Sunday, March 27th 2022 (about 2 months ago)
If you just closed your Series A funding, congratulations are most definitely in order! Raising the funds to get your startup to this stage was no small feat. In many respects, you’ve already beaten the odds just by making it this far!
So what’s next? How do you keep track of all that money, prioritize your expenditures, and make the most of the momentum you’ve got going?
Although you might not have anticipated it, this moment can be pretty overwhelming, especially for founders who’ve never been in this situation before. We know that’s not what you want to hear right on the heels of your big victory… but unfortunately, it’s the truth.
To help you get your bearings and make great decisions while the iron is still hot, we put together a list of things you should do, or at least plan for, as soon as you close your round.
The work you’ve done to reach this milestone has been epic in proportion. It’s been a long and challenging road, but you have navigated it like a true champion. You did it!
Take a little time to gather your thoughts, reflect on the experience, and recharge for the hard work ahead.
You don’t want to pile the stress of new hires and a new budget on top of the stress you’ve already experienced during your Series A raise. You need to decompress and get out of the grind long enough to get some perspective.
We’re not suggesting you should phone it in for 2 weeks as soon as you close your round. As you’ll see below, you’ve got a lot of tough decisions coming up quickly.
But we do think it’s important to celebrate the victory. So pop some bubbly, take your family and friends out for a nice dinner – or whatever it is you do to celebrate. This will help you maintain your momentum and focus as you charge forward with your new resources.
No matter how busy you get in the days following your Series A, do not go dark on your investors. They bought into your vision, and now they’re watching closely to see you execute the plan you pitched.
Share your plans and schedules to keep their expectations about how you will spend the money in line with your actions. Make sure the priorities you communicate are consistent with the vision you presented in your pitch.
It’s important to establish a regular rhythm for investor updates, and stick to it.
Communication is essential. It shows that you are responsible and transparent. It also helps build trust, which is important for maintaining a strong ongoing relationship with your investors.
It’s easy to prioritize communication with investors and forget to communicate effectively with your team and other stakeholders. At this point, everyone needs to be on the same page – so make it that way by keeping your team updated on your planning and decision-making process.
Be sure to thank your employees, advisors, mentors, family, and friends who have supported you along the way. These people have helped you get where you are today, and they will be an important part of your journey going forward. Let them feel the love!
After closing your Series A round, it’s important to be thoughtful and intentional about your first moves. It can be tempting to blow some money while your account is swelling, but you need to exercise careful restraint.
As the old saying goes, “Plan your work and work your plan.” In this case, you already have a plan – the one you’ve been presenting to your investors. All you have to do is stick to that plan.
Only spend on items that were included in the plan you pitched.
If you need to update or upgrade any of your services – such as legal, insurance, HR benefits, etc. – do that now so you can see the impact in your forecasts.
Get resources flowing to the key players who have specific actions to take as a result of the raise. Ask them to track and report on how they’re absorbing new responsibilities into their existing role, and triage as necessary.
As risks and challenges arise down the road, you’ll undoubtedly find yourself pivoting and adapting to your environment – which can mean straying from the vision your investors agreed to. But at this moment, they need to see you working hard towards that original, agreed vision.
If you raised money to execute a hiring plan, start interviewing! If you raised money for marketing, start building your campaigns or hiring contractors. If you raised money for office space, start shopping.
Don’t lose time (other than a quick celebration, above), and get straight to work on executing your plan and impressing your investors and stakeholders.
If you don’t already have them in place, set post-raise OKRs and KPIs to monitor your progress towards your goals. Having these metrics in place will help you manage effectively and give you an objective way to show your investors and your team how you’re advancing toward your goals.
As you get underway executing your plan, be careful not to lose sight of regular communication with your investors and your team. Keep everyone updated, and solicit their feedback on how things are going. This is a crucial part of maintaining positive relationships and making sure that everyone stays on the same page.
Seriously. If you’re like most founders, it was a real challenge to avoid running out of cash before you could raise your Series A. If you want to repeat that little miracle, now’s the time to get started.
Get a solid grasp on your new burn rate so you know when your next raise will be needed, and start laying that groundwork right away.
Update your financial model after your raise to reflect your new cash flow, hiring plan, and any changes in your operational expenses and administrative costs.
If you keep your financial model up to date between now and then, you won’t need to create a new model from scratch when the time comes to start raising your Series B.
Consider upgrading to a dedicated financial modeling tool like Forecastr. Our tool was created by startup finance experts with one goal in mind: to help founders make decisions and raise money with confidence. We’ll work alongside you to build and maintain a great financial model that gives you a crystal clear view of your cash flow and runway.
You should always have an exit strategy in mind, even if you’re not planning to exit anytime soon. An exit strategy is a plan for how you will sell or transition your business in the future.
Having your exit strategy built out can help you make better decisions about how to grow your business. It can also give your startup a valuation boost since potential investors will see that you have a plan in place for how, specifically, you will generate a return on their investment.
If you don’t already have an exit strategy in place, now is a great time to start thinking about one.
What are your goals for the future of your business? Do you want to sell it? Do you want to take it public? How long does each of the founders plan to stay personally involved?
These are just a few of the questions you’ll need to answer when developing an exit strategy. Even if it’s a pretty simple plan, document it and keep it in mind so you can make the best decisions for your business as it grows.
Closing your Series A is a huge accomplishment, and our hats are off to you!
But, in the big picture, you’re probably still near the beginning of your journey. So take a moment to celebrate and bask in the glow of success… but don’t overdo it.
Your investors and your team are looking to you to see how you respond, and the example you set should be head down, working hard, laser-focused on the goals you pitched during your raise.
This is the best way to ensure that you will continue to grow your business, increase your valuation, and attract additional investors down the road.
To see how far down the road your next round will be, reach out to Forecastr today. We’ll set you up with an awesome financial model and a team of dedicated analysts to help you make the most of it.