Once you have the outlines of an investment deal and there’s a term sheet on the table, you are still a couple of months out from closing the round. Most of the work will be in the hands of the University Technology Transfer office and the lawyers acting for the various parties.
You will have a few documents to review but there are plenty of other things you can be getting on with.
First things first, you will need laboratories and offices. You want to avoid having to make any material changes to the facilities (e.g. external venting) if at all possible. This is not just an upfront cost issue, there may well be a remediation fee payable if you leave. So you’ll end up paying to put things in and then to take them out. If you need additional benching, then get mobile benching you can take away.
The logical place to start is the local science and business parks. These will often have flexible workspaces that you can rent so you could start off with a relatively modest laboratory and office requirement and then expand into additional space as necessary. When you talk to them make sure you understand the pressure on facilities and future expansion plans. It may be possible to access local business incubators rather than strictly science-based ones but make sure that they understand the nature of the work you will be carrying out and that this is compatible with their license. If you need things like environmental venting this will restrict your options somewhat.
Approach everyone you can think of - you could also try the local enterprise partnerships and innovation networks who will know of local facilities you can target. Appraise them of the likely funding date and your requirements. If you find a facility you like you can ask them to hold it for you until funding completion on the understanding you will sign up then.
You want your office furniture to arrive on the day you sign the premises lease so talk to potential suppliers about what you want early and ask them to reserve it for you. As soon as funding is closed, confirm the delivery date – you can’t do anything without a desk.
There will be plenty of second-hand options available – it just has to do the job.
The day after the office furniture is installed you will want the IT systems up and running so get some quotes from local IT firms early. Don’t forget to include full support in the package.
There will be a question about back-up – your IT supplier should have an off-site back up of all your hard drive data in case of an emergency. You will also need a local back-up which can be either cloud-based or a mini-server in house. You also need to consider whether there will be some working from home and how this will be handled to make sure every file is up to date.
Get a local website designer to put together a simple website. It doesn’t need to be too extravagant at the start, but you need something. Keep it low cost and simple – you can always add and expand later.
Outsource this to a local firm or sole trader on a set monthly fee. Make sure they are qualified on typical accounting packages such as Xero or Sage and introduce them to your accountants as soon as you’ve signed the contract with them. Experience with technology start-ups is a bonus but not essential.
This is best outsourced. Find a company that offers start-up procurement that is flexible enough to order anything you need and can offer discounts for common consumables. For large items you will probably want to negotiate a price with your preferred supplier so be sure that the procurement system can handle one offs. If you go for outsourced procurement, it must be able to handle everything you purchase or there is little point. Talk to them early about their terms and conditions and get a demonstration of the interface so you can order office supplies on day 1.
Now there is a substantial amount of money in the bank account you need to think about how payments will be authorised. It is best not to have a single payer but put in place a dual mandate. Typically, the CEO/Managing director and senior member of staff would have mandates but it’s a good idea to have a third one, for example a board member, if payments are required urgently and someone is away. You could also give your bookkeeper a reduced mandate to upload payments only with authorisation from a full mandate holder.
A dual mandate requires a payment to be uploaded by one mandate holder and authorised by a second one. It’s good practice not to have single payment authorisation.
Now you are up and running with a functioning company – find out next what to look out for in the first six months of trading.