So, You Raised a Series A – Now What?
A confirmation email has been sent to your email.
There’s no shortage of content and advice out there targeted at founders who are about to raise money or who are currently raising. And it’s all focused on how to pitch, sell, and value your company while structuring a fundraising process.
But what about advice and resources for what to do when the round is closed?
My first experience fundraising for a startup happened in March of 2019. I had just come out of Y Combinator, and raised ~$1 million dollar seed round. As a first time founder, I wondered “now what?” but it felt vulnerable to actually ask anyone this.
Turns out, I wasn’t as alone as I felt in my post-fundraising anxiety. And I wasn’t the only one with questions. In private groups and smaller circles, founders of all funding levels are asking for guidance.
So, I interviewed a handful of entrepreneurs who’ve raised a Series A to put together some advice, perspectives, and tactical to-dos to answer the question, “I just raised a Series A — now what?”
I put these in chronological order so you can follow it like a to-do list.
Celebrate (but not too much)
Investors love to tell founders how “the real work is only just starting” after every seemingly happy milestone a founder hits. Just raised money and burnt out/exhausted? Well, congrats! The real work is still ahead of you.
The thing is, they aren’t totally wrong. A fundraise is a precursor to a time of major growing pains and change. With one milestone behind you, the next can feel like it’s at the top of a tall mountain in the distance. So as a response to that fear, some founders push forward with gusto after a raise, never taking time to slow down, let alone a minute to breathe and reflect.
This is a mistake–not just for the founders, but also for the rest of the company. Taking a vacation, going on a team retreat, throwing a party, or giving a day off are positive for morale after a fundraise, and help everyone go into the next period of working refreshed and energized.
“The best time for founders to really take a break is right after a fundraise. Go on a vacation. Take your team on a retreat. It's not only to celebrate, it's also to help you get out of the weeds of operating day-to-day and think strategically about the next stage of your business” — Kerry Wang, Co-Founder & CEO Searchlight
Founders who passed on the opportunity to rest expressed that they regretted it. Pushing forward with no acknowledgement of the raise meant taking a bit of a hit on team morale.
As a founder, you don’t need as much positive feedback to be motivated, and you don’t want to spend time anywhere that doesn’t appear to have an immediate impact on growth. But as an employee, you don’t have the same incentives, and founders need to remember that. It’s important to acknowledge the value the team created, and give feedback to employees that their contributions matter. - Anonymous Co-Founder of Series A Consumer Platform
Personally, I think Brian Vallelunga put it best when I asked for his thoughts on this — if a vacation kills the business, you haven’t architected it the right way.
So, don’t skip an opportunity to celebrate. Just remember that there is such a thing as taking it too far.
In current times, it’s less common to see founders spend frivolously, but one founder I chatted with shared that after their Series A in the bull market, they threw a lavish party with customers and investors.
“One of our investors asked us, ‘did I just pay for this?’ So the lesson here is — save every dollar you can and teach the company to do the same. A huge party or other brand efforts made us look cool but delivered nothing on our metrics” - Anonymous Founder
Manage Your Team’s Expectations
All of the founders I chatted with emphasized that a balance needs to be struck when celebrating with the team. The new fundraise does not mean the company has ‘made it’, and founders are responsible for making sure everyone gets that.
“Let’s say you’re bottlenecked on marketing and product: the extra money you have from raising should help you move forward, but it shouldn’t be a green light to the team to spend more in that area as a substitute for strategy.” — Max Kolysh, CEO and Co-Founder, Dover
“As a millennial founding team, we splurged on everything. We hadn’t considered a market like this where you earn your valuation — we’d only raised in the bull market. Our first thought was: we’re gonna take over the world so let’s just act like it.” — Kevin Chiu, COO and Co-Founder, Catalyst
Managing expectations often means making it clear that employees shouldn’t spend freely on more software, vendors, tools, and partnerships without consideration.
The team also shouldn’t expect unreasonable salary adjustments, though some market-correcting is probably appropriate. Several founders shared that after their Series A, they pulled the cash salaries of key contributors up closer to market rate.
“We felt we should take care of our people and wanted everyone to have equitable compensation. This meant that immediately with new salary offers, we had to benchmark to a different market. The Series A comes with higher expectations of what the company will do for employees.” — Kerry Wang, CEO and Co-founder, Searchlight
“We took a set of employees who meaningfully contributed to our Series A and we adjusted all of their salaries. And when we started looking at compensation data, one of the factors to that includes, ‘how much has the company raised?’ So right away we were in a new bracket.” —Anonymous Founder
In terms of how and what to pay — you may be sensing a theme in the quotes above. The Series A often leads founders to seek out salary data for the first time. Investors are a good source of information for this, and the percentile you pay from there is a matter of strategy.
“We wanted everyone to be in the 85th to 95th percentile of comp. We’d rather take 1–2 exceptionally skilled people than hire a dozen people that are just satisfactory.” —Brian Vallelunga, CEO and Co-Founder, Doppler
Be aware, though, of what comp adjustments can communicate to your team. This doesn’t mean to skip them — but frugality (keeping burn low) should still be a priority. Company spending is a constant process of negotiation.
So what do you do when employees ask for too much? Well, prepare for some uncomfortable conversations. Being a good leader means knowing how and when to say no.
Sweat equity is how startups normally pay people but as more rounds close, the first thought that crosses people’s mind is: when do I get a piece of that?
Beyond individuals asking for higher salaries, they will want a bigger budget for their team. Building a team is the best way to get more resources and bigger titles. Expectation management is an art that is something to be continuously considerate of. - Vince Ning, Co-CEO and Founder, Nabis
A straightforward way of thinking about this, and communicating it back to the team — is to focus on breaking even, or achieving slight profitability. Put decisions through this lens, and help your team do the same in order to make the right trade-offs between spending and holding off.
Your bank balance doesn’t govern your spending, your metrics do. And your bank balance doesn’t change your metrics. So raising more funding doesn’t mean you’ve earned the right to spend more — you haven’t. —Waseem Daher, CEO and Co-founder, Pilot.com
We were always trying to break even, so try to stay as close to breaking even or lightly profitable as possible. More runway shouldn’t change behavior. For us, we used it as a safety net, to fund more ambitious projects, but not a lot of changes.— Max Kolysh, CEO and Co-Founder, Dover
Tempering needs to happen after a big round. It comes down to negotiation, and employees might inch out some money from the account, but ultimately aligning the team on vision and strategy and redefining the mission is what’s critical to ensure success –-- Vince Ning, Co-CEO and Founder, Nabis
Time Your Press Strategically
A press release in a fancy publication is fun and exciting for any company. But beyond that, there are actual tactical considerations to make about when and why you’d seek press coverage for your Series A.
You’ve probably already heard (or seen firsthand) that press does not lead to sustainable customer growth. But, if timed properly, it can be a nice one-time boost, and it can help substantially with recruiting. And counterintuitively, expect investors to reach out to you once you’ve launched your funding press. Many will want to build a relationship with you before your next round.
“If you’re the kind of company where customer trust and PR matters, announcing a raise is a good thing. Series A is a milestone and a sign that you’re building a real thing that is not just a side project. It increases the credibility of the business. At Dover, we’ve even proven through data that prospects respond with more interest in roles when a company includes a TechCrunch article in their outreach.” — Max Kolysh, Co-Founder and CEO, Dover
As far as when to announce, some founders take the strategy of timing the press around a particular product release, key hire, or pricing update. Press is a chance to get in front of new people.
“Pick a day you can own. If you choose a busy time, you’ll get drowned out by all the other launches. We decided to launch our press in between YC batches when less was happening.” —Brian Vallelunga, CEO and Co-Founder, Doppler
This can sometimes mean that founders delay the announcement of their raise for quite a while, until something feels significant enough to announce.
“We didn’t make a big deal out of it, or even announce it. There has been no official announcement, still, a year later, because we are trying to time it with product release or something. Nothing has felt big enough yet, and we’re trying to be intentional about why we are announcing.” — Anonymous Co-Founder of Series A Consumer Platform
So there are no rules here. If you raise a round in June, it doesn’t mean you need to get press by July. And in fact, it can sometimes be a lengthy process to get your story in front of desirable publications, anyway. TechCrunch can have a turnaround time of up to 3–4 months.
Once you secure press, the brand impact can be sustained for a while. Though — once again — a feature in Forbes does not mean you’ve made it, it can help you earn the trust of customers and prospects a bit more efficiently. Be sure to include your press on your website and in outreach.
Re-evaluate Your Hiring Plan
A Series A these days tends to be millions of dollars — possibly 5–20M. That’s a lot of cash — and the #1 reason founders raise this amount is because they need to hire more people.
“We had to justify to investors why we were raising money, and it was going to come down to headcount. Salaries in the Bay Area are so expensive.” — Anonymous Founder
When I chatted with founders about the first 3–6 months after their raise, the ‘hiring’ topic came up immediately, and repeatedly. A Series A can make a founder falsely believe they need to hire a ton, and fast.
This is a bit of a misconception — There are no universally key hires companies have to make after the Series A. The right hires are specific to your business and team — Kerry Wang, Co-Founder & CEO Searchlight
And can oftentimes feel like a mistake in hindsight. Particularly in recent years, with the dramatic shift from bull to bear market — many of the founders I spoke to had similar stories of over-hiring in 2021, and then needing to downsize more recently.
We overdid it with hiring. The thinking was: now we are a ‘legitimate’ company, so we should use an executive search firm. We overspent on that search firm. And we didn’t actually need to hire as much as we did yet. — Hanmei Wu, Co-Founder, Empowerly
Founders like to fill the room. The general correlation is the faster you spend, the faster you grow, but it’s not true.—Vince Ning, Co-CEO and Founder, Nabis
Hiring played a huge role and motivated our Series A, but because of the recession, the post-Series A didn’t go as planned. We slowed down a lot and didn’t add anyone new to the team. — Anonymous Co-Founder of Series A Consumer Platform
“The goal isn’t to be a company with a lot of employees. It’s to be a successful business, and ideally you do that with as few people as you can.. Once you add to your headcount, it’s very hard to shrink it” —Waseem Daher, CEO and Co-Founder, Pilot.com
So it’s probably worth looking at your hiring plan again. When forecasting your needs, talk to someone who’s seen a number of companies that look like yours scale a team: your investors or a fractional CFO that specializes specifically in startups (or both).
And what about investors — will they be angry, or feel “tricked” if you raised money on the basis of a hiring plan you don’t carry out?
No, almost certainly not.
As a founder, investors are not your boss. They are supporters and collaborators who should understand your decision making, assuming you’re communicating it well. And when it comes to hiring, hire the people that the business truly needs, and hire people who your current team are excited about:
Don’t copy others when hiring — listen to your team. Even if the founders think someone is great, get consensus of the whole team, and especially anyone who will be working directly with them. Do what is best for your company. – Hanmei Wu, Co-Founder, Empowerly
And while over-hiring full-time employees and ICs can be costly, hiring the wrong execs can be immensely worse. Nearly every person I spoke to also expressed hard-earned learnings about the early executive hires made after Series A. So why does this seem to be a universal mistake?
Don’t Go Overboard Hiring Execs
Undue pressure to hire people with fancy resumes can set in quickly once the money hits the bank. You may suddenly be able to attract and afford someone you couldn’t before with the newfound cash (like, someone who requires a 300K+ salary).
“I would strongly avoid the thinking that now that we are a Series A, we need to have an exec for every one of the company’s functions.” — Max Kolysh, Co-Founder and CEO, Dover
You perhaps should hire the one really high leverage exec who moves the needle, but you definitely don’t now need a VP in every single category —Waseem Daher, CEO and Co-Founder, Pilot.com
It only seems logical to want to find an experienced CRO, VP of Marketing or CS Director who’s “done this before” to help you take action on the aggressive plans you’ve made. The hard truth is — no one has really done this specific thing before, because your business is unique. Previous experience helps, but it’s not a guarantee. And an executives impressive salary is probably the least expensive thing about them if the hire goes wrong.
“If you make the wrong exec hire it’s detrimental. It might put you in the grave. If you hire the wrong person, it’s not just the time and salary, it’s the recruiting time, onboarding time, the entire company’s time. Making the wrong hire is super painful.” — Kevin Chiu, COO and Founder, Catalyst
An exec will set the culture, and mobilize everyone else. If they aren’t setting the right tone or moving people in the right direction, this could be disastrous. Key hires can quit, culture can take ages to reset, and time is wasted. Also, execs are compelling — it’s what they do. So you need to make sure you’re not being led in the wrong direction yourself.
That said, don’t mistake this advice to mean that exec hires are totally unnecessary at this stage. Bringing high-level and experienced operators aboard has to happen at some point, and the Series A is a good time to do it. It’s more about ensuring you’re being thoughtful, and not swept up in superficial data points about a person.
“I waited too long to hire a sales leader. I had 8 reps under me, multiple SDRs. A full-time sales leader can only handle 6. I had more than that, plus marketing and CS. I was drowning, and it left me with no time to interview people.” — Kevin Chiu, COO and Founder, Catalyst
“In the early stage: are you hiring an IC, a super IC, a manager, a director, a VP? Every single decision is a sacrifice. The IC rarely is able to scale to Director or Head of. The Director never really scales into VP for long. The first person you hire will not scale with you forever. 18–24 months max is probably their timeline. The earlier you are, the less they scale with you in the long term. So you need to hire the right person for the right stage.” — Kevin Chiu, COO and Founder, Catalyst
After your Series A, all of a sudden you attract a new batch of people. You have to be careful, because 50% of the people will come in with the right attitude, but the other 50% see Series A and they think you have it all figured out and that’s not true. — Kerry Wang, CEO and Co-Founder, Searchlight
Brian Vallelunga suggests narrowing down the leader archetype you’re looking for:
“Figure out if you need a Builder or a Scaler. They are very different people. Builders can scale, but scalers don’t build. So you need to run a search that is hyper tailored to both the role and the persona.”
Get Ready for Your First Board Meeting and Investor Updates
There’s an understanding that with taking on Series A investors, the company ‘grows up’ a bit. New stakeholders will have higher standards for the way you communicate with them.
“We had to start running board meetings. Over time the board meetings have become more discussion-based which helps the company.”— Vince Ning, Co-CEO and Founder, Nabis
It’s not a bad use of time to ensure the first board meeting goes well. It’s an opportunity to make sure the new group of stakeholders really understands the business. It’ll set the tone for future meetings and situations.
“I asked a lot of friends for their board meeting decks, and walked through them together via zoom. I also used this article: http://delian.io/lessons-4 — which is impactful about board meetings.” —Kerry Wang, CEO and Co-founder, Searchlight
To prepare for your first board meeting, there are several things to consider:
- Prepare a deck that includes sections on the vision, market, competitive landscape, product roadmap, growth strategies, and financial projections.
- Educate the board on your business: Share relevant research, customer testimonials, and case studies to substantiate your claims. Help board members grasp the intricacies of your business and encourage open dialogue to address questions or concerns they may have.
- Share operational updates: In addition to sharing your financials and new hires, provide regular updates on product development, marketing campaigns, sales pipeline, customer acquisition, retention, and key performance metrics. This keeps the board engaged in your company’s progress.
- Leverage the expertise of your board and investors: Recognize that your board will bring valuable knowledge and networks to the table. Ask for advice, tap into their connections, and leverage their experience.
Get a grip on your financials
“Get strong finance people. It can go south quickly if you’re not making enough revenue to offset some spend. That’s a big lesson. Deeply dive into the numbers. Burning way too much money and eating into margins — it’s hard to adjust and walk back, so get ahead of it.” —Hanmei Wu, CEO and Co-Founder, Empowerly
Reflecting on the sections above, founders highlighted the major areas for which their series A spend went: key hires, comp adjustments, experimental projects, etc. You can very quickly lose track of your spend, or lose your understanding of your business if you aren’t categorizing your spend correctly and taking the time to understand your numbers.
“We hired a Head of Finance as one of our first key hires after the A. We needed to reel in uncontrolled spend and audit our spend on services. Some of them were redundant and needed to be cut. A certain amount of recurring spend — let’s say 30K — could be equal to a month of runway. When you put it into that perspective, you become very motivated to categorize your expenses and wrangle the chaos.” — Brian Vallelunga, Doppler
If you’ve been DIY-ing your bookkeeping and accounting… if your mom has been filing your taxes for you… now is the time to graduate to a more sophisticated vendor. Ensuring that you have accurate and transparent financial reporting month over month should be a top priority. Not only for your own peace of mind, but for your stakeholders.
“You now have real investors and they’re going to want to know how you’re spending their money. You now have a reporting obligation to someone that isn’t you. You need to take that seriously.” — Waseem Daher, CEO and Co-Founder, Pilot.com
Getting a grip on your finances could mean working with a trusted external firm like Pilot.com, or it could mean hiring a head of finance. Whichever path you take, be sure to look into taking advantage of competitive interest rates to extend your runway, and the R&D credit, both of which could save you material money.
Finally, Switch Your Mind Out of Fundraising Mode and Back to Your Customers
Founders go into a ‘fundraising mindset’ when they raise a round. They go from talking to customers to talking to investors, who can be a considerably more scrutinizing crowd. Founders have to move forward in the face of doubt with an unwavering confidence that their business will make massive returns. They need to make existential threats seem easy to navigate, and make competitors or market volatility seem like frivolous concerns. They’re in super sales mode.
But once the round is closed, it’s important to get out of that mindset and back into building. After the raise, it’s not enough to sell the dream and get people excited about the vision. Founders need to build. Whether that means building their team or continuing to develop and improve their product.
“Once money hits the bank, there is this swell of anxiety that unfolds because now you have to go back into a valuation. There is one thing people say externally, but internally, you do everything to get back into that valuation so you can raise your next round and that can be a vicious cycle for an early stage startup. Not bad in all cases. Know what you’re getting into and manage potential downside effects as they come.” —— Vince Ning, Co-CEO and Founder, Nabis
Founders should have an honest look at what’s next, and acknowledge the dissonance between the appearance of success (closing a round) and actual success (product-market fit, customers who pay you and love what you do).
“The completion of a raise shouldn’t change prioritization. Money is a tool. I would not create artificial spending. Keep doing the things you’re already doing, be fiscally responsible and treat it as the last round you will ever raise.” – Max Kolysh, CEO and Co-Founder, Dover
“I thought when we raised more money, the company would change more. But the main customers we had from the beginning are the same type of customers we have today. Keep investing in your loyal customers and what works. Experiment but don’t experiment too much from what is bringing in revenue.” —Hanmei Wu, CEO and Co-Founder, Empowerly
“Everyone knew about us. But everyone knowing who you are doesn’t mean they know why they should enter a 4-month sales process and spend 100K on you. That’s what we had to focus on” — Kevin Chiu, COO and Founder of Catalyst
So, get back to basics — sales mode off, build mode on. Get scrappy, run experiments, put your head down, focus, and take a good look at what’s under the hood. You’ve successfully delighted investors enough to send you a wire. Now it’s time to delight the people that matter most: your customers!
A confirmation email has been sent to your email.