A startup usually prioritises its focus on the front end functions like marketing and sales, as well as the backend functions like finances and product development. While there is no denying these functions are very critical for the success of a startup, there is one more important aspect to it which often tends to be neglected because it may not seem important. Communications and information management is an often overlooked function a lot of companies ignore. The fallout from ignoring the criticality of good communication does not immediately make itself known but rather keeps on piling up until the problem becomes too big to ignore.
During the initial or idea stages of a startup when there are only a few members on the team, communication might not be a problem because all of the team would be together for most of the time. However, as the idea develops into a product and the startup begins rapid scaling up, the need for hiring more hands arises. This is when communication becomes a priority.
Communication for startups includes both internal and external. Good communication needs to be nurtured and can become a powerful tool. Some easy but highly effective ways to improve communication, both internal and external, are discussed as we progress through the article.
Internal communication is a powerful tool for enabling better decision making and for increasing business productivity. Open, clear, crisp communication from the top management level to all branches of the organization will serve to bring everyone together on to a common goal. This will also further keep executives informed, engaged and make them feel valued thereby leading to more productivity. Regular team meetings will ensure each team member is on the same page and will also boost employee morale. Google Hangouts, Slack, Microsoft Teams and Trello are some of the tools which can be used for internal communications.
Some of the ways to drive a healthy internal communication within startups are
- Promoting openness, honesty and transparency.
- Candid one on one sessions with leaders.
- Valuing every opinion.
- Sharing challenges, suggestions, progress and expectations.
- Welcoming team feedback.
- Create an environment of creative expression and non judgemental spaces.
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External communication also plays an important role in the growth of a startup. While internal communication is used to keep the teams on the same page, external communication plays a huge role in the brand awareness and value. External communications play an important role and a startup cannot ignore how it is perceived by job seekers, financial institutions and the public. Therefore a startup needs to put out its ideas, culture, vision and products in the purview of the public and this can be done through blogs, social media, newsletters, press briefings, advertisements and emails. A startup needs to realise the importance of managing external communications and the power of releasing information at the right time.
Some of the ways to drive a healthy external communication and which often tend to be overlooked are given below.
- Leverage the correct medium for communication. For example social media for branding, ads for lead generation, landing pages for call to action.
- Create a unique tonality suitable for the brand image of your startup.
- Ensure to stay in touch with your external public through all contextual means like emails, newsletters, publications and so on.
- Create high-quality content like opinion pieces, sales materials, research reports, annual reports, whitepapers, buyer’s guides, and product datasheets.
- Incase of any issues with the product on the technical side or manufacturing defects, startups need to immediately issue advisories. Good communication is also essential for firefighting and damage control
Startups should keep in mind that internal and external communications are mostly about being spontaneous, relevance and honesty. A healthy communication goes a long way to improve employee performance, team productivity, positive mindset, and above all business revenue.
What Are Series A, B And C Fundings?
Startups usually go through a tumultuous series of journeys during their lifecycle. As a startup is continuing to grow, the need for funds becomes more and more important. Funding offers startups the necessary influx of money at various stages to focus on different aspects like product building, scaling up, expansion, innovation, research and development. While only a handful of startups usually make it big without the need of much funding, the rest of the other startups engage in multiple efforts to raise enough capital through rounds of external funding.
In the previous article, we have explored seed funding and the various sources of seed funding. Once a startup completes a seed funding round, the next following rounds are called as series funding and are classified into Series A, B and C respectively.
These Series fundings usually have a timeline and Series A is the first of the three rounds of funding. Many startups often spend years in search of a Series A funding while some other startups easily get their foot in the door. The Series fundings are a stepping stone for a startup to eventually become a Unicorn or for filing for an Initial Public Offering (IPO.)
As is the case with seed funding, the Series A,B and C rounds of funding also see investors putting their money into a startup in exchange for equity. The success of a startup directly correlates to the amount of returns an investor gains.
Before any round of funding, a startup needs to be valued and a valuation is done based on multiple factors like management, track record, market size, risk and liabilities. Let us have a look at what Series A,B and C funding means below.
Series A funding
Once a startup gains a proven customer base and consistent revenue figure, the startup may opt for a Series A round of funding. This funding can be used by a startup in question to improve their customer base as well as taking opportunities to scale their product across different markets. A startup also usually prepares a long term business plan after receiving a Series A funding. Series A fundings range between $ 2 million and $ 15 million. Investors are not looking for a great idea but rather a plan to take the great idea and make it into a money making business.
Series B funding
Series B funding rounds are all about startups expanding and taking their business to the next level. Investors help startups get there by expanding market reach. Companies that have gone through seed and Series A funding rounds have already developed substantial user bases and have proven to investors that they are prepared for success on a larger scale. Series B fundings are usually used to scale a startup to meet the increasing demand levels. Series B fundings range between $ 30 million and $ 60 million with the average funding at $ 33 million.
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Series C funding
By the time startups arrive at Series C round of funding, they are usually quite successful. The idea behind the Series C round of funding is for startups to raise capital to develop new products and expand into newer markets or probably even acquire other businesses. Normally investors expect a 200% return on their investment during the Series C round of funding. Companies vying for a Series C funding are usually looking to go for an IPO or to expand on a global scale. Startups are usually valued at around $ 118 million when applying for a Series C funding.
This concludes the list of Series funding. Series fundings are an important milestone in any startup’s roadmap to success and this article hopes to break down the Series funds into simple terms.
What Is Seed Funding And What Are The Sources For Seed Funding For Startups
As startups begin to grow beyond an idea stage to a minimum viable product stage, they begin to brainstorm in order to develop a market ready product. However, all the product development and testing does not happen for free. A good product development lifecycle will need a lot of resources both financially and physically. While physical resources can be spared, finances can often drain out quickly thereby jeopardizing the future of a startup. Therefore startups look for investors who will be willing to invest capital into the startup. The investment happens during seed funding events where venture capitalists look out for promising ideas and products in which to invest.
Seed money, sometimes known as seed funding or seed capital, is a form of securities offering in which an investor invests capital in a startup company in exchange for an equity stake. Imagine a startup as a plant which needs to grow but in order for it to grow a seed needs to be planted. A seed funding also works in a similar way, by giving a startup enough working capital to get things off the ground. Undoubtedly, this is one of the most important processes for laying a strong foundation for a successful startup.
There are multiple sources for a startup to infuse seed capital and the list of sources is given below. Read on to find out more about the various sources of seed capital.
Bootstrapping is nothing but building a startup from the ground up with only personal savings. While this brings in added pressure of using one’s own money it comes with its own benefits of not having to worry about returning borrowed money.
Incubators are a great way to grow as well. An incubator acts as a source of funding for businesses if they have good business models. Many well known business schools act as incubators. The famous startup WeWork also began as an incubator platform for startups and they have branches all over the world now. A lot of incubation programmes do not take equity from the startup but do offer support beyond just funding.
Accelerators work with startups to scale up their business rapidly as opposed to Incubators which nurture early stage innovation. Accelerators also provide minimal seed funding for startups along with professional services, networking opportunities, mentoring and workspace. Y Combinator is the most famous accelerator around the world.
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4) Business Revenue
Once a startup has a minimum viable product, they can begin sales in order to generate revenue. This revenue is then invested back into the startup as a capital to develop a fully functional product. In recent times, this method has gained prominence as it does not involve the complexity of seeking external funding or diluting stake.
5) Corporate seed funding
Large corporations often are looking for a way to invest in a startup which is bringing a new innovation to the market. This source of funding brings big visibility for the startup brand and is usually an early indication of an acquisition in the future. Tech giants like Apple, Facebook, Google and Microsoft are constantly on the lookout to spot latest innovations.
6) Angel investment
An angel investor is an individual who provides capital for a business startup, usually in exchange for convertible debt or ownership equity. These investors often come together to form angel networks where they each invest small amounts into a startup during the early stages when the risk of failure is high. AngelList, Indian Angel Network and Lead Angels are some of the leading angel investment groups.
7) Philanthropic Investors
This is a perfect source of investments for startups who are looking to address social problems with their products. Startups could approach international philanthropes, who act as seed investors for startups with social impact. One of the major advantages with philanthropic investors is they do it for the love of mankind and not for profit and therefore the expectations are fewer than venture capitalists.
This concludes the list of sources of seed funding. Looking for seed funding does not have to be a complicated exercise and it can begin by looking into these various sources of initial capital.
5 Best HR Softwares for Startups And Small Businesses
Human resources are the personnel of a startup or small business and make up for one of most valuable assets for any organisation. Additionally startups often have a dedicated vertical or function which looks after human resources and various other functionalities which come with it like payroll, compliance, hiring, grievances and many more. Over the years, human resources has evolved from just one aspect of hiring to covering a broad spectrum of functions like learning and development, improving productivity and culture in an organisation. Therefore. human resources can become tedious with a lot of manual work involved in payrolls, interview scheduling, leaves and grievance management and therefore tend to take a lot of valuable time which could be used elsewhere. Therefore automating these processes can free up time as well as streamline the entire processes.
This is where a Human Resource Management System (HRMS) comes into play. HRMS refers to a platform which helps the HR department in planning, organising and controlling the workforce, recruitment, staffing, payroll, announcements, policy changes as well as functioning as a repository of important human resources information.
We have compiled a list of five best HRMS softwares for startups and small businesses. Read more to find out about them.
Gusto HRMS offers customised services for each business. The HRMS platforms handles payroll, insurance, onboarding, employee finance tools and time tracking. Gusto is not just any simple HRMS tool, and what sets them apart is their financial advisors which let startups plan their insurances and taxes according to the budget they have in mind as well as a handy service which lets employees manage their finances better.
Namely is a HRMS provider who prides itself on being able to cater extensively to medium sized businesses by streamlining their HR processes. Namely believes in enabling startups and mid sized businesses to make data driven decisions in all aspects of their HR functions. Namely can cater to organisations who have employees from the range to fifty to a thousand.
3) Zoho People
Zoho People is an online Human Resource Management System designed to manage and access all your employee data from a centralized location. Zoho People does not need a separate software which needs to be installed and instead operates from the cloud. Zoho People provides modules for Employee self service, leave management, timesheets, attendance management and HR automation to name a few. Zoho People even offers a thirty day free trial in order to convince startups on their HRMS tool.
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4) Bamboo HR
BambooHR is designed with small and medium sized businesses in mind. This HRMS tool offers modules for onboarding, hiring, compensation and a special module for culture. The culture module provides a new approach to performance management and the latest tools for measuring engagement and driving organisational behaviour. Bamboo HR also provides a free trial for startups and offers pricing depending on the size of an organisation.
Zenefits simplifies the process of curating, and providing great benefits to employees from comprehensive healthcare plans to useful perks like commuter benefits. Zenefits also provides a fourteen day free trial for startups with most of its features available in order to convince the organisation to opt for their HRMS.
This concludes the list of Best HRMS platforms available in the market for startups and medium sized businesses. Let us know if you are already using any of these HRMS tools or plan on using them in the future in the comments below.
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