A start up begins with a great idea but needs a substantial investment of time, commitment, discipline, and money to keep going and developing. Study after study has found that the most common reason behind the failure of startups is insufficient capital resources. Even in the purest of service industries where expertise rather than manufacture is the unique selling point, entrepreneurial vision without funding will get nowhere.
It is widely recognized in the business community that as a company grows, it will pass through a succession of funding stages. This begins with pre-seed funding to get the enterprise off the ground, followed by seed funding of the product development stage and then, if the launch has been successful, passes through several levels of venture capital investment before eventually making it’s Initial Public Offering (IPO) in which corporate shares are offered to the general public.
Rising through the funding stages is not as simple as following a map. Every business will have individual needs at specific times. It is vital to ensure that sufficient funds are available at every point. It is neither necessary nor feasible to expect the kind of major venture capital investment which would precede an IPO while you are still in the early stages of growth. Still, your resourcing must grow with your expansion.
It is essential to be aware of the optimal time to move on. At the pre-seed stage, your sources of funding are likely to be limited to your resources, those of family and friends or early-stage venture funds. Staff will seem to be an unaffordable luxury at this point, which means the founders will end up doing everything, working long hours in every imaginable role, driven almost entirely by a belief in the future of the business. What matters most is having enough money to keep your operation going until the second stage: most startups fall at this first hurdle simply by running out of cash.
To attract external investment from Micro-VCs or crowdfunding, your business needs to have achieved a measurable value of at least £2 to £3 million. Once past the seed funding stage, you should have a business that has a demonstrable future, such that you can explain to potential investors with confidence how your current position will evolve, yielding substantial profits as soon as six months or a year from now. It would help if you established a core team of associates and employees.
Your startup is now a scale-up, with a brand identity, a proven product or service and a growing customer base. Known as Series A, B, C and occasionally D, the following stages will enable you to broaden your range of investors, fund market research, increase market share and extend your workforce to form or expand your marketing, business development and customer service teams.
Resourcing can be particularly problematic in the compressed expansion cycle of hypergrowth, necessitating more excellent investment much more quickly. Hypergrowths usually fail for the same reasons as any other business: lack of funds. The difference in hypergrowth is that it happens much more rapidly, including the urgency of hiring new talent.
Understanding the needs of your business at every stage is the key to managing the process of funding and growth. It involves having a clear idea of the stage you are at but must also anticipate the short- and long-term future demands. A fundamental requirement of growth is an increased workforce since your employees will make the most significant contribution to your success.
While your time is consumed with running the business, planning for the future, and pursuing investment, it can be hard to give the necessary attention to your vital recruitment needs. That is why it pays to partner with resourcing experts.
Tekna Search has many years of experience in project and talent management services. Our consultants understand the stages of growth for startups, scale-ups and hypergrowth, and we can provide the human resources you need for every stage of your journey.
Contact us today and find out how we can turn pressures into solutions
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