Most Popular
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Hey Mark, could you share your thoughts on what is most important in financial planning for startups? There has been a great deal written about the uselessness of 80-page business plans, but at the same time, I don't subscribe to the notion of "let's just get started and see what happens".
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Great question. The most important thing is cash (runway) management. Most startups burn cash at the beginning. So, you need to know how much cash you have and how long it will last. This allows you to plan for the # of iterations and improvements you can make in that period.
From there, financial planning priorities should relate to building a model that captures how your business behaves. Do you understand the key drivers and levers of your business? Do you know what hires will be needed and when in order to achieve your growth targets?
You can read more on this here: http://www.startupcfo.ca/2009/10/what-matters-in-early-stage-pro-formas/ http://www.startupcfo.ca/2008/04/build-pro-formas-like-a-pro/
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What do you think of kickstarter and other crowdfunding services to get an idea going? I am an inexperienced entrepreneur and I'm not sure if VC's will buy into just an idea....
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They sound great in theory but not in practice. They violate securities laws in most juridsctions (because they are public offerings and hence need a prospectus). As a VC I want proprietary deal flow not something public
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Do you need a Term Sheet for a small private round (friends)? And how do you set your evaluation for such a group, at a discount?
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It is recommended. If the round is sub $250K, you might be better off just doing convertible debt with a low interest rate (5-10%) where the interest and principal convert at a 20% discount to the next financing. That eliminates pricing risk and keeps things simple.
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How do you secure funding if investors think that you don't have enough of a competitive advantage? For example, I've been told that my startup could be mimicked by anyone and that I would not be able to prevent it. How do I create a successful web startup that doesn't have any IP?
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One word: traction. I would say foursquare is not full of IP. Massive user adoption gets investors past this point.
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When establishing a start-up are there good guidelines or lessons learned to follow in setting up ownership and equity in the business among the founders?
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The best method looks at the long term value of each role. i.e. if one of you will lead the company, he or she should have more equity than someone who will be a developer. It all comes down to what you are comfortable with. I have seen splits as wide as 90 / 10 between founders. Don’t do 1/3 each unless you are truly equivalent in value and impact on the company. Entrepreneurs don’t realize it, but co-founders are often more dilutive than investors.
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What's the best way to show projections on a graph for a social media app? step-function growth or hockey stick? (For step-function growth you can't accurately determine future spikes in usage)
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Best way is the one that is realistic. Hockey sticks rarely happen.
If you look at user growth patterns for some of the biggest social networks and apps out there, they go through a long period of seemingly slow growth and then just explode. They hit some kind of inflection point where things take off.
This could be a function of hitting critical mass, product maturity, more capital to invest in growth (likely all of the above).
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I have no direct sales force other than the two founders of the company. Should I focus on selling through channels/resellers or direct to end client (mid to large size enterprises)?
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This answer has nothing to do with your current resources and everything to do with what is the right strategy for your product and market.
In my experience channel and resellers only work for established products. In the early stages you need to sell direct.
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How can you predict revenues for a web start up if the business model is based solely on advertisement....predominantly google adsense program???
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You cannot build a business on adsense. However, if you want to do this the biz model is quite simple.
Model targets for unique visitors * Pages/ visit * CPM
Don Dodge has a great post on this and underscores the difficulty of an ad-base business model. This is especially true for adsense.
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When is it worth it to put together a board of advisors? What is the expected compensation? Does the make-up of the board affect funding or acquisition?
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I find in most cases, advisory boards sound better than they really are. I think that when you are getting started you are better of with a mentor or two. Save the board for later. And don’t do it to impress investors.
If and when your company is growing and you feel you are ready to take it to the next level, an advisory board can add credibility and visibility.
Advisor comp is usually in the form of options. No more than ¼% of the company. Same vesting as staff.
You can read more about advisory boards here: http://www.startupcfo.ca/2008/02/advisory-boards/
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If I can't raise $300K for my startup, should I next try to keep bootstrapping and just raise $25K? My startup has been around almost 4 years now, is finally ready to be monetized, and I want to take the next step by building a team and getting an office but my business advisor says I still may need more traction for outside angels. I see other startups that are only a few months into things getting big funding with likely no traction so I feel that I should be able to raise $300K or $500K now.
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The fact that you are this far after four years is a bit of a red flag. What are you building that has taken so long?
Would need to know more info to give you a good answer, but my guess is that given how long it has taken to get this far you will have trouble raising outside $. Only clear, positive, upward traction will get you past that. So, I think your advisor is correct.
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How to device a freemium model for a social app...?
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Check out this post from Andrew Chen. It includes a model you can work from
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What are some signs that it's time to leave the start-up you're working for?
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Great question. Should turn it into a blog post sometime, but some thoughts:
- When middle management arrives
- After multiple downsizings
- If culture is bad
- If you have a bad direct manager (people join companies and leave bosses)
- If the founder(s) are exited (there can be legit reasons for this, but it usually does not bode well)
- If the work is not challenging
- If you have a clear career path that this role will not satisfy
The wrong reasons to leave: – Something else seems better (the grass is always greener on the other side) – Your friends work somewhere else – Your raise was not big enough – Your current company is not taking off (success is rarely a straight line)
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Is it easier to start a company in the valley versus anywhere else?
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Having not started a company in the Valley I could not say, but I can compare the Valley to other locations.
Valley pros: – Tons of talent, capital, energy, strategic partners, acquirers
Valley cons: – Competition for talent, investors can hold out for the best investment opportunities, high costs
So, in other locations the big advantage generally is there is less competition for talent and operating costs are lower. On the downside, you have fewer available investors and you are not near most of the big buyers of startups (they are in the Valley).
I can tell you I have no plans to move to the Valley and think that where I am (Montreal) is a great place to build startups.
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How should I approach forecasting or benchmarking revenues for a web app to potential seed round investors? Should we extrapolate directly from planned early marketing initiatives, set a goal for profitability or try and base it on estimated metrics from competitors?
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It should be built from the bottom up based on your own expectations. Factors: – Current traffic (unique visitors) – Assumed growth rate in that traffic – Mix of paid vs. organic traffic – Conversion rates to user, paid – Cost per user, customer – churn: rate at which customers cancel their account
Based on the above: Per user economics: lifetime revenue from a customer less cost to acquire
The lifetime value dictates funding strategy and how much capital you need to grow.
Sounds complex. If you’re not comfortable, get help. It’s important stuff.
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What is the best user acquisition method that can be used at the initial stage of a crowdsourcing app?
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Borrowing from an earlier answer:
There is no one or even small list of things to do to build users. If you are targeting early adopters, it
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There are more and more startups emerging from Canada now. Where's the most activity and why are we seeing a rise in Canadian startups now?
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I am seeing huge activity all across Canada. Why? It’s easier than ever to build and launch something. There is robust open source software at all levels in the stack, free social promotion channels and deeper and deeper talent that want to do their own thing.
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Mark, as part of the Real Ventures, how much equity do you take (on avg) in a seed investment, what's minimum return do you seek, and how often do you invest in visions vs. defined markets?
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I will generalize for seed investors: generally, seed investors take 10 – 20%. We seek very big returns as we invest at the period of highest risk. However, because we invest relatively small amounts (compared to traditional VC) we can be flexible in the exit size that is needed to generate those high returns.
We rarely invest in defined markets. by the time it’s defined its probably too late
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Do you think Angel List is a good way for a first time entrepreneur to get $$?
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I love angellist but unless you have social proof either as an entrepreneur (by having a track record) or by having lots of traction for your product, don’t expect a lot of attention.
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If you've got the option of getting investment from a corporate (intending to start investing in early stage startups) or from a venture capital fund, on equal terms, which represents the better deal? (There could be additional value-added support/advertising/cross promotions with the corporate).
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Corporate VCs come and go. They could have bad results in their core business and decide that investing is a luxury. VCs only invest. You’re better off going the VC route. Especially in the early stages. If you take money from a strategic / corporate investor it could impact how others (namely that company’s competitors) view you.
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Does it matter to an investor how much of the co-founders resources have already been invested in the start up? For example, the start up is 6 months old and $100K has been spent. How would this impact on a valuation exercise?
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I think it is important in that it shows how committed you are. However, it does not impact valuation. Your valuation will not go up if you have invested more. It will instead be based on traction, opportunity size, team strength and deal competition
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We're a SaaS startup with revenue, but not enough. We have a good number of users and are gaining traction in the market. We're thinking about raising angel/seed money to accelerate our business. What are the best ways to justify valuation? Financial models can be done but it's all guesswork. And, to be honest, seed valuation seems like more of a negotiation exercise than anything else.
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Why are you focused on valuation at this stage? This should not be your main concern. Instead, you should be focused on finding an investor who gets your vision and help you get there faster. Valuation is important, but should not be holding you back.
To answer your question directly, there is no model to build at your stage. It is about market standards, how hot your deal is, your track record.
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Hi Mark. I am the founder of a start-up tech company that is launching an exciting new advertising platform in a week. Over the next few weeks, we'll be looking to raise an early-stage investment of 50-75k to fund our marketing efforts. Couple questions. Just how important is the business plan when presenting to investors? What are the areas to really focus on in the business plan? What graph(s) must be included (ex: Cash Flow statement)?
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Good luck with your launch!
That is a very small amount of cash. Other than friends and family, you will have a tough time raising such a small amount.
Key areas to focus on: Opportunity: Why are you starting this? What opportunity do you see? What problem are you solving? How big can this be?
Team: Why are you uniquely qualified to do this?
Distribution: How will you goto market?
Financials: How will you spend this cash? What does the business look like at the end of this cash?
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What should customer acquisition costs be? Should it be a certain percentage of revenue? What's deemed acceptable?
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Really varies. No common standard. You can estimate bottom up by looking at the cost of relevant key words and applying click through / conversion %s. Ideally, acquisition costs are considerably less than lifetime revenue from the user, but some businesses violate this rule initially to drive growth. As long as the costs go downnevery month and you know when user value will become positive. Obviously you need outside capital to use this approach
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For a startup in the enterprise software space, how do you balance market validation vs following your gut on a new approach?
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I think that balancing act exists for all startups and there is no one answer. Steve Jobs has clearly demonstrated that following your gut works. I believe in customer development and lean startup principles but not to the exclusion of following your gut. So, I think you always lead with your gut and confirm that with validation. In the enterprise space in particular you need to walk in with a much more developed prototype or beta than would be needed in consumer. You can still validate before building.
Not sure that helps….
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How much do you tell a potential investor about your business idea?
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Don’t hold back. If you do, investors can tell and will feel they can’t trust you. If you don’t trust the investor you’re speaking with, move on to the next. But if you want to close $ you will need to be fully open
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I want to start up a social dating website,however, now that I have my Ideas down, i'm not sure what to do next, my plan is to have it up and running by next year (2011) . What is key aspects in running a website? How do i ovoid legal troubles? I noticed many social websites do not differ in their business layout, ex.Chat-Blog-Profile, Friends,and Videos. This is not stealing Ideas right if i want to use these on my website?
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It sounds to me like you need a co-founder who is more familiar with this space. Why? This is a heavily funded space with big players. If you are figuring it out on your own and are new to the space, you will not attract the funding needed to compete with these bigger players. Hate to say that.
Find a partner.
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Problem: not all Advisors contribute to value creation equally. Therefore, we want to incent and reward value-added on some equitable basis. How can Advisor stock options be correlated to their value-added so there is an egalitarian solution for multiple Advisors with variable contributions to value creation?
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The problem with advisor relationships are many:
You get what you pay for. If you pay only in options (no cash) which have uncertain value, you will get mixed levels of engagement.
You need to set objectives and have a structure with regular touch points.
In terms of comp, I recommend finding some cash for active advisors. Either way, do option grants with vesting. But if you have a structure and objectives and they are not being met, thenend the relationship. If you have a standard one year cliff on the grant then you have a year to make the decision.
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How long should be the free of charge period (trial) for a site? There will not be freemium mode in the model.
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If it’s not freemium then consider having a permanent trial. Many companies have a free 30 day trial for all users. Shopify does this. You give your credit card on sign up but are not charged till after the 30 day period.
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What do you feel is the single most important quality in an entrepreneur? What sort of founders do you like to fund? Hustlers? Technical? Balanced teams?
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Honestly, the expectation of founders are so high that they cannot be boiled down to one thing. I have a strong bias for technical founders. Must be good product people, have deep passion for the problem they are solving and have the ability to recruit a team. Many many more attributes.
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How should a startup value itself before the revenue stage? Sounds to me like it's a big (no right answer) debate between entrepreneurs and investors.
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Depends on your sector, how much deal competition there is, how experienced you are, and how big the long term opportunity is. In software and the web, pre-revenue startups are usually valued between $ 750K and $1M. Sometimes a little higher
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Does the investment firm you work with, Real Ventures, invest in companies in the states?
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We focus mainly in companies that are close to us. A small portion of our fund is allocated to deals that are further away but on those deals we would not lead a round. Instead we come in where the company has a local lead investor that we know and trust.
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I recently started my own bookkeeping business. What is the best way to market myself? Is postcard mailings a good idea? Do networking events really work? Any advice would be great!
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The best source of new clients is existing ones. Do amazing work for them and ask them for referrals. Good bookkeepers are in scarce supply. You should not have a problem if you are good. Where are you based? I would like to learn more depending on your location (mark@realventures.com)
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How would someone calculate company equity for sales commission? We have an incoming person who we think could help us with customer development/sales but wants equity instead of commission. We're really early stage SaaS for businesses with only 3 paying customers.
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I don’t like that. Only give equity to people who will be long term contributors to the team. Are you ready to make this person a permanent team member? If so, go ahead. If not, then start off seeing if this person brings in sales and give a generous commission.
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I'm putting together my pitch deck (for my web based service company) and I'm struggling with how to show my user / revenue forecasts in an easy to understand, visual manner - have any advice around how to lay out my projections clearly and strongly? Any examples you can point to?
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By web-based service company, do you mean a subscription (SaaS) service? If so, the best way to present the numbers is to show them in the same way as your business behaves.
i.e. in real life, you drive people to your web site and try and get some of them to convert, some to activate and some to subscribe. You then hope to keep your subscribers for a certain period of time.
So, in your model you need to show: – Web site traffic assumptions – Conversion rates for Visitor to register Register to active Active to paid
- Monthly per user revenue
- Churn rate (% of subs who cancel each month)
- User acquisition costs (how much do you spend to get a paid subscriber)
With this info you will show investors your key per user economics and growth assumptions.
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How does an entrepreneur prove that he is THE guy people should be investing in?
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Not by talking the talk but by walking the walk. Meet Investors early tell them what you’re going to do. Come back tell them you did that and more. Do this a couple of times and they will be on board. It’s about execution. Period.
Would not hurt if people the investors have already invested in are singing your praises as well but none of that matters unless you are executing
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What is Real Ventures typical investment size? What is the smallest amount you would consider investing and what is the biggest?
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We are pretty flexible. There is no minimum per se. Smallest to date is $50K. Largest investment on a seed deal is $400K. We can put more in over time as a company grows.
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What is the best (and easiest) way to calculate our long term value of a customer?
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This is hard to do until you have meaningful churn (rate of cancellation) data. Once you have that then this is the calculation:
Average revenue per user per month * 1/ monthly churn rate * gross margin % = lifetime contribution per user less customer acquisition cost = lifetime value.
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what are the most crucial steps to be taken by a new tech startup when outsourcing major part of the tech to IT firms or outsourcing "product development" eg new social media website project?
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I would have a very clear specification of the work with many staggered deliverables so that you can assess progress each step of the way.
Have a clear timeline (related to the 1st point).
Ensure ownership of the end product and all associated intellectual property is yours.
Actively manage the project. Don’t hope things are being done on time and on spec. Know it.
Check prior references extensively
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We have a great product and a growing customer base but are still going to run out of money before we break even. We've put it off raising money too long and even though I'm sure we could get investors, it wouldn't happen fast enough. What can we do?
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Seems like simple math to me: you either dial back spend and cut into the bone to extend runway or bite the bullet and raise some capital. If you have real traction Investors can move fast. Perhaps you could do a friends and family bridge to start off and give you more time for the fundraising process.
One caution if you choose spending cuts – you can’t save your way to greatness. And it can be hard to recover lost momentum and the impact on team and culture.
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A product idea, plan and schedule is developed independently from existing operational, non cash investment shareholders of an Inc. Said shareholders prefer to focus on the Inc.'s legacy product. Do you start another Inc. or buy out said shareholders?
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If you want to do the new thing, you should spin it out and do it in a fresh, focused company. And if you no longer believe in the legacy thing, try and get bought out so you can just focus on newco.
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What are the most optimal methods for monetizing a business that distributes a service or program/application for free?
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Are you freemium? If so then you need a stand alone free product that replaces marketing spend. It should be good enough for users to get value from it, but have a clear path to get engaged users to eventually pay. So you need clear differentiation between the free and paid versions.
You can read more on freemium here: http://www.startupcfo.ca/category/freemium/
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We are set-up a business around mobile backup. What would you recommend as a business model?
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Most backup businesses are sold on the basis of capacity. Fixed amount/ Gb. You could have some extra tiers depending on the management, analytics or other features that you offer on top of basic storage.
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We're an early stage SaaS startup, with modest demonstrated customer traction (~350 free and 21 paid customers), about to raise our first round. What are the key metrics you'd be looking at? We hear conflicting messages about "track your stats" and "startup metrics are irrelevant".
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Congrats on getting paid accounts so early. As an investor, I would be looking for growth rates in your new accounts. You’re 350 this week. Where will you be 1 month from now. From there, would look at comversion to paid.
Would also want to know how engaged your users are so would look at active rates in free and paid accounts.
At this early stage it’s more about the team and opportunity than the hard metrics.
Where is your company? I am with a seed fund in Montreal and specialize in SaaS. Happy to learn more (mark@realventures.com)
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I have a real passion for small start-up technology companies and would love to get involved as an investor! What advice would you give someone who wanted to become an investor? Is there a particular skill set you look for? Is it a 'type' of experience? Very interested in your response
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why don’t we chat about it? Feel free to email me at mark@realventures.com. We do a lot of co-investments with angels. 11 out of the 15 deals we did in our 1st fund were coinvestments. Depending on where you are based I could you show you some deals that interest you
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Hello, I am self funded and have somewhat limited resources. I currently have v1 of my app on the android market and web component. I need to do 2 things, can't afford both. 1. I need to create a version two of the app and have it on iOS as well because the app is the main form of user interaction. 2. I also need to redo my back end and open the web to my public beta list. What should i peruse first, looking at both from user and from investor point of view (looking to raise seed round).
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Rather than building more features, I would focus on getting users / traction for what you have built now. That validation will allow you to raise more $ so you can do more.
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How do I forecast revenues when I haven't launched yet?
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Its hard for sure, but you need to do it. Start with traffic estimates to your site, then apply benchmark conversion rates for the % of visitors that register, activate and subscribe (this example is for a web-based business). You can then apply a monthly revenue per user number and churn % (the % at which subscribers cancel their account) to get a forecast.
You can read more about this here: http://www.startupcfo.ca/2010/08/the-startup-forecasting-dilemma/
http://www.startupcfo.ca/2009/10/what-matters-in-early-stage-pro-formas/
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what's the usual percentage of capital given to advisors in early startups (that already has a prototype) ?
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Advisors typically get 0.25% – 0.5%. This is usually done through stock options that vest over time
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We sell a product. At the beginning, we want to offer the product to a very low price to attract early adopters and thanks them to be the first to test and gradually (for example each week) increase the price to a fixed amount (for example 2% each week) until we achieve our final price. So sooner you get the product, cheaper it'll be for you. Does it make sense?
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It makes sense only if it is clear that this is a limited time offer. You may also consider grandfathering that price (i.e. keeping it forever or an extended period of time) for those early users.
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How do you choose founders vs choosing founding team members? Everyone is working the very hard and brings a lot to the table but I know having 5 founders is prob too much. Also I am worried that if I pick some now I might regret it and wish I had picked the other.
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Very good question. I think you need to distinguish between skills vs. goals. Some people may have the skills you need for a particular role but not have the same goals and risk tolerance as you. Those people would not be good co-founders.
Co-founders are like spouses. You should be heavily aligned on goals, risk tolerance, how you will run the business, etc. It’s easier to have those conversations with fewer people. Ideally 2 -3.
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What is your take on NDA's? I read how it is a faux pas to ask to have them signed, but my counsel warns me of the risk I open myself up to. I fear not having meeting with potential key advisers. Thoughts?
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Advisors should sign. As should partners, employees, etc. Don’t ask investors to sign them. We meet too many companies and just don’t sign them.
But when we invest we do want to know you have used NDAs in all other aspects of your business
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Whats the difference between preferred and common shares?
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Good question. Pref shares come in many shapes and sizes, but the big difference is usually around something called a “liquidation preference”. When your company is sold, your investors will have the choice of taking their capital back (or some multiple of that capital) before common shareholders get any money or convert their shares to common and take their % of the total sale price.
So, this scenario only matters at lower exit values. If you sell for a relatively low price, your investors could take most of the proceeds, even if they own a small % of the company.
Pref shares are standard on all deals.
To read more about them check out Http://startuplawyer.com
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Mark - Thanks for taking the time out to answer these questions. I am building a solution to better connect car buyers and dealerships (<a href="http://bidzuku.com">http://bidzuku.com</a>), my team consists of 3 including myself. We are boot strapping the entire venture with limited funding and resources. At what point do you think it is most necessary to truly reach out for larger seed funding and what is the best way to connect us with those resources?
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You should look for funding when there is a clear milestone that can be accomplished. Either to complete your product and/ or to get it in market and validate it.
No one invests on an idea any more (unless you’re a repeat entrepreneur) so you will likely need to continue bootstrapping until you can show product/ market fit and validation
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There is always great support from the entrepreneur community that encourage founders to believe in their product and truly "change the world", but nobody ever talks about the right time to give it up. What are some key indicators that entrepreneurs should be aware of to cut their losses and move on to another venture?
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Great question!
If you have built something that the market does not want, then move on. This implies that you have iterated, collected feedback and tried to make it work but it is very clear that there is just no need.
I would also move on if you have lost the energy and passion needed to really win.
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In the first year of business, should I compromise the pricing (keep pricing lower) in order to build the product and draw attention?
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Depends on the business type. I have several SaaS companies that have raised prices over time. At the beginning the most important thing is to get market feedback and validation. So price should not be a barrier to that. You could still be selling an expensive product. Just give free or cheap access to those beta users. To answer this properly I would need to know more about your product, market size and funding status
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What do you view as one of the better sources of funding to go after for a new startup? VC or Angel or...? What's the best way to approach this decision. (please note our startup is self-funded at this point and will take us through our phase 1 of launch)
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You want seed funds like Real Ventures. Angels can be good as well. You are too early for traditional VC.
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Is there a standard "dashboard" I should provide my investors with each month?
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It varies from startup to startup.
You want to show the key metrics of your business covering: leads, revenues, hiring, financials, cash runway.
Here is an example: http://www.startupcfo.ca/2010/04/the-startup-analytics-dashboard/
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Hi Mark, Daniel Havas here from Primal Skill (@havasd). Does a VC invest if the founders do not plan on selling or going public ?
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No. Investors get in in order to get out at a profit. You might get angels who’d be up for a dividend stream and stock buy back over time, but not VCs.
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For entrepreneurs, it is critical to build a championship strategic advisory team at the early stages of a start-up. However, bootstrapped teams find this task to be more challenging than pricing their product. Please provide advice on how entrepreneurs may assemble a strategic business team comprising of awesome bankers, financial advisers, accountants, attorneys or legal advisers and other specialists.
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I don’t think advisors are “critical”. And you don’t want that many advisors. Bankers and accountants are easy. So, just focus on getting a mentor / expert in your industry who complements your skills. You can build an advisory board over time, but I don’t think it’s critical. I have a post on that here: http://www.startupcfo.ca/2008/02/advisory-boards/
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I am planning to open a language academy and have a list of interested candidates to become instructors. I feel like I have adirty little secret: I don't really have the resources to pay salaries. I'd like to be able to compensate them fairly but I am not sure what model to use. Should I advertise the academy before I have a commitment from instructors? I need them as much as I need customers. Is there an industry model I should be following? Thanks in advance.
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Either start small with yourself as instructor and add people as your business grows or raise some money. It does not sound like you have the resources to bring in enough customers to fully use multiple instructors.
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as a new tech startup what is the right % of the company to put aside for the esop?
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Standard is between 10 and 15%. I have never seen higher. When you bring in new investors they will ask you to top the ESOP up so that after the financing it = 10 – 15% of the company.
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When creating a startup social networking site, when does one need to have a full plan to monetize? I have a great idea (we'll see if everyone else agrees haha) for the actual site, but no real method of monetization at the moment.
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Very hard to monetize a social site until you have a lot of users on it. Just look at Twitter and Facebook. So you need to have a plan and can get the funding to support building a very large, free user base.
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Do you recommend a specific format or have a template proforma to help calculate financial projections for business plans?
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Here is a good template here: http://unstructuredventures.com/
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I am refusing to prepare any financials for our seed round. Have a burn rate and a list of things that I would like to do but it's more like one page. I feel that everything that could go in a longer xls is mere fiction, and starting a funding relationship on such grounds is wrong. Am I being too extreme?
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Your tone does sound extreme to be honest. Projections at the seed stage are fiction, but in some circumstances can be useful to show how you think about the business model and key assumptions. But in your defense, they should not be super important at the seed stage.
At Real ventures, we do ask for a monthly spend plan and key milestones at the seed stage but don’t look for a full financial model until the series A.
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When's it appropriate for a start-up to find their first office space and how to fund the rents?
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I would postpone this until you absolutely need it. It is not an expense that adds value when you are a small team. Especially since the early work is technical in nature.
If you can’t work at home, co-working spaces are a great option. I like the energy of being around other startup folks.
As for funding, well, I guess 1st funding can come from friends, family, angels, seed investors. But that is a whole other topic.
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I'm currently in college, looking for ways to finance my start-up creative biz from the ground up. What options do I have?
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You won’t raise any money other than friends and family until you can dedicate yourself full time. So bootstrap or hit up your friends and family.
Depending on where you are, accelerator programs could be useful. Check out yearonelabs.com. We will be launching an accelerator at realventures.com in the Spring
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In what ways can I create a proper foundation and healthy for a new company?
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To properly answer this requires a long answer, but here are the core topics to consider:
Vision and purpose: Have a clear purpose and value proposition going after a goal and vision that is clear to all your stakeholders.
Culture: Define the culture that you want for your business. Invest time in defining, developing and maintaining it.
Hire great people
Delight customers always
Measure everything
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