Your Company Will Slow Down After Your Capital Raise. Here are 3 Things You Can Do About It
Here at Delta Awesome, we’re semi-obsessed with organizational inflection points. We define “inflection point” as anything, big or small, that makes it so the old way of doing something becomes obsolete.
Our favorite analogy about inflection points is thinking about the day a child is born. This day is not just the next day in a pregnancy, but actually constitutes a 100% shift in your situation — you’ve moved from being pregnant to being a parent. It’s the same for business inflection points — there are moments when your entire business life changes and the way that you once did something doesn’t make sense any longer because the situation has changed so significantly.
Inflection points often lead to a period of instability for the company (as illustrated by the frequently referenced J Curve theory). One such inflection point is “the day after the raise.”
Although there is cause for celebration that you’ve finally closed your round, the next order of business is to anticipate and prepare for a period of instability, reduced efficiency and effectiveness. Why? As a result of focusing on your raise for so long, there are frequently things that you have put off and a backlog of necessary activities (like paying bills) that have been neglected. You and your team move from focusing on raising the capital to deploying it (yes, deploying capital not spending money), which necessitates a whole new way of thinking. Additionally, once you’ve raised capital, it’s common to start the process of hiring new people — people who don’t automatically know what your business is and how it works. New team members need time to ramp up, learn new systems, and understand your company’s processes and products. All of this takes time and will, inevitably, slow your company down for a while.
As a founder, there are three key things you can do to navigate this time:
Be aware that a period of instability and reduced efficiency is coming, so don’t plan for any added changes during this time if at all possible (i.e., don’t plan a product launch for 45 days post-close).
Hold your team’s hand. Give clear directions to your team and continually reinforce what everyone’s roles and responsibilities are.
Keep your vision clear and consistent. Effectively communicate the vision of your company to your team. We would even advocate for over communicating during this time period. Remember the adage: you have to tell someone 10 times, 10 different ways for them to remember 10%. It’s better for everyone to feel like they’ve heard your direction more than they need rather than not enough.
Hopefully with the knowledge that instability is coming post-raise, along with these three tips for what to do about it, you can successfully navigate this specific inflection point. Still have questions or need support? We’re here to help.