For many companies, securing seed funding can be a bitter-sweet occasion – on one hand, founders can finally breathe a sigh of relief for overcoming the daunting hurdle of closing a round and yet, on the other hand, a brand new challenge is presented – deciding how to scale a company effectively while keeping investors pleased. The step between seed and a Series A can be a defining time for young startups. How well can you execute on an aggressive business strategy? What is your approach to talent acquisition (and retention)? How do you overcome challenges and changes in the market landscape that could be threatening to the sustainability of your business?
With a large influx of funds, one of the first things we advise companies to avoid is overzealous spending. Be strategic. While it can be tempting to hit the ground running on spending money quickly after a new round of funding, it is crucial to be calculated about where funds should and should not be allocated. VentureBeat advises, “Remember this is expensive capital. Make it last. Spend what you have to, when you have to, and no sooner.” It is okay to hold off on certain expenses (like a larger, dedicated office space, for example) in order to hire a more seasoned executive team to help expand the business. Leverage your partners and advisors to develop the most effective decision-making process. It might also be in your best interest to create a detailed plan for how your funds will be spent, conduct routine audits and remain accountable to those that have chosen to invest in your vision.
Remember, both customer and talent acquisition are critical to your growth. Within the first three to six months post-seed funding, your team should begin executing on a detailed plan of attack to quickly begin acquiring new customers to filter additional funds into the business. Invest in new and innovative marketing initiatives that will help drive your company messaging and help you tap into the audience that you have identified as core customers. In today’s mobile-first age, it is also recommended to implement digital tools to aid in streamlining the customer acquisition process. How are you tracking success and making sure you are maintaining a competitive pace?
Growth, however, is not a one-track initiative. Being able to hire the right people early on to execute and expand on strategy will prove to be invaluable to the future success of the company. As noted earlier, consider being strategic about your funds in order to hire specialists as opposed to generalists in your specific industry. The rationale behind this, according to Inc. is “once you have money in the bank, you should hire specialists who can put their heads down and focus on one aspect of the business.” Effective leadership also supports competitive talent acquisition. Be sure to work to maintain synergy within your team and establish a clearly defined culture that will work to unite your staff and motivate them to maximize performance for the greater benefit of the company. The long-term benefits of these efforts will undoubtedly serve as a key differentiator and serve as an asset when pitching future investors.
Lastly, transparency is key. Do not undermine the value of maintaining a connection with your current investors and building an even stronger relationship over time. Beyond the standard cash flow, investors will be incentivized to dedicate more time and resources to companies that they are more connected to and invested in on a more personal level. Founders and execs should be encouraged to keep investors updated regularly and continue to actively network. It will be important to create connections that open doors for future collaboration and strategic investment opportunities.