The 4 Things Every Founder Needs To Build After Raising A Seed Round

Hello to Canada’s SaaS Community,

While every startup is unique, there are a few core changes that founders need to implement after raising a Seed round. Janet Bannister, Founder and Managing Partner of Staircase Ventures, knows these changes well, having been a Seed-stage investor for over a decade. Speaking with SAAS NORTH, Janet shared four things every founder needs to have in place after their seed round.

Key takeaways:

• Implement dashboards to track product-market fit progress and customer engagement and churn, not just topline revenue growth.
• Founders have to accelerate their go-to-market motion to close more deals faster, and potentially increase the average deal size.
• Founders need to establish their operational processes, functional responsibilities, and the plan to reach the requisite milestones for their next fundraising round.

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Raising a Seed round is an exciting time because an investor is taking a bet on you.

But it’s also a time for maturity and evolution.

Janet Bannister, founder and Managing Partner of Staircase Ventures, has seen around this corner many times as an investor for over a decade.

Speaking with SAAS NORTH, Janet explained the four things founders will need to put in place immediately after raising a Seed round.

1. Dashboards to track company-specific metrics

You need dashboards and data—but make sure you’re tracking the correct information.

Specifically, Janet said dashboards at the post-Seed stage need to measure product-market fit, including customer engagement and churn.

“In the early days, the founders are very involved and they have a very good feel for the business,” said Janet. “However, as the business gets larger, you need those metrics in place so that you can continue to understand what’s working in the business and what’s not working.”

While metrics will heavily depend on business type and industry, Janet said all founders need to understand engagement by customer segment.

In particular, engagement metrics help you assess whether the customer is getting value from your solution; this could mean repeat usage, cost savings, or efficiency gains from using your product.

“It’s [more] important to have a fewer number of customers with high engagement than a lot of customers that are not very engaged,” said Janet.  “Once you have high engagement, you have —or are getting close to having—product-market fit.  And then you can focus on getting more customers of the same profile that are engaging heavily with your product.  Without high engagement, if you are getting more customers,  you are just pouring water into a leaking bucket.”

“Growth can hide a lot of underlying challenges that will catch up to the company,” Janet continued. “You could have a very high churn rate, but if you’re growing fast enough it hides that churn. If you have high churn, you’ve got something wrong with your product, sales, or targeting — and you’ve got to address that quickly.”

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2. Go-to-market acceleration

At the seed stage, companies typically have a product in the market and some early customers. After raising a seed round, the focus is often on validating product-market fit and accelerating sales.

In particular, Janet said post-seed companies should think about three things with respect to go-to-market:.

1. Your go-to-market mix: Will you lead more with marketing or sales? What makes the most sense for your space and ICP (Ideal Customer Profile) at this time?
2. Accelerating sales: How can you close more sales? Look at your pipeline and look for improvement opportunities at every stage, from getting more prospects into the funnel, to increasing the conversion rate at every stage.  In addition, is there an opportunity to increase sales within your existing customers and/or increase the average contract value for new customers?
3. Sales team: Do you have a sales playbook with relevant metrics? Who do you need to bring onto your sales team given your GTM approach and existing bench strength?

“There are multiple levers you can pull as you accelerate your go-to-market,” said Janet. “You need to be thoughtful about how to execute and be data-driven so you can adjust based upon what is working and what is not.”

3. Clarity on team needs and operational steps

Beyond beginning to sell more, you’re also maturing from an organizational perspective.

“A lot of founders do not put in efficient operations at the beginning,” said Janet. “That can catch up to them very quickly.”

In particular, Janet said founders need to bring clarity to what everyone is doing:

1. The to-do list: Every employee—from Sales to Engineering—knows their core tasks and outcomes.
2. The roll-up: Clear lines of responsibility (both overall and on a project-specific basis).
3. The cadence: Lines of communication between team members (and between project leaders and individual contributors).

“I’m a big believer in running a tight ship… and it’s easier to put those things in place when you’re a small startup,” said Janet. “And if you don’t put that structure and discipline in place, then problems and inefficiencies compound exponentially as you grow.”

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4. Next round fundraising workback plan

In the vast majority of cases, a Seed round will not be your final fundraising round. That means you need to work back from your next fundraising milestone.

Janet said you can plan around three key questions:

1. Who are my target investors and what outcomes or metrics will they want to see before they invest?
2. What do we need to do to hit those outcomes or metrics?
3. How can I manage cash flow to hit those metrics at least six months before I run out of money (giving me time to run a fundraising process)?

When it comes to targeting profitability, Janet said that it will depend on your space. If you’re in deep tech, quantum, or other technically difficult space, aiming for profitability in the near term is likely not realistic. Conversely, if you can achieve significant revenue quickly and cost-efficiently, and if you are in a space where there is limited investor interest, you may want to get to cash flow positive as quickly as possible, and then raise in the future opportunistically to further accelerate your growth.

“Generally, it is difficult to get to cash flow positive on a Seed round,” said Janet. “Companies need to develop their strategy and budget based on a deep understanding of who their target investors are for their next round and what they will be looking for.”

Supporting founders through growth

As an investor, Janet knows that these four elements are far easier said than done. But they are all crucial to breaking through into the expansion stage.

This is also a space where Janet wants to support founders with more than just cash. It’s why Staircase Ventures has a founder growth platform that offers coaching, personal financial advice, and a lifestyle stipend on top of the traditional VC value-adds of customer intros and a talent network.

“The most important factor in the success of a start-up is the founders,” said Janet. “That is why we focus on developing the founders and helping them perform their best everyday.”