When a company raises funding, events follow a familiar cycle: leaders announce the number to staff, a flurry of media coverage offers a glimpse into how the company’s product offering or market share has progressed, executives offer predictions about how they’ll spend the money — and everyone gets back to work.
But what goes on five, six or seven months on from that funding? Where does the money go? In interviews with leaders at growing mid-sized companies, we learned that VC cash is often leveraged in one of three ways: supporting research and development to expand a company’s offerings, investing in product lines that have shown the most potential or building out HR and people teams to build upon existing company culture and rapidly onboard new hires.
Each of those options comes with a number of important considerations.
“Hiring a large group of new employees can either meaningfully improve your company output and culture, or can have the opposite impact,” ClimaCell CMO Dan Slagen said.
The throughline that connects each response to a cash infusion from investors is intentionality. Or, in the words of BlockFi Co-founder Flori Marquez: “In times of rapid scale, it’s easy for teams to lose sight of the company’s key values.”
Flori Marquez, Co-founder and SVP of Operations at BlockFi
The company: BlockFi is a New Jersey-based fintech company with a range of products, including cryptocurrency interest accounts.
The funding: BlockFi’s $50 million Series C was the company’s third funding round in the space of 12 months, and was raised to help expand both the company’s teams and product lines. Those new initiatives include a bitcoin rewards-based credit card and building support for new assets and currencies.
Where does it go?: Marquez said that all her teams are currently hiring. Though as BlockFi’s product team — comprising engineering, product management and design — makes up 60 percent of its headcount, “it feels most dramatic in that area of the business.” Meanwhile, BlockFi’s institutional services team required a rapid acceleration in headcount growth to help deal with the level of demand Marquez said the company encountered for its services.
What is your first priority after raising a round of funding?
“Our priority is always to keep building. We are fortunate in that we’ve been well funded to meet our objectives and that our fundraising to date has been entirely proactive. Securing a new round of funding reaffirms an aggressive growth strategy. So while we’re not generally changing our overall trajectory or business objectives, we are able to build our infrastructure with confidence and at pace. One of our core values is ‘pragmatic pioneering’ — we know where we want to go and have lofty aspirations, but we understand we need to build pragmatically to get there. Our ability to fundraise quickly just adds rocket fuel, but the course is the same. Hiring an all-star team to support this growth is essential.”
“In times of rapid scale, it’s easy for teams to lose sight of the company’s key values.”
What advice would you give to other talent acquisition leaders tasked with rapidly growing teams after a large funding round?
“Two pieces of advice. In times of rapid scale, it’s easy for teams to lose sight of the company’s key values. Always make sure to champion time and quality over speed and to consistently reinforce values like hiring for inclusivity. Second, I would recommend that leaders build hiring processes earlier than they think they need to. From ATS management to a robust hiring process that emphasizes strong channels of communication from the internal hiring team to your candidates, a good process will improve your ability to measure your success and ensure strong partnerships with your team internally.”
Dan Slagen, Chief Marketing Officer at ClimaCell
The company: Boston-based ClimaCell leverages data from a wide array of IoT devices — drones, cell phones, connected vehicles, street cameras and even airplanes — to create a more comprehensive weather prediction than traditional government services are capable of.
The funding: ClimaCell raised its $23 million Series C last July to expand the company’s go-to-market efforts and invest in research and development. Though the company’s travel business obviously struggled in 2020, it retains a number of large clients in the sports and agriculture industries, among others.
Where does it go?: Aside from its go-to-market efforts, Slagen said ClimaCell is using the funding to expand its sales, research and development, engineering and product teams.
What is your first priority after raising a round of funding?
“The core reason for new rounds of funding is most often to accelerate and further invest in areas of the business that have shown exponential progress and present the opportunity to expedite scaled growth. This is how we're thinking about our latest round of funding. The entire team at ClimaCell is excited about our growth as we head into 2021, and we'll continue to use our capital to grow the business accordingly and sustainably.”
“Focus on diverse and quality candidates.”
What advice would you give to other talent acquisition leaders tasked with rapidly growing teams after a large funding round?
“Focus on diverse and quality candidates. It sounds basic, but hiring a large group of new employees can either meaningfully improve your company's output and culture, or can have the opposite impact. The pressure is real to hire a certain number of people ASAP, but you can’t take shortcuts or else you’ll pay for it tenfold down the road. At ClimaCell, we’ve developed our own company ethos for employees, which we’re committed to during any and all hiring processes.”
Tad Druart, VP of Marketing at Eagle Eye Networks
The company: Austin company Eagle Eye Networks builds video management systems, surveillance assets and encrypted cloud-based software that help businesses manage security. The system uses AI to recognize possible suspicious behavior on-screen and notify operators remotely.
The funding: Accel led Eagle Eye Networks’ $40 million Series E funding round last October. According to Crunchbase data, the company has now raised $100 million total.
Where does it go?: Druart said “virtually every department” is undergoing expansion in the wake of Eagle Eye Networks’ October funding. In particular, the company is building out its engineering team to accelerate the adoption of artificial intelligence within the platform.
What is your first priority after raising a round of funding?
“Communicating the core information about the funding and what it means for our organization and team. Ensuring people recognize this is a milestone in our growth and the success that they helped create, and that we have more work to do. That while we will invest, we will continue to be stewards of our resources and continue to be focused — it’s not a blank check.
“For Eagle Eye Networks, adding the HR function was one of our priorities after the funding. We needed to add HR team members and strengthen our systems and processes as we add more than 75 new roles to our more than 200 people across the globe. Hiring and onboarding that many people required the right HR mix. Hiring and onboarding a staff of this size would require HR to create a staffing plan that will determine the composition and content of the workforce required to position the organization for current and future business objectives.”
“This isn’t an HR job alone.”
What advice would you give to other talent acquisition leaders tasked with rapidly growing teams after a large funding round?
“Measure twice and cut once — but do it quickly. Communication and alignment across leadership and departments are critical. This isn’t an HR job alone. HR facilitates and supports the organization, but the hiring managers need to help own and engage in the process. Remember too that it is not a normal challenge to increase hiring and add 50 percent more people in just a couple of months. Partnering with other parts of the business, communicating clearly, aligning and reporting are critical. You also need to be able to count on hiring managers across the business for help when you need it, as you need a team to build a team.”