How to Get People to Work at My Startup (without money) & How to Raise Money for My Startup (without employees)
Note: This question was originally asked of me on Quora (Q&A platform). It came in two parts, the first part addresses How to Get People to Work at Your Startup; And, the second part addresses How to Raise Money From Investors When You Don’t Have Employees.
To listen to the mini-podcast version of this answer, you’ll find it below:
One of the most common ways you can get people to work for your company or for your business when you don’t have any money is to offer them equity in exchange for the work that they perform.
I’m not going into the details of the equity and how much, for example.
But, let’s just think of your startup as a pie. As a whole pie, it has 100% equity.
You, as the owner or the founder, get a certain percentage of equity. You must also set aside another portion of that pie, or equity, in your company so you can distribute amongst your first team members.
These people are going to be the team members that come on when you haven’t gotten any investment yet, and so they’re willing to work for you and with you in exchange for equity.
The percentage they receive as equity, depends on how much work a person is performing for you. It also depends on what skill-set they’re bringing to the table.
Typically, there’s different equity ranges, so I won’t really get into that. (But I will share an in depth discussion in a separate video.)
The type of people who can work in exchange for equity are going to be people who have other sources of income.
Consultants, mentors, and advisors typically have multiple streams of income and so they’re not reliant on one particular job to pay them.
They have time and income reserved and they’re able (hypothetically) to dedicate themselves towards working (with no pay) on a startup without getting paid in cash.
However, the mass majority of people, rely on their job or their career in order to gain income —
So, they’re not good candidates for your startup or for this proposition of working in exchange for equity.
They simply can’t afford to, because they rely on the hours they spend at work to be paid, and this is to cover their expenses or living costs, etc.
Therefore, if you direct your search for recruits towards people who are former business owners, mentors, advisors, and/or consultants.
These types of people are more likely experienced at working with a startup, such as yours, that has no funding in place yet.
The second part of the question was how to get funding from investors.” >
The second part of the question was how to get funding from investors.
Now let’s continue from the first part, and dig into how to get funding from investors without having any employees.
Because you don’t have employees yet.
You have team-members.
Because employees requires a salary.
This is quite simple. The hard part was the first part, which was to convince people to come and work for your startup in exchange for equity.
Once they agree to work for your startup, with no money, they’re willing to work with you because they believe in your concept.
They’re also more likely to agree with you including them into the Team Slide of your pitch deck.
(In a separate video I’ll discuss the pitch deck, which slides to include, what goes on the slides, and in what order to place the slides)
Your pitch deck is telling your startup’s story to an audience who’s never heard of your concepts before.
The story needs to flow from the first slide — the introduction, to the last slide — the conclusion.
Between those two points, there’s one slide that dedicated to the team.
The Team Slide is one of the slides investors will focus their attention on most.
Investors are searching for a well-balanced team with a impressive professional backgrounds.
They want to see big names. (Google, Big 4, etc)
In some cases, they’ll accept less professionally experience team members, if it they came from a top university if they’re names like Harvard, Stanford, MIT.
Investors are mostly interested in your team’s professional background because it means your team has adequate experience in the workplace. Moreover, they have experience in the market, in their industry and more importantly, they’re connected in their industry.
By demonstrating your team member’s professional backgrounds are affiliated with big names, you’re capitalizing on their name recognition and can attract more investors.
You want to have your potential investor’s thinking, “okay. I know that company. They have a great work culture. And so any employee coming from that background, is going to be a strong achiever, a doer, an implementer, or an executor. I can put my trust in this team member because their background proves they have the dedication and commitment necessary to make this project successful!”
So investors are looking at your team slides, and they’re looking at each individual that you list on your slides.
A place where I see startups often mess up, is on team slides.
They tend to throw in whoever they can because they think, “the more, the merrier”.
The people you add to your team slide should have strong professional backgrounds,(or strong educational backgrounds), and highly relevant skill-sets to the success of your startup.
Your team members should contribute actively to your startup’s core value proposition your startup is putting out onto the market.
That’s what investors are looking for.
Anyone else, anyone additional — is only going cause a distraction and may actually negatively impact you because you’d seem scattered. Or as if you don’t have a strong grasp on how to build or manage your team.
If you’re a first-time entrepreneur and you show up with a team slide that has 20 people — it’s going to raise more questions.
Such as, where’s your professional background that proves that you can even manage 20 people? Moreover, how are you going to manage a 20-person team for a new startup to execute and bring it your product or service to market?
My suggestion? I say, three to five people — your top, core people who directly contribute to your startup’s value proposition.
Recruiting team members who have strong professional backgrounds will make your startup look good (less risky) to potential investors.
Once you have those two pieces of the puzzle in place,
- Convincing a number of people to work at your startup in exchange for equity, and
- Showcase your new team members on the Team slide of your startup’s pitch deck.
You’ll be able to gain the attraction of an investor (maybe).
I hope this answers the question!
It was excellent to receive it and I hope this helps anyone out there.
If you’re interested to learn more, I also offer 1:1 coaching.
Erika JoseFebruary 4, 2020Comment
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