Series B can be a challenging growth stage – often considered to be harder to raise than earlier rounds, largely due to the shift in focus from vision to execution. If Series A is about selling the dream, Series B is about making that dream a reality, and investors will be paying very close attention to whether the right talent is in place to pull that off. It is, therefore, imperative that a scale-up looking towards a B-round builds a senior team that is capable of delivering against growth objectives.
At Series B, it is likely that the leadership team is still a work-in-progress, so investors won't be looking for a complete executive suite to have been assembled by this stage. However, the foundations do need to be in place, with experienced talent in key roles that facilitate and drive growth. The senior team at Series A stage typically comprises a CEO, CTO, COO and possibly CFO but, in preparing for Series B, ventures should be thinking about sales and product-focused appointments – (eg. VP Sales, CPO, CMO). These hires should have a pedigree and track record of successfully delivering growth – people who have done this before will be much more credible to investors.
Bringing in experienced individuals also proves your ability to attract and secure A-players. This is a vital factor for investors because recruitment and retention of talent will be key to the venture’s ongoing growth. If you can demonstrate that you’ve brought in exceptional people who share your passion and excitement, it indicates that you will continue to build a successful team and culture that drives the business forward.
It is also key to have a talent roadmap in place that demonstrates your awareness of who you will need to hire and when (this roadmap should cover the next 12 months). Recruitment can often create delays or bottlenecks in growth plans, but having a hiring strategy in place ahead of time can mitigate this (and further demonstrate your ability to scale).
The temptation – especially after a Series A funding boost – can be to spend quickly and rush key hires to meet certain objectives. This can be disastrous as it risks overbuilding the team before the product is ready, prematurely raising costs in the process and potentially causing frustration and disillusionment amongst the new talent. Also, by recruiting hastily, you might fail to hire the quality the business requires; eventually replacements need to be made and growth targets are missed. As such, it’s critical to ensure enough time and thought is invested in building the team, well ahead of a Series B round.
Expect and Embrace Change
Beyond Series A, it is possible – perhaps likely – that some of the company’s earlier hires may not be the best people for the next stage of growth. As a venture scales, the need arises to bring in more experienced and seasoned talent – sometimes this is to complement the existing team but, in many cases, it is necessary to make replacements (it may even require a change of CEO). While this is never an easy process, it’s important to keep an objective and open mind in order to recognise where the evolution of the business demands changes in personnel.
The journey from Series A to Series B can be tricky and often represents a period of significant adjustment in the company culture as it becomes a fully commercial entity. However, with the right people on board, the transition can be navigated smoothly and successfully.