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Congratulations 🎉 You’ve Raised Funding! Now What?

Just 0.05% of startups manage to raise venture capital, which is a tiny fraction of the entire spectrum according to industry reports (Fundera). So, as one of the very few founders to successfully raise funds, particularly in the context of the current funding downturn, that is an even greater achievement.

As a milestone in your business, it is also something you should acknowledge, as part of your efforts to secure capital for your venture. However, with great funding, comes more strings attached, and as part of your raise you will have more stakeholders to manage and report back to.

In this article, we will discuss what reaching this milestone means for your entrepreneurial journey and managing your evolving relationships with investors, ensuring you maintain momentum and continue to drive your startup toward its objectives.

We will also explore how to strategically allocate your new capital, especially focusing on product and platform development.

Celebrating Your Success

First up, take a moment to breathe and celebrate. Securing funding is a clear sign of your startup’s progress and the hard work of your team. It’s important to recognise your success too, not just individually, but as a collective.

Organising an event or a team-building activity can be a great way to celebrate—perhaps via a dinner, an outing, or a simple in-office function.

Such celebrations not only boost morale, but also collaboration across the team and show your appreciation, setting a positive next step for the ongoing journey.

For the founder personally, the power of celebration for even small wins can be a positive reinforcement for establishing new habits. Psychologist BJ Fogg, suggests in his TED article, after coaching over 40,000 people, he understands that we focus too much on our shortcomings, and not enough on our actual accomplishments.

Don’t forget to celebrate your wins!

Of course, balance your excitement with the new outlook that include the challenges that lie ahead with an increase in stakeholder management.

Being Accountable to New Stakeholders

New funding also comes hand in hand with a new level of accountability, particularly to the investors who have put their trust and capital into your venture.

Moving from relative autonomy to regular investor updates can be challenging but is essential for maintaining trust and support.

Setting up structured communication channels, such as regular update meetings or reports, helps keep investors informed of your progress and decisions.

Transparency in your operations and financial management plays a critical role in building lasting relationships with your stakeholders too.

Regular, honest updates—even when the news is not positive—can help manage expectations and reinforce investor confidence in your leadership.

Strategically Allocating Your New Capital

When it comes to use of capital, more often than not startups are using the fund raising process for product development. There are generally 3 areas where this might occur:

  1. MVP Development: Invest in transitioning from a prototype or concept to a market-ready Minimum Viable Product (MVP). Following the viral success of their explanatory video, Dropbox developed an operational MVP that allowed users to sync files across multiple devices. This MVP was fundamental not just in demonstrating the feasibility of the concept, but also in engaging early adopters who provided crucial feedback that shaped the subsequent iterations of the product.

  2. Feature Enhancement: Enhance your existing product by adding new features that improve functionality and user engagement. An example might be Instagram’s introduction of the Stories feature, which was a strategic enhancement to keep users engaged and compete with Snapchat’s similar feature.

  3. Platform Overhaul: Upgrade your MVP to enhance usability and functionality based on user feedback and technological advancements. A case in point is Twitter, which had to overhaul its backend architecture early on to handle the rapidly increasing volume of tweets and maintain a smooth user experience.

Steps for Strategic Allocation

Gather User Feedback: Collect and analyze user feedback to determine essential features and improvements needed.

For example, Slack regularly uses Net Promoter Scores (NPS) combined with direct customer feedback to prioritize updates and new features.

Feature Prioritization:

  • Essential Features: Develop features that are crucial for the basic functionality of your product.

  • Important Features: Identify features that enhance user experience and add value, prioritizing them next.

Desirable Features: List additional features that could improve the product but are not critical at this stage.

Develop a Roadmap: Outline the development timeline for each prioritized feature category, aligning with business objectives and resource availability.

Implement User Stories: For each feature, create user stories that detail the functionality from an end-user perspective to guide your development team.

Drawing out user stories can help get everyone on the same page

 

Execute and Review:

  • Begin implementation with essential features, followed by important and desirable features as resources permit.

  • Continuously review the impact and relevance of each feature against user feedback and business performance.

The Benefits of Offshoring Product Development:

Offshoring offers a cost-effective alternative to hiring locally.

Despite some misconceptions that offshoring can lead to painful legal battles or reliability issues, these can largely be mitigated by working directly with developers instead of through third-party agencies.

Direct collaboration with offshore developers can help avoid misunderstandings and eliminate middlemen, leading to a more agile and lean operational setup.

This approach enables startups to iterate quickly and efficiently, which is crucial in the rapidly evolving tech landscape.

High profile startups including WhatsApp and GitHub have successfully offshored to developers abroad, enabling them to access top talent globally.

Benefits of Working with Tekkon

  1. Cost-Effectiveness: Tekkon provides access to top-tier development talent at a fraction of the cost of local hires. Our pricing models are transparent and designed to be budget-friendly for startups, making high-quality tech development accessible without compromising your financial strategy.

  2. Flexibility and Scalability: Our staffing solutions are highly flexible, allowing you to scale your developer team up or down based on project demands. This adaptability is crucial for startups that need to pivot quickly without the burden of long-term commitments.

  3. Focus on Startup Needs: Tekkon is deeply embedded in the startup ecosystem, with a proven track record of supporting startups throughout their growth journey for the past 6 years. Our understanding of the pace and nature of startup development ensures that we are not just a service provider but a growth partner.

  4. Enhanced Productivity: By handling the recruitment, onboarding, and management processes, Tekkon allows you to focus on your core business activities. Our developers integrate into your existing teams to enhance productivity and bring in fresh perspectives and expertise.

  5. Quality Assurance: Tekkon commits to delivering high-quality software solutions by employing only skilled developers who are proficient in the latest technologies and methodologies. Regular training and development ensure that our teams stay at the cutting edge, delivering innovative and robust solutions.

  6. Access Top Talent: Working with remote developers means you’re not just restricted to you local talent pool, and you can get access to professional developers, whom you wouldn’t normally get access to by posting a job ad in the local media publications or relevent websites.

How Tekkon Reduces the Risks of Offshoring

  1. Direct Engagement with Developers: At Tekkon, you work directly with our offshore developers instead of going through third-party agencies. This direct communication reduces the risk of misunderstandings and ensures that your specifications and requirements are precisely met.

  2. Dedicated HR Function: Tekkon has had a dedicated HR function for the past six years, focused on ensuring the best hiring practices, ongoing personnel management, and developer welfare. This dedication to HR excellence ensures that only the most qualified and reliable developers are recruited and maintained, significantly mitigating the risks typically associated with offshoring.

  3. Thorough Onboarding and Integration: Our detailed onboarding process guarantees that developers are fully integrated into your projects with a complete grasp of your tools and processes. This meticulous approach minimizes ramp-up time and aligns developer activities with your project goals from the outset.

  4. Regular Monitoring and Feedback Loops: Regular check-ins and feedback sessions are conducted to monitor progress and address any concerns promptly. This proactive approach helps maintain project quality and developer performance, ensuring that any issues are resolved quickly.

  5. Legal and Compliance Assurance: We adhere to strict legal and compliance measures to protect your intellectual property and ensure data confidentiality. Our robust legal framework provides you peace of mind when engaging with resources outside your local jurisdiction.

  6. Dedicated HR Function: Tekkon has had a dedicated HR function for the past six years, focused on ensuring the best hiring practices, ongoing personnel management, and developer welfare. This dedication to HR excellence ensures that only the most qualified and reliable developers are recruited and maintained, significantly mitigating the risks typically associated with offshoring.

Final Thoughts:

So, that brings us to the end of this article, remember pitching and getting funding is half the battle, spending it wisely is the ongoing war.

Try to take a little more time to at least acknowledge and/or celebrate your achievement. As this is a big thing, but you’ll need to balance that with the new responsibility of reporting back to managing stakeholder relationships with your investors.

If you’re looking to spend your newly acquire funds on product development, there are more lean, cost-effective and reliable ways to do it. So, if Tekkon can help make your life a little easier, team more agile and spending even a little more frugal, we’d love to chat.

Feel free to reach out to me (Matt) via LinkedIn, explore the rest of the site or email us @ sales@tekkon.com.au.

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