The take away from my last post on 5 essential tips to raise seed capital came down on manage and stay in charge of your funding process in terms of expectations, timelines and on the almost relentless need to focus on closing the deal. But what happens next once you succeeded and closed the deal? Five essential tips to get from seed to series A.
1. Reassemble the plan
After the champaign and high-fives dry up and the money hits the bank, you start refocussing on your business and start looking back into the plan you so carefully summarised to no more than a couple of sheets for your investor deck. In a lot of cases, if not all, when talking to investors you have made a lot of changes to that plan. In rare cases, you have actually built those changes in your deck based upon an (also) changed plan.
To make sure you keep your focus on where you are heading, and to keep your troops inside your company aligned as well as your investors, it’s crucial to reassemble the plan with all stakeholders how you plan to get to the next stage. Failing to do so will lead to endless discussions, internally as well as with your investors and customers, which ultimately will result in getting lost in the fog and losing control over the process to get from seed to the next stage.
2. Reevaluate the team
Where you successfully have been able to gather a first team, build your first product and gained first traction, you will encounter many challenges in transforming your team towards people actually working for the benefit of the company. Moving forward instead of just launching a first product.
Clearly defining product lines and business lines and executing your vision require focus, persuasion and tapping into the right network and experience. Evaluate the team you have, make profiles of what and who you need, and accept that raising seed capital might be hard. But finding the right people to actually execute your vision and plan is even harder.
3. Create need
Validating new channels or industries to connect to your product is great. But do not make it your end goal. Validation of new channels and industries always serves the further development and enhancement of your company. By taking your product from a level of nice to have to need to have requires a totally different skill set and approach.
It’s extremely hard to make your customers understand they cannot do without your product or at least create that perception. Of course, on boarding processes become more and more important and surely are. But finding the right customer-fit and retaining them are more important.
4. Set a new timeline
Just like when you were raising seed capital, make sure you know when you need to raise capital again, in the various versions of your plan, and start counting backwards. Build in sufficient time to build the team. Finding the right people is important and in many cases underestimated. Rebuilding your team again and again as you have not sufficiently profiled the people you need, creates an often devastating delay in the execution of your plan. And your funds dry up even harder than you planned in your most defensive plan.
5. Know what you need to raise Series A
Make sure you know what it is you will need to raise a new round, most likely and hopefully Series A. I hear many clients saying: hopefully we will manage to finance our growth from the cash flow we will generate by launching our first series of products. Of course, that’s great, if that is the goal you have.
However, proving that you are able to scale and grow fast, learn fast, that you understand the need and master with sufficient speed to learn-measure-build, are considered crucial by many venture capitalists. If it takes longer than – roughly said – 18 months to grow your company from seed to Series A, why would you be able to do so quicker for the next level? – When the challenges further pile up. You will have more explaining to do, while you should focus on closing your new deal.
Guest post by Dave Dirks, Managing Partner at Certa Legal, a Dutch based leading law firm in the tech industry, advising startups as well as angel & VC investors. He is also one of the early investors in Startupbootcamp, a pan-european accelerator program for startups.
Photo by kyasarin (creative commons via Pixabay)