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You've Landed a Series A. Now What?

Your company's journey doesn't stop there. Here's what to consider after securing this important round of financing.

As an entrepreneur, you hope that your business does more than survive, you want it to thrive. Ambitious owners with early signs of success and growth — healthy revenue, an established customer base, etc. — often look to expand their businesses exponentially. But all that growth requires money. If you've exceeded your capabilities bootstrapping or raising money from family and friends, the next step is to raise a Series A round of financing.

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A Series A is the first time a business accepts money from legitimate outside investors, such as a venture capital firm, in exchange for partial ownership of the company. Entrepreneurs can utilize the funds from a Series A financing round to hire more employees, purchase new equipment, and many other things related to expanding the business.

"The Series A is a huge moment for a startup. It gives them the capital and board/advisor support to take their business from a vision and early customer traction to a real company," says Ted Wilson, senior market manager at Silicon Valley Bank, a commercial bank used by 50 percent of U.S.-based, venture-backed tech and life science companies.

Wilson says companies typically should have at least $1 million in annual recurring revenue before raising a Series A. Companies seeking a Series A are typically looking for approximately $4 million or more in financing, with the median raise around $9 million, he says.

But a company's path to success is just starting with a Series A financing round. Wilson says too many founders don't become focused fast enough on taking the steps that will get their businesses to a Series B and, in turn, more revenue.

Whether you've recently secured a Series A round of financing or that's the route you're headed, it's important to know what comes next. Here are three things every business owner should keep in mind.

1. Become laser-focused on finding more customers.

Entrepreneurs have spent years focused on creating a brilliant product or service. But once they've landed a Series A, the real work of building a sustainable business kicks into gear.

As Wilson says, entrepreneurs need to "get your product adoption gears moving quickly." In other words, find new customers.

"Often, founders come from a technical background and focus on getting the product perfect. That is critical, too, but even with the most amazing product, the Series B is going to be hard if you are not growing your customers and revenue at a fast rate, 2x year-over-year, minimum," he says.

2. Hire the best talent — no matter where they're located.

Right after you complete a Series A, build out your middle tier of people "who get things done," Wilson says. "A willingness to hire anywhere — in the U.S. or abroad — is key to acquiring the best talent possible. You will likely need to move past your initial circle of trust hiring into the second tier."

"Focus on people who can help get product adoption going," he continues. "If you need a recruiter to help find a head of sales, do it.

Board members can help most with executive hires that may come into play closer to your Series B or beyond. "Engaging your investors around hiring helps them play a tangible role in the business that can be very impactful," Wilson says. "Also, the longer-term benefit is giving your investor more skin in the game…And that deep early engagement often translates into your investors being more engaged and supportive over the long haul as they not only have a capital investment but also a more personal investment of time and energy."

3. Adjust your mode of communication.

In the early startup days, company communications tend to be somewhat casual. Important meetings happen with co-founders and a small handful of employees over pizza. That all changes after a Series A, however. Once you've started hiring for those key roles, you'll have a significantly larger workforce, with people one layer removed from your initial core team. As your business evolves, the way you communicate with employees needs to evolve as well.

"This requires the CEO to be experts in painting a masterful forward vision about the changes coming in the world and the ability for their company to drive massive success in that evolving world," Wilson says. "Instilling confidence not just in their longstanding colleagues but every new person that walks into the door to interview."

Communication with employees is only one portion of the equation, however. Your communications with investors and customers need to mature as well. Institutional investors require periodic updates and well-organized board meetings. Your perspective on customers needs to shift from beta to winning enterprise clients.

"You need to show up at the customers' level," Wilson says. "You need to communicate with your customers with a new level of confidence and perceived scale."

Click here to learn more about how Silicon Valley Bank can help your business get to Series A and beyond.

SVB

Brand Spotlight Partner

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