Plans for the Future: Post-Series A Strategies

Mallika Khandelwal

14th Sep'23
Plans for the Future: Post-Series A Strategies | OpenGrowth

After all that you have been through, from creating the business idea to the team planning, down to gathering investors. It is now time to know what happens next when you are done with Series A funding

Your work still needs to be completed, even though you have found some investors to support your startup. You need to make sure that you know your goals and objectives for the next level.

In this section, you will learn about the post-series A strategies and what comes next, so read on.

 

A Brief Intro to Your Knowledge

It is impossible to deny the exhilaration that comes with the excitement of raising a fresh round of venture capital.

Your software-as-a-service (SaaS) valuation has never been more appealing. You have sufficient money saved up to launch an assault on the market. 

You have earned the right to take some time off to celebrate the successful completion of fresh funding rounds with your team and ride the positive press coverage resulting from such successes.

However, each level of the fundraising process, from the seed round up to Series A and beyond, has at least one thing in common: they signal the beginning of your job rather than the conclusion.

Every new round of funding brings new challenges and opportunities for the development of your business. If you have recently finished a game of investment for your firm, the following is a rundown of what you need to concentrate on at each stage to move it to the next level.

 

What exactly is meant by "Series A funding"?

When a company has a stable user base and income numbers that can be relied upon, it is typically at this point that it will consider applying for Series A funding. After that, it will broaden the company's customer base and the range of products it offers by expanding into potential new markets. 

This round necessitates formulating a comprehensive company plan that can sustainably bring in a profit over the long term.

When it comes to a company's Series A investment round, investors tend to put their money into businesses with a fantastic idea and a solid strategy to make this idea a reality. 

Consequently, it is common for businesses going through this procedure to have a valuation of up to twenty-three million dollars.

 

 Post-Series A funding

 

Post-Series A Funding

After you have successfully raised your Series A funding, everything you do should be geared towards demonstrating that your product is a good fit for the market. Angel investors and venture capital companies want to see evidence that you can build the early proof of concept into a legitimate market leader before they invest money in your business.

After successful completion of a Series A funding round, there are quite a few goals to pursue, including the following:

The typical amount of money raised during a Series A investment round in 2021 was $22.9 million, enabling businesses to pursue all these goals. Most of the funds will be used to pay for new employees. 

To scale product development, you will need to invest in the appropriate leadership while expanding the size of the technical team. 

In addition, to maintain your current expansion rate, you will initiate your first investments in sales and marketing.

It would help if you remembered the financial aspect while putting the infrastructure in place to support the growing flywheel of the firm. Putting money into finance at this early stage is necessary to construct your first comprehensive plan and prediction. 

It makes it possible to hone in on the science underlying scaling product-market fit and ensure that the necessary infrastructure is in place to evaluate it accurately.

 

Hiring Your Team: Important qualities that should be present in your recruits

After the Series A funding, recruitment takes on a more critical role. Businesses need to assemble a group of adaptable people who can quickly generate traction and are equipped with the ability to scale the product or service over the long run.

When a firm is expanding quickly, new hires must have the mentality that they can take on any challenge and the flexibility to adjust to new positions, responsibilities, and expectations. The team needs to be able to identify problems, develop ways to fix them, and collaborate on finding answers to the issues that may arise.

 

After Completing a Series A Funding Round, Important Metrics to Track

After receiving a Series A investment, the finance team is responsible for ensuring that the business remains focused on metrics demonstrating that an established track record of early success can be maintained over the long term. Investors want to know that the money you raise will help you continue expanding your customer base if they put their money into your company.

After a Series A, the two most important metrics are as follows:

 

Growth in Annual Recurring Revenue: The rate of your company's revenue growth will always be the most fundamental sign of success in the lead-up to the next round of funding. Are you on track to reach $100 million in revenue using the T2D3 route (that's triple-triple-double-double-double)? 

To demonstrate that your company is moving in the correct path before applying for a Series B funding round, you will need to be able to go further into the "why" behind your ARR growth. To successfully convince investors to fund a Series B round, having a distinct revenue model and visibility into your organic growth, bookings, and renewals is essential.

After you have successfully raised your Series A funding, everything you do should be geared towards demonstrating that your product is a good fit for the market. Angel investors and venture capital companies want to see evidence that you can build the early proof of concept into a legitimate market leader before they invest money in your business.

After successful completion of a Series A funding round, there are quite a few goals to pursue, including the following:

The typical amount of money raised during a Series A investment round in 2021 was $22.9 million, enabling businesses to pursue all these goals. Most of the funds will be used to pay for new employees. 

To scale product development, you will need to invest in the appropriate leadership while expanding the size of the technical team. 

In addition, to maintain your current expansion rate, you will initiate your first investments in sales and marketing.

It would help if you remembered the financial aspect while putting the infrastructure in place to support the growing flywheel of the firm. Putting money into finance at this early stage is necessary to construct your first comprehensive plan and prediction. 

It makes it possible to hone in on the science underlying scaling product-market fit and ensure that the necessary infrastructure is in place to evaluate it accurately.

 

Hiring Your Team: Important qualities that should be present in your recruits

After the Series A funding, recruitment takes on a more critical role. Businesses need to assemble a group of adaptable people who can quickly generate traction and are equipped with the ability to scale the product or service over the long run.

When a firm is expanding quickly, new hires must have the mentality that they can take on any challenge and the flexibility to adjust to new positions, responsibilities, and expectations. The team needs to be able to identify problems, develop ways to fix them and collaborate on finding answers to the issues that may arise.

 

After Completing a Series A Funding Round, Important Metrics to Track

After receiving a Series A investment, the finance team is responsible for ensuring that the business remains focused on metrics demonstrating that an established track record of early success can be maintained over the long term. Investors want to know that the money you raise will help you continue expanding your customer base if they put their money into your company.

After a Series A, the two most important metrics are as follows:

 

Growth in Annual Recurring Revenue: The rate of your company's revenue growth will always be the most fundamental sign of success in the lead-up to the next round of funding. Are you on track to reach $100 million in revenue using the T2D3 route (that's triple-triple-double-double-double)? 

 

To demonstrate that your company is moving in the correct path before applying for a Series B funding round, you will need to be able to go further into the "why" behind your ARR growth. To successfully convince investors to fund a Series B round, having a distinct revenue model and visibility into your organic growth, bookings, and renewals is essential.

 

Cash Runway: In the world of startups, cash is the fuel that carries you from one-mile marker to the next. The Cash Runway is a metaphor for this. Most entrepreneurs do not choose to stop funding at the Series A level purposefully. 

 

Because of this, keeping a clear perspective of your runway and the rate at which your cash is being burned until you reach the next milestone is vital. A year's runway should be sufficient for pre-seed or seed rounds. However, after the Series A round, you should prioritize keeping a 24-month runway.

 

Net Retention Rate: Prove that your clients adore your product by calculating your net retention rate. If your company has a net retention rate higher than 100%, it indicates that its consumers love the product so much that they are prepared to pay a higher price for it in the future. 

You will need concrete evidence to go on to Series B funding. You can determine which portions of your customer base exceed the benchmark of a 120%+ customer retention rate and which are falling short if you gain profound insight into your client base using granular cohort analysis.

 

Final Thoughts

When raising new rounds of money, the focus is rarely on the immediate future. Instead, it is about providing you with the resources necessary to take the business to the next level and accomplish the vision outlined in the SaaS pitch deck you presented to investors.

 

OpenGrowth is constantly looking for innovative and trending start-ups in the ecosystem. If you want more information about any module of OpenGrowth Hub, let us know in the comment section below.

 

A staunch proponent of karma, Mallika believes in what goes around, comes around philosophy. She is ecstatic with her life and strives to live it to the fullest.

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