Landing a big funding round can open up all sorts of opportunities for a startup, but that influx of cash meant to accelerate growth comes with its own set of challenges. We spoke with leaders of five Chicago startups that have raised major rounds. Here's what funding has meant for their companies, and how they’ve worked to overcome the challenges that accompany it.
Logistics software provider project44 landed a $10.5 million round in September to double its team and open up its SaaS platform to new parts of the industry, both nationally and abroad.
Since then, co-founder and CEO Jett McCandless has worked hard to ensure that new hires are balanced appropriately between teams.
What opportunities did the funding open up for you?
The logistics and SaaS technology sectors are extremely hot right now, making the competition for top talent stiff. Our Series A funding round led by Emergence Capital and Chicago Ventures helped put project44 on the map as the leading innovator within logistics technology.
We’re laser focused on building a winning team. Within 90 days of our Series A, we had more than doubled our headcount. Our VC partners provided the external validity needed to help us attract some of the smartest, most well-rounded talent I’ve seen in a long time.
What challenges came along with that opportunity?
In order to meet the rising demand for project44 that accompanied the timing of our Series A funding, we have needed to quickly grow our customer success and product teams, roadmap and strategies.
It’s easy to grow. It’s much harder to strategically scale an enterprise SaaS company. If you pull one lever too much and the other not enough, the delicate balance between product and sales breaks down, creating a level of chaos. In order to support our rapid surge in monthly recurring revenue, customer success and product must be in sync with that surge. That’s a difficult balance to manage. For project44 it has required tremendous focus, open cross-functional communication and the right team of go-getters.
ActiveCampaign’s marketing automation platform helps small and medium-sized businesses better at staying in touch with their customers. The company was founded in 2003, but took its first round of outside funding in October of this year. Founder and CEO Jason VandeBoom said the most important thing for him has been to not think of growth as the only goal that matters.
What opportunities did the funding open up for you?
It has allowed us to remain profitable but take larger steps towards where we want to go. A combination of calculated risk, lack of burn and taking an aggressive stance on how we choose to grow the business can be a very powerful combination.
What challenges came along with that opportunity?
Having bootstrapped well into a growth stage prior to funding, we have found the largest challenge doesn't occur immediately, but over a period of time where people have the chance to let growth or the concept of a financial security to cloud areas that we should focus on or work to resolve as we grow.
It's easy for companies to hide or neglect potential issues by masking it with growth — yet it's vital to not let that happen for the long term value of the business. We have overcome that possibility by staying true to our bootstrapped mindset and metrics outside of growth alone.
An online marketplace and communications platform that helps students find tutors for one-on-one instruction, Wyzant got its start in 2005. After gradually scaling for over eight years, the company took its first round of funding in December 2013.
Founder and CEO Drew Geant said raising outside funding allowed his team to get out of survival mode and start looking forward with the long-term in mind.
What opportunities did the funding open up for you?
The biggest opportunity was the ability to think and act way more long-term. Being well-capitalized frees you up to make the right decisions for your business and customers rather than always being in survival mode, which can manifest itself in a short-term view.
What challenges came along with that opportunity?
Shifting to a longer-term outlook is definitely an adjustment. It requires patience, conviction and discipline to avoid chasing "shiny objects" that are not in support of your long-term strategy.
Semantify makes it easier for businesses to dive into their data. CEO Ashoke Dutt (pictured above) said his company took funding to expand its market reach.
What opportunities did the funding open up for you?
Semantify pioneered the concept of empowering end business users without technical data management skills to instantly and independently discover deep insights and any form of information from their data universe. Prior to the round, we had a very robust, function-rich technology platform validated by large banks through many successful engagements. We needed to now sharpen the list of targeted solutions we wanted to take to the market, and package these solutions for scalable delivery.
Our funding round enabled us to create holistic product packaging, wrapping the product with strong domain expertise in our two target industries. We increased the value proposition in financial services by developing solutions addressing specific issues in regulatory change management, governance risk and compliance and audit transformation. We also delivered a niche analytics solution to community and regional banks which is a traditionally underserved market by fintech companies.
What challenges came along with that opportunity?
The challenge of establishing a product in a new industry opportunity is establishing a strong domain layer, and creating a highly differentiated solution with compelling return on investment. We were able, purely following our new go-to-market model, to quickly expand into the healthcare industry, where heterogeneity and diversity of data are challenges that Semantify very effectively solves. We now already have proven, domain-rich, highly differentiated industry solutions in this sector.
Increased market-facing resources enabled us to significantly increase our activity in the field and learn lessons that gave us deeper insights into how to market and position our value proposition in terms more relevant to our audience in both these industries.
SwervePay makes patient management systems that help healthcare providers communicate with patients, reduce no-shows and accept payments via text message. After raising a $10 million Series B in February, CEO Jaeme Adams said one of his key efforts has been to make solid decisions about which projects to prioritize and communicate clearly with employees about those priorities.
What opportunities did the funding open up for you?
Receiving $10 million earlier this year allowed us to attract and onboard some amazing talent. It’s my view that you can’t have a quality organization without quality people. My number one priority involves creating a team full of talented, personable, committed individuals who will help foster a healthy, collaborative SwervePay culture. I want our clients to know they're in good hands.
Our recently added team members come to the table with great ideas. Our funding not only allows us to employ these talented people; it allows us to invest in their ideas.
What challenges came along with that opportunity?
Striking the balance between supporting our employees’ proposed initiatives and being good stewards of our investors’ capital isn’t always easy. I would love to be able to give my team unlimited budgets to move forward with all of their proposed plans, but we have to be realistic about wants versus needs while we’re still in our current growth stage.
Having a collaborative culture allows us to have open discussion about internal prioritization of various initiatives. I believe this open dialogue leads to an understanding of why certain initiatives take precedence over others.
Images via listed companies. Some answers have been lightly edited for length and clarity.
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