Product manager |Freelance writer| Introvert
The role of a product manager varies across the startup spectrum, from early-stage to the expansion stage. And knowing the stage of a startup when taking on a product management role can help you set the right expectations.
While there is a uniqueness in roles, product managers are often on the look-out for opportunities where they are. They are either discovering a growth lever or finding the next one.
In this article, I will discuss the types of funding series and how they work. I will also highlight a big take-away for product managers at early-stage startups.
Starting a startup may mean that the founders have done their due diligence in raising capital the bit they can. This small investment is called Pre-seed funding, pre-seed capital, or pre-seed money. Money raised is usually around $10,000 to $250,000.
Family, friends, incubators, close people, and even kind strangers are typically the ones that contribute to the pre-seed capital. Of course, added to the personal savings of the founders.
If a startup decides that they have enough seed funding to grow their business and scale, without the need to raise any further funding, they won't be the first. Survey Monkey raised $100 million 11 years after they started.
Each round of funding is expected to be a catalyst for bigger growth in a company, more so when there is an actual market need for the product or service.
If you can’t creatively turn $1 into $10, why do you expect to be able to turn $1 million into $10 million? - Tech Crunch.
Let's dive into the funding stages:
Series A funding: At this stage, investors are looking for a high return on investment, not just great ideas. If there is a clear strategy on how you can turn your idea into a money-making venture, it will aid your search for that first investor for your business. Get that one investor for your startup and others will come in.
Startup Evaluation (Eligibility for Series A): Estimated value of $10 million to $15 million and above.
Amount: This round raises approximately $2 million to $15 million and above. The first round of VC!
Type of Investors: They typically come from traditional venture capital firms.
Requirements from investors: Either or all of, a team with the required skills to grow the product, proof of concept, financial records, tested business model, and an established customer base.
The reward for Investors: Preferred stock shares.
Series B funding: This is a next-level adventure where your startup transitions into a well-established company with the funds gotten. To put the funding to work, you may develop new technologies and increase the number of your workers: tech, marketing, sales, sales support, business developers, everyone your business needs to grow, etc.
Startup Evaluation (Eligibility for Series B): Estimated value of $30 million to $60 million
Amount: This round generates around $7 million to $10 million and above. The second round of VC!
Type of Investors: Commonly, Venture capital firms and private equity firms. Crowdfunding too.
The reward for Investors: Preferred shares.
Series C funding: Companies at this stage are already successful and are looking to tap into new markets, create a new product or service, or even acquire new companies. This is often regarded as the final stage of fundraising, but companies can move beyond if they have to.
Amount: If the pre-money valuation of a startup receiving a Series C funding is about $115, they can raise approximately $50 million and above. The third round of VC!
Type of Investors: Commonly, Hedge funds, Investment banks, private equity firms, and large secondary market groups
The reward for Investors: About double the value of the investment returned. If not more.
[Most companies stop at Series C. Those that move on to Series D, and maybe E; are most likely trying to boost their valuation before going for an Initial Public Offering (IPO) or acquisition, or may have encountered an unforeseen circumstance.]
In early-stage startups, the founder or founders often joggle roles to get things running, including taking on the role of a Product Manager, before more hands join in. Once a dedicated product manager is brought on board, things loosen up a bit.
This Product Manager might find themselves doing whatever it takes to create that first product and making it successful. And sometimes it can be hard to distinguish this one product from the business itself.
The challenge for an early-stage PM really is unique and it will really help if the PM is literally agile. Open-minded too!
Be flexible: Early-stage startups are not always quick to hire and this could leave white spaces between different roles in the team. To ensure the success of the product, it's best if the PM fills up the white spaces. This is not a time to focus solely on what's on your JD.
Personally, I have done all sorts of things from operating machines to collecting data and testing the performance of our software/models, purchasing and organizing testing samples, conducting user interviews to gather feedback and customer insights, speaking at conferences to promote our solutions and attracting talent, drafting mock-up wireframes, to writing company blog posts. I did whatever needs to be done for the team to deliver successful products. - Bastiane Huang, PM at OSARO, Inc.
Birthing a successful product at whatever stage of a startup is an intense process. Product managers have to adapt to new challenges over the major phases — formation, validation, and growth.
When a product manager rises to the occasion with a growth mindset at every stage of the company's trajectory, it makes a significant difference for the customer, the product, and for their career.
Like to read more of my articles? Here is a link to my previous article on Product Management titled, Entry Level Resources for Becoming a Product Manager.
Feel free to connect with me on LinkedIn.