Every founder undergoes a metamorphosis throughout the lifecycle of his or her company. A founder must attract investors, engage the ideal founding team and plan for precise execution and scale. Thus, he sheds his solopreneur shackles to transform into a blossoming and successful entrepreneur.

This question behind this blog post came from Hire Power Radio Show engineer @PaulRoberts (@octalkradio)  who asked, “What happens after you get seed money?” What happens in between the initial investment and next round of money allows you to scale into something larger.

What attracts initial investors?

A solid business model, strong team, and a deal structure make investments enticing. When a new pitch comes along, investors will examine the industry and see the opportunities and challenges. Then, they’ll explore the strengths and weaknesses of the company’s business model to see whether there is a unique IP or interesting approach to solving a problem that might not exist. A lot of investment decisions derive from gut feelings, but others originate from industry best practices. Thus, investors gauge the likelihood of success in those many factors conditions.

If the business model passes scrutiny, the next item on investors’ lists is the team - which is the strongest of all and the most difficult to build. According to Hicham Semaan, President of Tech Coast Angels-Orange County,  investors look for well rounded, industry-specific experience and a sharp commitment to pivot a business towards success. Agility is important -- the business model can change, but the team is who you're counting on to take you to the finish line. How open is the team and leadership to getting others involved and harnessing the expertise of others? For founders, a strong self-awareness of blind spots is key, and leaders must be able to leverage the strengths of those around them.

This is a difficult sticking point for the solopreneur. Their product is their baby, and they are reluctant to share control. Realize that the power of many is stronger than the knowledge of one. If you don’t have the money to hire others, then a dynamic, engaging leader’s pitch can really sell others on the vision, even for zero pay. That’s a key trademark, being able to generate that following and passion behind your vision, and then share that passion with others.

A business leader is crucial

Whenever you're working with a solopreneur with an invention, a Technical Lead, investors look for an outside person to serve as a Business Management lead who can build relationships with partners and clients. It’s important to have a mentor on the business side, and many angel investors play that role with the companies in which they invest. If a founder is open to the feedback, they can derive a lot of value from those people.

Often, CEOs raising funds underutilize their resources once the fundraising is done. You can and should tap into your investor pool because they now have a vested interest in your success and may have plenty of expertise to provide you. These people can fill in the gaps that you’re not even aware that you have.

The biggest challenge is the same across the board for business owners: they want to fundraise but tend to overvalue their business and are reluctant to give away equity. This is understandable but highly limiting. When you exit as a CEO, you can expect to own between 10-40% equity, depending on the industry in which you play. As Hichman says, 10% of a large amount is much more than 100% of a small amount. Think about how much you stand to gain by giving up equity.

How to build a team

If a team is most important on investors’ lists, building a great one is critical to scale. There are plenty of options, from bringing on one of your investors to play CEO to winning over like-minded, passionate people with excitement in your vision. Most importantly, you must get people thrilled with where your company could go. Beyond that, you’ve got to offer a balance of compensation (equity or pay) and time their entry at the right stage of your company’s lifecycle.

For employees, the general option pool size is 15-20%. And who you bring in at what time depends a lot on the work that needs to be done for the business itself. If it’s a low-level staffer, by all means, pay them with low equity. But if a person is helping to shape the vision of the business, that person is in more of a founder’s role. In sports, you’ll see top players on teams, but they can’t win championships. You’ve got to get the right people on the team at the right time. Once you do, it’s worth whatever equity that you share because you've got your perfect mix of talent, experience, and personalities.

Many business leaders and team members feel, and rightly so, like they’ve worked hard to get the company to where it’s at. As such, they hold onto the equity and sacrifice much-needed value than if they distributed equity to the right people. With stakes, people have got more to gain and more to lose, and worry about the company’s total success. For smaller equity pieces, it’s your job as opposed to your company. Be picky with your people but generous when you find the right ones.

Start to scale

Once you have your team and your funding, you must have your specific plan ready to hit the ground running. Tap into your investors and resources, sure, but you scale a company by executing. “A poor plan executed to perfection is a lot better than a perfect plan executed poorly.” Set up your hiring and growth pipelines, and get to work with how you’re going to make that money back and hit your established milestones. Planning ahead is so crucial, because when you miss targets and you go for the second round of funding you’ve lost some credibility.

The planning needs to happen before the funding is secured. Try not to dive into the tunnel vision of raising money, because you can quickly lose sight of the execution part of starting a business. Subsequent rounds of funding will get harder and harder if you don’t hit your goal posts. Build the funding around your execution rather than your execution all around your funding.

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Hicham Semaan is an experienced CEO, GM, senior executive, angel investor, senior, and board member to CEOs, management teams, private equity, startup companies. He is a respected leader with strong vision, value creation, turn around, and acquisition expertise, and has successfully grown and exited businesses. Hicham is considered an expert in the technology, education, and real estate industries and has been a featured speaker at several industry events.

He is the newly elected Tech Coast Angels-Orange County President and has received the “Excellence in Entrepreneurship Award” from the OCBJ and was recently named “New Investor of the Year” by Tech Coast Angels

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Rick Girard is the Founder & CEO of Stride Search, an Orange County-based recruiting and consulting firm.  Rick brings world-class leadership to firms across the nation to meet highly challenging business and talent acquisition objectives. With expertise in creative sourcing, consultative management and winning placement strategies, Rick Girard plants the hiring seeds for his partners’ success.

While not running a School for Gifted Mutants as Professor X, Rick hosts Hire Power Radio Show, a weekly series on OCTalkRadio.net which serves as an entrepreneur’s resource to solve the most difficult hiring challenges. When not on the air, Rick regularly gives talks and writes valuable content for Hiring Managers and Job Seekers alike. His mission: elevate and sharpen the industry standards of exclusive professional search.