As a founder, raising money through the Seed Enterprise Investment Scheme (SEIS) can be an exciting and pivotal moment for your startup. SEIS funds can provide the financial resources needed to take your startup to the next level and turn your vision into reality. But, with this opportunity comes a responsibility to use the funds wisely and strategically.
So, how should a founder spend their SEIS money?
The answer is not straightforward and can depend on a range of factors such as the stage of your startup, the market you are operating in, and your growth objectives. However, there are some general guidelines that can help you maximize the potential of your SEIS funds.
First and foremost, prioritize product development. Creating a great product or service that solves a real problem is the foundation of any successful startup. As Mike Moritz, Chairman of Sequoia, notes, “The single most important thing a founder can do is to build a great product. Everything else is secondary.”
Once you have a great product, focus on building a strong team. As Sequoia emphasizes, “Building a company is a team sport, and a company can only be as good as the people who work there.” Invest in hiring and retaining top talent and provide them with opportunities for growth and development.
Next, use SEIS funds to test and validate assumptions about your business model. As Eric Ries, author of “The Lean Startup,” notes, “You can’t just build something and hope people will come. You need to test your assumptions and validate your business model before you invest heavily in scaling the business.”
Customer acquisition and brand building are also essential to the success of any startup. Use your SEIS funds to build a strong brand and acquire customers early on, as recommended by Dave McClure, founder of 500 Startups. “Most startups fail not because they have bad products, but because they can’t acquire customers,” he notes.
Finally, be frugal with your SEIS funds and avoid unnecessary expenses. Prioritize investments in areas that will have the greatest impact on your startup’s success and avoid unnecessary expenses that don’t directly contribute to that success, as advised by Paul Graham, co-founder of Y Combinator. “Figure out how to do things cheaply, and then do them even cheaper,” he recommends.