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Building a funded start up is a unique experience. If you’re more used to bootstrapping your way to victory then you’ll know that a tight cash position makes that journey a paced one.

But what happens when you inject that picture with significant free cashflow?

Add millions in fresh funding into the mix and you’d expect all of those frustrations and challenges to evaporate. But the reality can look very different indeed.

It’s a situation we come up against time and time again; founders so focused on the ‘raise’ that they freeze once the money lands and the realisation hits that real money – and the expectation and pressure that comes with it – can create as many problems as it does solutions.

As a proactive venture business run by entrepreneurs, we know what both routes look, and feel, like and so we wanted to pen this post to help those readying themselves for life before, during and, critically, immediately after a game-changing raise.

Early stage

But before we dive in deep it is also important to point out what stage we are talking about here as advice and rules about raising from Series A onwards clearly looks very different (and are the subject of a post for later this year).

Our main EIS Fund focuses on early-stage businesses, who are often raising their first or second external money rounds at pre-seed and seed. They may previously have taken in a small amount of cash from friends and family or angels but will still be very early from a revenue perspective.

All this means that any money will have been raised on the promise of growth; so, let’s look at the steps needed to achieve it, irrespective of what you are building…

What do newly minted start-ups spend their money on?

This is a good question and one a lot of prospective founders want to know the answer to, after all, the best way to learn the path of least resistance is to follow that of others.

Working within a fund allows you to see those journeys played over and over again across a glorious mix of businesses and industries and share that best practice across the portfolio.

And those that do it well focus early spend and effort in these four categories:

  1. People
  2. Growth Marketing
  3. Product
  4. Reporting and Governance


The first thing on almost all lists is hiring people. Good people. The challenge for a lot of founders, however, is that they are yet to figure out exactly what ‘good’ looks like – particularly when it comes to the critical part of the decision-making process around culture and ‘fit’.

All good pitches will have a thorough breakdown of how new funds will be spent and specifically WHICH roles will be filled first in order to deliver the roadmap. What they so often miss however is any awareness of who those people should be. It may sound insignificant but understanding and building around a shared belief system is critical for early-stage business as every employee is a much large percentage of the overall firepower available, which makes for little wiggle room when it comes to bad hires.

Being able to confidently understand how to answer the ‘how well do they fit?’ question comes down to thorough work on developing your mission statement, your why and what it is you stand for at a very basic level. What is your purpose as an organisation?

In a small knit team these things matter and any misalignment in why you will be fighting so hard to win in the early days will result in damage.

It’s for this very reason that I spend time ensuing that any early-stage business I invest in has started to develop that cultural compass and ensure they know how to hire not just on skillset, but on ‘fit’. Get it right and the hard work and dedication will come naturally.

Where to hire

Knowing who to hire then is critical to success, but which areas do you prioritise first?

In the very early stages whilst it is still possible for the founder/s to wrap their arms around every element of the business (so think hires 1-8) there is less requirement for employees to be hugely experienced, expensive and senior. Instead, it can be more beneficial to find smart, hungry and talented younger employees who will very quickly become true, passionate evangelists of the brand and its mission. This is especially important for mission-led companies.

These early hires can and do propel you a long way, but of course there comes a time when the business does require greater strength in depth. It is important you make this point to those coming in early that whilst they have a huge opportunity ahead of them in progression terms, there will come a day when the business may hire more experienced leaders to help with the next stage of scaling and maturity. Doing this avoids cultural damage and demotivation at a time when you need your team more than ever.

In those early days and as you look to pass some of the workload off so you can focus on priorities as opposed to everything you consciously begin the process of specialisation.

Employing tactical specialists means you can simultaneously improve output, begin the process of organisational scaling and start working on the business right than in it.

But it’s also an incredibly risky time. Get it wrong and your runway can very quickly disappear, and your brand and product be irreversibly damaged.

So, which areas of the business are critical and require focus first? In practice most successful start-ups push funding towards these three critical areas:

  1. Audience acquisition
  2. Product development
  3. Commercial sales

Funding is diverted to filling roles to drive these forwards as quickly as possible with tactical experts, exhibiting one to five years of experience delivering in a similar role.

Audience acquisition

Across audience acquisition the preference is for an exec or manager level hire with deep understanding of those digital channels which are key to you – whether that’s social, search, email, influencer, YouTube or something else. And remember, as a funded start up you can afford to bring in either an agency or a series of channel specialists to help build the strategy and approach, leaving your hire in this space to either manage the outsourcing or then run the tactical delivery element. My preference, given the increasing complexity of delivering world class content and targeting is for the former.

That means that the right skill set is probably someone with a good broad range of knowledge across digital marketing and with agency-side experience or coming from a role where they managed agencies and freelancers previously.


Product development is a very different proposition of course and here experience counts, particularly when it comes to building quickly. Developers and engineers with experience will move faster and will also have the ability to work alongside remote teams to give you greater scale when it matters. Businesses like our own portfolio company Deazy often sit alongside full-time developers within our existing portfolio engineering teams to give them the option of expanding and contracting quickly when big projects arrive.

Hire well here and you won’t go far wrong – and think about adding a project manager to the mix if you do not have someone good at it within the founding team. This will avert the risk of massive release delays – so often seen in the early stages.

Exactly how this looks will vary greatly from business to business and is dependent upon how complex your digital product is. For a few businesses, and in early enough pre-seed rounds, the entirety of the focus, and budget, may be on this and this alone, so we are making generalisations.

For all the digital and tech businesses we invest in however, product improvement plays some part of the story. And whilst the roadmap is often clear at investment pitch stage what is less forthcoming is a view on why the priorities sit in that order and what they are drivingin terms of progress towards metrics for next round.

Too often founders end up fixated by building the best version of the product they possibly can. And whilst that will never be a bad thing (staying as close to your audience as humanly possible is some of the best advice you can possibly stick to as a founder) little effort is spent mapping out which growth metrics matter most, and where they should be by the time it comes to the next round of fundraising.

The product road mapping process then should include not just a feature set, but also the associated metrics they impact. No early-stage investor will expect those forecasts to be decimal-place accurate, but they should be directional and will prove you have thought deeply about where you should be by the time it comes to runway conversations again. This is both prudent and confidence-inspiring for an investor looking in.


No start-up has ever been funded without a compelling story around growth prospects. To deliver it you should have a detailed, watertight plan and a back-to-front understanding of EXACTLY who your audience is and why.

We have already discussed the importance of knowing your metrics and they are borne out of this process – the creation of your post funding growth marketing plan.

To create such a plan, it can make lots of sense to work backwards from the metrics you believe will be necessary to raise again or get to profitability/whatever your key next milestone is.

Let’s say, for the sake of argument, you want to get to £50,000 MRR (Monthly Recurring Revenue) in order to achieve the level of valuation you need for a chance at hitting your Series A funding numbers.

To do that you’ll quickly work back to a point where you can capture how many customers that is, at what AOV (Average Order Value)/LTV (Lifetime Value) and therefore what kind of limits your CPA (Cost of Acquisition) needs to be within to get to your £50,000 MRR.

This kind of maths is never perfect – things change constantly – but what it does show is a willingness to work the challenge back and prove that it is possible based on what you have just raised.

There are other metrics that are important also, of course, including those covering engagement, usage and churn etc and some of these will be more important to some business models than others. The key is to understand your growth journey, which levers will be most important in attracting investment and growth.

Reporting and governance

And then there comes the critical, but slightly less sexy, subject of managing the supply of critical information on performance as you progress.

Whilst this should never be burdensome on early-stage businesses, it is also an important habit to form and a key mechanism for keeping track of those key top-level metrics as you go. Later on, as the business becomes larger and more complex, the governance piece because an integral part of the growth mix, but for now it’s about staying on track and highlighting potential challenges before they become real ones.

Irrespective of size or stage though experience says that it is good to get into the habit of producing a Board Book prior to formal monthly meet where you can share key developments under the following headlines:

  1. P&L – how are you doing against plan/budget and any reforecasts, and why? How long is the runway?
  2. Sales – what does the pipeline look like at each stage? Where are the weak points and how is that feeding into the P&L and shaping it (usually on a probability adjusted basis).
  3. Marketing/growth – how well is the plan being executed and what impact is it having on key metrics?
  4. Product – What progress has been made against the product roadmap?
  5. People – How is hiring going? How are you progressing culture? Where are the gaps and risks? What does churn look like and what are you doing to improve it?
  6. AOB

A simple structure like this ensures that all key areas of the business are summarised, and no stone is left unturned. It also leaves a great data trail for later stage investors should they have deeper questions in due diligence. Being able to show evidence of governance and reporting inspires confidence and shows maturity of the founding team and existing board.

Getting it right

By following the above process around hiring, priorities and tracking key metrics you’ll stand a better chance of not only raising a much bigger round, but more importantly, growing in a more controlled manner. You might even make a few better decisions along the way…!

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