now that I have your attention…
Cap Tables are more important than sometimes people give them credit for. They are the ledger of value in the company you’ve built, but they are often neglected and updated last minute or relegated to a lawyer to draft and thus hard to conceptualise and realise the impact decisions such as SAFE’s can have on your ownership long term.
To help you out with not only creating your own cap table, but also modelling out future events, check out the 3-part video series Felix Martinez and I put together to illustrate the most typical fundraising examples. Hope you enjoy them!
Episode 1 — Creating A Cap Table for an Angel Round.
Episode 2 — How to Model a Pre-Seed round with Options.
Episode 3 — How to model a Seed round with SAFEs/ASAs/and Convertible Notes.
I recently caught up with a long time friend, co-founder of Lyst, and Venture Partner at Seedcamp Devin Hunt about his view on the role of Product Manager. What followed was a fun deep dive into the evolving nature of the role, but also an exploration into its relative infancy in terms of what best practices are, and why this makes it challenging for founders looking to hire a PM to know what to look for. This blog post is a summarised and synthesised version of our chat, but hopefully it helps you answer the following questions:
What is a product manager?
Where can I meet one?
When should I hire one?
First, let’s start by defining the role of a Product Manager (PM). A PM is more than just one thing, it’s a role that encompasses several disciplines. To make it simple, I’ve broken out those disciplines into four categories: Product Leadership, Management, Design, and Sales.
Leadership, in the context of being a Product Manager, means making the critical decisions based on your team’s research and the product vision set out by the founder. In our chat, Devin shared that there are two unique streams in building product: developing the product vision, and executing on it, which he calls product operations. Whereas a founder might be hyper critical in setting product vision (at least until they trust the PM), the product operations (think customer development, iterating on ideas, tech requests, etc) still require decision-making leadership.
Typically, the blend of leading product operations and marrying that up with the product vision of the founder is what defines the key leadership attributes of a PM, especially in younger startups.
In effect, the PM will become an arbiter between product vision and product operations. They will have to understand customer development and initially do it jointly with the founders, but later manage what success looks like.
Which brings us to *Management.* Within management, a good PM is able to manage the team that delivers and maintains the product. This ranges from managing the priority stacks from both the engineering and design teams, the customer service requests, and the like. In effect, this is where the core of the confusion sometimes happens around Product Managers being perceived as Project Managers. Clearly there is some overlap, but there is more to the role of a Product Manager, than simple Project Management.
Next, comes *Design*. Whilst some of the best designers in the world don’t have a formal education in design, it helps to have an eye for what is ‘quality’, particularly quality for your customer. The PM needs to know how to calibrate the trade-off between quality of the product shipped vs. the’ speed’ of shipping. The PM needs to be able to understand what good delivery and a good user interface looks like, but doesn’t need to be the one doing it. It’s not uncommon for a PM to start recruiting a design team to support in making those design decisions, and scale those design teams as further funding rounds come. Andy Budd will be publishing a series of deep dives on around design with us at Seedcamp over the next few weeks — stay tuned.
Finally, I added *Sales* as the last ‘wish list’ attribute. Ultimately as much as the title of the book by Daniel Pink is around ‘to sell is human’, I’d argue that to build a product is to build a product around human interactions. I wrote a piece a while ago on the relationship process and product cycle and feel that a PM benefits from understanding what customers need and want and a background in some form of sales can be handy. David Mytton, who we’ve been lucky to have as an EiR with us at Seedcamp for a few years, adds that the commercial element of a PM is largely overlooked: the full go-to-market strategy needs to go alongside product functionalities.
Now… How to find a PM? Well, one of the interesting observations Devin shared with me is that in a human resource constrained ecosystem (think Silicon Valley where lots of the PMs are hired by big tech firms), there have been many lateral hires that have ended up being good product managers with the right level of encouragement. As I explored with Devin what were the key attributes that stood out for a good PM, responsibility, trust, ability to manage and communicate, and organisation stood out as strengths over intrinsic ‘design’ skills or engineering skills, for example. As such, as you reflect on people in your network that could be PMs, don’t overlook ex-sales, ex-engineers, or ex-lawyers if they understand your segment & customer. They could very well be trained to be great PMs for your business.
To conclude, when is the best time to bring in a PM? As soon as you can afford to if you are a commercially minded CEO, and if you’re a technically minded CEO, likely still as soon as you can afford, although you can potentially get away with it for much longer provided you evaluate your role as not preventing you from leading the wider organization effectively.
In the words of David Mytton: The best founder teams have two people, one commercial and one technical. They’re the skills of a PM in two people. I think startups tend to grow the engineering teams out of line with the commercial, though they should be growing together. The PM sits across both. There’s a lot of logistics in customer development in the early days, so seed stage is probably around the right time to gear up those efforts.
“Typically a startup’s founder will fill the role of the Product Manager for the first 12 months. This is essential as every good founder should have an intimate knowledge of both their business goals and their customers. However as the founder takes on a more focused role as CEO of the company, she will have less time to manage the product and will instead start prioritising the strategic direction of the business. Constrained by budget and often encouraged to focus on hiring support around technology or growth, she will make do until the startup is at a large enough size that she is able to afford dedicated help with her product. Yet this can often be too late. By the time that your business has secured seed-stage or later funding the foundations of good product thinking (also referred to as having a good “Product Muscle”) should be well and truly in place. This should coincide with the first 12 to 18 months of your product’s lifecycle. Being able to present a deep and meaningful understanding of your customer to investors, along with a story of increased revenue due in large part to adapting the product to better serve your customer base, will go a long way in securing future investment. With this in mind, we believe that a Head of Product should be amongst the first key hires that you make during your first 12 months.”
I’ve put together a list of resources below, in various blog posts, books, podcasts and tools to dive in on further on the topic:
During our recent Seedcamp Founder Summit, we had the honour of having Nicky Moffat CBE kick-off our event with a fire-side chat on leading teams. From Wikipedia, “Brigadier Nicola Patricia Moffat CBE, known as Nicky Moffat, was the highest-ranking woman in the British Army from 2009 until her resignation in 2012.” With her story and experience as a backdrop, we covered what it took to be a leader of small teams scaling all the way to teams in excess of 4,000 (which she herself led, during her last posting in the Army).
Whilst there is no lack of leadership insights to be gathered from fellow tech-leaders, it was interesting to hear the unique challenges Nicky had throughout her career in the Army. In some ways, they paralleled those of any tech company (attracting, training, leading, and retaining key team members) and as could be expected, in many ways they were drastically different. Nicky kindly shared various anecdotes during her chat, which she requested we not share, but what was clear across all of them was the high pressure environment Army officers operate under, the unique challenges she had to overcome within the various roles she held, and the sheer size and scale of the organisation and variety of challenges that can present to any leader. As she shared her stories, three themes for developing leadership within an organisation bubbled up. The three themes were:
Becoming the Master of Your Brief
Creating the Context for Leadership (to happen)
Leaving no Stone Unturned
Becoming the Master of Your Brief:
Before you can lead others, you need to become the master of your domain. Part of leading, is mastering the items you are responsible for, and likely will have others be responsible for down the road. During her chat, Nicky shared difficult anecdotes of her life where she learned the importance of this lesson. In particular, she shared:
Just as a soldier’s weapon is their body (and thus fitness is something he/she needs to invest in day in and day out), if you’re a knowledge worker, your mind is something you need to invest in daily. You need to stay mentally ‘fit to fight’ throughout your career.
When you have doubts in an area you are responsible for, you need to double down on it and invest the time to achieve mastery, review all the relevant factors that contribute to that element, and then train until it becomes second nature. Don’t hesitate to gather information from as many sources as possible to achieve this goal.
Remain curious. It is that curiosity that helps you in understanding what is going well and what isn’t.
Remain resilient in your quest to master your brief (and yourself). You will have moments where you fail — but you need to pick yourself up again, learn from those mistakes and not let them keep you down.
Creating the Context for Leadership (to happen):
As a leader, you need to create an environment where others can flourish in their leadership. After you’ve mastered your brief, and you find yourself leading others, what you will realise is that not everyone will share your values. Nicky shared her view on how to best align the organisation around a shared vision, but more importantly how to create an environment where others could become leaders within the culture she created. Here are her key points:
Firstly, start by cataloging the positive values you find in the organisation or those values you want to have that lead the organisation.
Then, start identifying your traits and those of your early hires (and or existing colleagues) to see how they map to where you want to go.
Identify the bad apples, as they infect others, and either correct them, or get rid of them
Set the culture clearly, don’t delay
Hold people accountable to that culture
Highlight and promote those that live up to it
Don’t let walls build up in your organisation, do your best to break them down
Break down cliques, there are no favoured groups in your success. Spend time with your team equally.
Make sure all roles are acknowledged as having value if they live up to the culture you set. Don’t let people feel like they aren’t important to the bottom line.
Set a clear vision for what you want to achieve. Communicate your vision and culture early and often and it’ll pay dividends later.
Leaving no Stone Unturned:
To conclude, Nicky stated the importance of re-visiting your mastery often, polishing what’s necessary, reflecting on what’s missing, and hiring for diversity of thought. Nicky highlighted that diversity in your team begins with a deep exploration of yourself and your weaknesses (gaps), that if left unresolved, your organisation will suffer if not corrected. Additionally, she emphasised that diversity is not only about those attributes that are visible, but also about attributes that are invisible. What’s important is that you hire for diverse ‘thought’ as that’s what will truly give you perspective.
In order to do this:
Know what kind of leader you are — for example, are you an authoritative team pace setting leader?
Find someone different from you to balance things out — if you are authoritative, for example, find someone who is more of a democratic affiliate leader. This will provide your team with perspective and balance.
In effect, find someone that complements you and has their ear to the ground
Trust them, and be open to their feedback. There is no point in bringing them on board if you are going to simply ignore their input.
This applies to your entire leadership team, don’t just build your team in your image
In conclusion, whilst Nicky admits that the challenges startup leaders have are different from those that are in the armed forces, her insights into small team and large team leadership dynamics showcase how much there is to learn from common challenges in leading people, and more importantly leading and starting with yourself.
In the first year or two of a company’s formation, it’s not unusual to have co-founders hit a wall in their relationship and have it become a point of division that if dragged out, ultimately leads to the company’s demise. Co-founders hitting a wall isn’t an uncommon occurrence; however, I believe many of these situations are not only preventable if addressed early enough, but also reversible if handled with grace and patience by everyone involved.
Going through the process of resolving a founder dispute isn’t as simple as reading a blog post — however, hopefully the below points will help you in thinking through what you could do, and help steer you in the right direction.
In my experience, the root of many co-founder disputes comes from the intersection of the required speed of execution that a startup demands, and its negative effect of displacing the pockets of time necessary to properly align expectations with colleagues. Early days it’s not unusual for people to pitch in and help across various functions, add to this a founder’s natural drive to achieve (you wouldn’t start a company if you didn’t have this), and you have the recipe for a decline in co-founder communication. This decline blurs what everyone is working on, to what tempo, and to what level of desirable quality/outcome.
Lastly, and as a point I want to address separately (because it tends to be most present in teams that were formed as part of an event), sometimes within this mix of issues, resides a mis-alignment of vision and risk tolerance (financially and reputationally) from the start. This kind of co-founder dispute is the hardest to resolve, and many times does lead to separation, because in effect, it isn’t due to a decline of an operating relationship, rather a misalignment of co-founders from the start.
For the sake of simplicity I will use two co-founders as an example, but this scales up to three and possibly four, beyond that, you likely need to rethink who is a co-founder and who isn’t as co-founding teams of four or more are inherently unstable due to the complexity of expectations from all involved.
Agree to Proceed: To resolve a co-founder dispute of any sort, regardless of the eventual outcome, you first have to agree you have a problem. That’s easier said than done. One of you will have to be persistent in raising this red-flag to be able to initiate any sort of serious conversation on the matter. In the words of a founder friend who recently went through this, “People need to be really fearless about driving for clarity, even if this can feel pushy at times, without it, you’re just adding more uncertainty to something that’s already uncertain.”
Have a Resolution Mindset from the Start: Following the agreement of ‘we need to talk’’, both of you will need to reflect on (prior to engaging in any sort of conversation with anyone) whether you are willing to engage in the conversations with a positive attitude and willing to find a constructive outcome. This might seem like a trivial thing, but it isn’t. Make sure you don’t polarize the nature of the conversation early-on by throwing accusations at each other; this will be very tempting to do. There can be so many pent-up negative emotions and resentments leading up to this point that you have to actively remind yourself that not finding a solution to this outcome will negatively impact you as much as them and that the whole point of you working with them in the first place, was to solve a problem that was meaningful to you both.
To help yourself with this task, ask yourself the following questions:
“Am I sure we are in agreement on the larger context that led to the disagreement, or could it be that we aren’t clear?”
“Do I fully understand why they chose to take the actions they’ve taken?”
“Do I sense that it is super clear to them why the actions that led to this disagreement were taken?”
“What part have I played in getting us to this place in our relationship?”
“Is this really a trust violation or more a disappointment in my expectations of them?”
“Is it clear to both of us who is expecting to have the final say in the matter we are arguing about?”
If the source of the co-founder dispute is one that can be rectified, usually the above questions will start indicating to you that there is some ambiguity in the source and prioritization of the dispute rather than a categorical failure of trust.
For the removal of doubt however, if the reason why you are reading this is because your co-founder did something unethical, clearly no level of conflict resolution advice will overcome that. Seek professional legal counsel at that point to begin a proper bad-leaver process.
Delay Involving Others: Assuming you’ve made it this far, the next thing to keep in mind is that you should try and resolve co-founder disputes internally as much as possible. As well intended as external advisors and shareholders can be, it’s hard to find one that can truly not ‘take sides’, and baggage from this process can sometimes haunt you later. If you do get stuck in trying to resolve this, however, reach out to some’one’ you trust, because it is 100% better than going around in circles and making things worse. In an ideal world, you have one investor or shareholder you both trust who can help you, but choose carefully, because this person has to be able to balance everyone’s interests from that point onwards, and that’s not easy!
Remove Ambiguity: The source of many conflicts comes from not knowing who should be doing what, to what level of quality/outcome, and who has the final say on a matter. To help you both, have a conversation around this, and as a start, set aside at least two hours to go through your organization in parts (eg. product, fundraising, engineering, sales, etc). The more parts you each can outline, the better, because usually hidden within these identified (or unidentified) parts, is where the ambiguity stems from.
Once you’ve done that, apply the RASCI model to each of the organizational parts (if you are not familiar with RASCI, read about it here). In effect, what you will discuss by using the RASCI framework for each part, is who is the ‘boss’ for that part and who gets a say in that part. I suspect you will have many ‘aha’ moments as you go through this and realize hidden points of friction. Hopefully this will also give you the right clarity and direction to start addressing the issues by agreeing who should take what role for which organizational part and who should merely be consulted or provide support, for example.
Re-Establish Consistent Communications: With your roles and responsibilities clearly outlined, you’ll have to get into a constructive cadence of communication to make sure you are aligned in the way you agreed to align. If you skip this, you’ll simply find yourself back in this same situation, but with a whole new set of issues to deal with. Communication can take any format you want, whether it be a daily stand up, weekly progress report, or impromptu chats. Just make sure they happen, and it can also include communication with relevant external parties who might have been wondering what is going on or have a vested interest in your success.
Set a Time-line: Lastly, set a time-line for when you want to revisit the agreements on division of roles you came up with. Don’t think of it as a report-card moment, just think of it as a hygiene check. When you come up with a mutually-beneficial solution as per the “Remove Ambiguity” section above, the temptation will be to check-in everyday to see if the person is doing what they said they would do, but in life, change isn’t always easy to measure on a daily basis. It is best, therefore, to agree to a timeline that makes sense relative to the severity of the issue, then hold each other to account on that timeline.
It will take time to really assess if the newly agreed plan will work. Make sure to keep to the interval of check-ins and take the review of desired outcome seriously, this is not the time to be ‘nice’ by caving-in/chickening-out if it’s not what you both expected, that will just lead to more resentment. If it goes well and resolves itself, this tribulation will cement your relationship even more deeply and become a pillar of strength in the future tests that will inevitably come your way.
However, if there is a failed outcome where it’s clear that you will have to ‘break up’ as a team, there are solutions, they’re just not ideal. All outcomes from a co-founder fallout are shit, and they don’t always play out the way they are outlined even on legal docs. Even the best case scenario involves the loss of a friend or relationship, and at the worst, a drawn out dispute over equity ownership with other shareholders getting involved.
That said, you have two mechanisms (depending on where you are in your company’s formation) to protect yourself from a departing co-founder:
Post company formation or post financing events, rely on a reverse vesting schedule as a mechanism to deal with the unwinding of a co-founder’s equity position.
Keep in mind that even after a co-founder leaves, if they have a form of vesting, then they will continue to be a shareholder in your company. As such, it would be short-sighted to polarize the relationship so much that you permanently damage the relationship going forward.
In conclusion, it’s not uncommon for co-founders to get into arguments that can escalate into full-blown points of division. Usually these are rooted in a mismatch of expectations and a deterioration of communication links due to the pressure of having to ‘move fast’ in the early stages of a company’s life. The solution is therefore unsurprisingly rooted in the problem. Employing patience and grace to go through an analysis of perceived breaches of trust due to a lack of role and responsibility clarity, and then coming up with a solution and timeline to judge its effective resolution will help. Should things fail after an attempted intervention, then yes, ideally you will have adequate measures in place to unwind your relationship.
Note on the Second Edition: The first version of The Fundraising Field Guide was written and published via Reedsy in 2015 and has been used by many to help navigate their fund raise. However, a lot has evolved since then, so this updated version 2.0 has been written with new content, ideas, and strategies to help early-stage tech startup founders decipher and navigate the fundraising process.
As a founder, it’s easy to get lost while trekking through the fundraising process. The dynamics of speaking to someone who has the capital you need, while discussing terms you’ve never heard of, can all be quite daunting. This book deciphers the secrets to raising capital from investors for early-stage, high-growth startups. Learn about communicating with investors, shareholders and lawyers. We will go over the materials you will need to prepare, the basics of how to understand your deal, and the mindset you will need to approach this journey successfully. The aim is to provide you, the ambitious early-stage founder, with the right information to take your company to the next level.
This new and updated version provides an overview of the soft and not-so-soft challenges you will need to prepare for as part of your fundraising journey, including things like reaching out to investors, dealing with rejections constructively, preparing materials and financials, understanding valuations and deal terms, how to manage the legal process and a crowdfunding chapter with statistics from crowdfunding platform Seedrs(who kindly helped in providing advice on how to best navigate). I sincerely hope you enjoy the book and get lots of use from it.
Lastly, as part of this second edition, I’d like to shine a light on the work of Resurgo’s Spear Programme (more on that below). If you’d like to support them directly, please consider doing a donation via Donate & Download below.
Whilst the focus of the Fundraising Field Guide Book is to help clarify the fundraising challenges and process for high growth early-stage tech startups, there are many other forms of praise-worthy entrepreneurship. Some non-tech startups are doing very amazing things, particularly in the realm of social entrepreneurship and social development. In particular, I’d like to highlight the work of Resurgo’s Spear Programme in empowering youth.
The Resurgo Trust is the creator of the Spear Programme. The Spear Programme helps young people facing barriers getting into work or education. The Resurgo coaching team equip young people with confidence, motivation and the vital skills they need to succeed in long-term employment.
I’ve witnessed, first-hand, the transformative nature of the programme and the empowerment it gives its graduates. I’ve been super impressed by how talented and driven the graduates are and even their ambition to continue on, post-programme, with their development. One particularly exciting case for me was when we partnered with CodeFirstGirls and Silicon Valley Bankfor the Founders For Opportunity Initiative in 2018. Check out the video of that experience here.
In an effort to make as much of the proceeds from the book go to Resurgo directly as possible, feel free to donate directly to them (suggested donation of £9.99 or as much more as you’d like) via this JustGiving page. After your donation, you will receive a link from which you will be able to download the book.
The kind sponsors and supporters for versions 1 & 2 of the book are:
The first version was published on a free-but-donate, effectively on the basis that you made a donation to Resurgo Spear if you enjoyed it. In that spirit, it will continue to be freely available (although some of the examples are now dated). Click here to access version 1.0 via slideshare/PDF, and the launch video of the 2015 book event can be found here. If you enjoy it, please do consider making a donation to Resurgo’s Spear Programme.
📚 Get the latest version of the book
If you enjoyed the first version, but want a more updated version with resources, below are the links to get the latest version of the book (just in case you missed them earlier):