Every startup needs capital investments to grow. There are numerous ways through which a startup can gain financial support in order to expand and build its business legacy. One such manner of financing is the Series A financing.
Series A financing is a form of investment that is made into a privately owned startup company that has proven itself to have a prosperous future. Often, startups rely on various funding options such as Series A funding to gain the financial muscle that they need in order to grow.
For most companies, obtaining seed funding itself is a challenge. Graduating to Series A funding is a significant milestone for startups, given that less than 10% of them can land one.
Series A funding works in such a way that the investor gains the preferred stocks of the new venture in return for the investment. They can provide the capital that it needs to develop its products or services and its team, and implement their product and marketing strategies.
However, Series A funding and startups combined face various challenges, especially at the HR front.
Startups often make the error of assuming and believing that an HR function is not relevant at the initial growth stage. They do not look into hiring a separate team to manage recruitment, compensation, payroll, and look into the development needs of their people. This is an error that often costs many startups to fail as they find it challenging to retain their talented employees.
While it is true that an HR function can be expensive to manage in-house during the initial stages, it is essential to have it outsourced. Numerous staffing agencies partner with startups and provide them with the best talent as per their needs. These agencies have the advantage of being connected deeply with the talent market, have an existing pool of resources, and can provide the startups with the right profiles in shorter periods compared to when recruitment takes place in-house.
Startups are known to have fierce competition in the talent market. This is especially true for startups in the tech industry, as technology changes rapidly; it makes existing skills redundant.
Quality technical talent is not only tricky to find but also a challenge to retain. Startups also often make the error of overlooking the importance of maintaining and creating an HR department to look into the economic needs of their human capital.
Since Series A startups have limited funding, they look for talent that can aid in their growth, but must of the time, they are able to compensate their talent with the right salary for their skills, or they may simply not know the proper amount.
For more on salary and compensations, check out our free ebook “Tech Salaries Report.”
Startups face challenges with their payrolls and compensation management. There are numerous factors that one must consider when developing a compensation package.
A compensation package for each designation is designed while considering the overall budget for the department and the importance of the role of growth achievement.
Apart from the base salary, compensation packages include health care plans, insurance plans, allowances, vacation, sick days, etc. Moreover, the taxation and legal requirements of employee payroll are highly complex, far more complicated when managing remote teams in other countries.
Most of the companies opt for choosing an outsourced payroll consulting company rather than managing it in-house. Those who manage it in-house often end up paying higher benefits or higher employee taxes for lower-based salaries or face legal penalties as a result of payroll errors.
The current talent market demands more flexible employers, create a positive work culture for their employees, and invest in the growth of their human capital.
There is a massive misconception that fresh entrepreneurs have when it comes to their employer branding. Just like companies invest in their marketing budgets to attract consumers in a highly cluttered and competitive market, employers need to invest in their employer branding budgets as a way to attract the best talent.
Human capital is the most critical asset that companies have. Startups fail as a result of small teams and skills.
When demand for talented developers is high, they do not only look at the overall compensation package but also stay loyal with a company that provides them the right working and growth environment. Therefore, every startup needs to have its values outlined and engraved into the company culture.
From these values will emerge all employer branding strategies that are important in attracting the right talent. Employers should communicate with the talent market through social media, especially LinkedIn, where they promote their values and culture and differentiate themselves in a highly demanding market.
On the other hand, startups may be ready to invest in the right talent in terms of compensation and have the right employer branding strategy implemented. Yet, they find it challenging to acquire the right talent.
This is often because qualified candidates may not be available locally, or they are too expensive, and therefore, they opt for remote hiring.
Staffing firms are the best option to acquire remote workers, especially when it comes to hiring remote professionals in other countries since staffing agencies facilitate the process. In most cases, it is much cheaper.
If local talent is physically available, go for it! But if you are struggling, remote workers are a better option for tech companies.
Also, given that technology progresses rapidly, each country moves at its own pace, and each country has a specialized skill set supply. For Series A technology companies, talent is more relevant if it is in the global market than the local, so it is preferable to keep remote tech teams in your mix.
While we understand the importance of hiring the right talent, every series A startup needs to have the right balance between a specialized team of senior developers and junior-level employees.
Given that top resources are expensive to invest in and demand higher compensation and more flexibility, they bring in the experience, skillset, and the expertise needed to grow a team of young and junior developers.
Startups need to have the right staffing strategy where they prioritize investing in the key leadership positions that would be responsible for setting the tone for growth of junior team members as well as of the overall organization as a whole.
Learn more about how to build a remote tech team, how to manage it, and who to partner with, in our latest ebook “The Ultimate Guide to Build and Scale a Tech Team.”