In this guide, we take you through the main challenges faced at each stage of tech growth and how to tackle them, as well as key insights and nuggets of wisdom from those who know, and where Tech Nation can help you on your scaling journey.
What is an early-stage tech company?
An early-stage tech company can be anything from a person with an idea, right up to a working company preparing to raise funding. Otherwise known as the ‘startup’ phase, an early-stage company is at the beginning of their journey - developing their product, setting up a website, seeking their first investment or funding, getting their first customer, forming partnerships, hiring their first employee. It’s an exciting time for a founder, but it can be a bumpy road. We’re here to help you along the way.
Getting started: Early-stage checklist
- Find a co-founder
- Name your business
- Register a website
- Make a business plan
- Build your website
- Get a business bank account
- Get an accountant or accounting software
The top 5 early-stage challenges and how to tackle them
Consulting the Rising Stars alumni and Founders’ Network, these are the most common challenges early-stages face.
New businesses often need capital to get things started and keep things moving forward. But it can be difficult to get investors excited when it’s largely based on vision and the team, as opposed to metrics and traction.
“Founders have to pull off a near-impossible trick: they have to distort reality – because they are selling a vision of something that doesn’t yet exist – but not bullshit themselves. As the Americans say: ‘Don’t drink the Kool-Aid.’”Wendy Tan White, AlphabetX
Once you’ve worked that out, it’s vital to get your pitch right. Think about the questions the companies will need the answer to and nail them down. Being prepared is the key. Not every investor is going to be right for your company, so don’t get downhearted if at first you don’t succeed. This a good framework and here are some top tips for a great pitch from our very own Harry Davies.
If your company is based outside of London, it can often be more of a struggle to secure funding. The Tech Nation Entrepreneur Engagement Managers are a great local resource for advice and networks.
2. Finding talent
Building a tech business requires a very specific skill set - and the more niche the skill the more difficult it can be to find someone who can do the job. If a skill set is harder to come by, it magnifies the problem and makes it even more difficult to solve. On top of that, at early stages you need people who are able to wear a number of hats, and get stuck in to any job when needs be.
It’s a good idea to have online visibility as an employer on platforms such as Glassdoor. Your employees can feedback and rate you as a workplace, building your employer brand early. It means you can fix things that aren’t working, and build upon it as you grow.
If you aren’t getting the right candidates applying, it might be time to review your recruitment process. The creativity and innovation of your business might not be coming across and therefore not attracting the type of talent you want.
Attending networking events and meetups for recruitment and grads is also a good way to meet people with the right skills and at the right stage of their career.
Remember that if you can’t quite afford to offer market rate salaries just yet, you can offer remuneration in the form of company equity to early employees. If they believe in your mission, they will understand this to be worth more that any pay deficit.
Tech Nation has been designated by the Home Office to endorse applications for the Tier 1 Exceptional Talent Visa in digital technology. The Tech Nation Visa is for those who are exceptionally talented or show exceptional promise and want to work in the UK’s digital technology sector. It can be a good thing to consider if you have a person in mind who you want to bring to the UK to work for your company.
3. Mentors and networking
Starting out as a founder can sometimes feel like being lost at sea.
Not only is networking with other founders good for the soul, it’s also great for business. Having like-minded people to bounce off and collaborate makes it easier to problem solve and innovate. Find meetups and co-working spaces in your area with our regional guides.
Founders' Network is a great place to meet other founders, collaborate, ask questions and get advice. It’s completely free to join and open to anyone incorporated and based in the UK, with a product-based digital service, who is pre-series A and has a monthly revenue of between £0 and £150k.
Aside from Founders Network, getting into an incubator or accelerator or growth programme for early-stage companies can be a brilliant way to build a network and find a host of mentors. Speaking to those who are going through the same thing, or have been there done that, is not only gratifying but it increases the chances of your business succeeding. So don’t be shy - reach out.
4. Finding your first customer
Some might find this a daunting prospect, but it’s also one of the most exciting things about starting a business. Start with the basics - who is your product aimed at? What sort of person are they and how do they tend to make purchases? Getting into the mindset of the buyer allows you tailor your entire customer journey to the people who matter.
It pays to know where you’re going, instead of heading into the market completely blind. Give it some thought and do your research, so you can identify prospective customers and do what you need to do to get them to the purchasing phase. The end goal is to have a structured, repeatable model for acquiring customers. Take this course to go into more depth.
5. Mental health
Founding your own company can be a lonely business. Long hours, high stakes, life savings and big promises can be stressful. Founders tend to be self-reliant, which can lead to feelings of isolation, not to mention burnout.
“I got very good at suppressing any negative emotion, whether that was a feeling of isolation, of imposter syndrome, or anxiety around our financial position. I just never showed any vulnerability at all really.”James Routledge, Sanctus
Being healthy mentally and emotionally is important, so keeping it as a top priority is vital to personal happiness and professional success.
Building a network of friends, peers and mentors means you can offload when you need to, or get advice or a sounding board when you come up against something you’re not sure about. Founders’ Network and charities like Sanctus and Mind are also great resources to call upon if you’re struggling.
“The best advice I’ve had was to take time out for yourself. My investors understood that me being in a good place would be invaluable to the business.”Saul Klein, LocalGlobe
Common mistakes early-stage companies make
Hone your skills with DBA
If you are at the beginning of your company journey, there are lots of resources available to help get you started and get some momentum going.
The Digital Business Academy is a free online resource offering 85 quick and easy courses in all the elements of starting and growing a digital business.
From talking to your customers, to avoiding running out of cash - the academy is a brilliant place to begin, and you can learn a new skill in as little as 15 minutes. It’s also good for growing your confidence in the areas you might not be sure about.
“The DBA makes startup skills simple. Our courses are short, free and full of practical advice from people who have started their own company. Plus you can earn rewards every time you learn, like desk space, mentoring and discounts”Ed Willis - Learning Lead, Tech Nation
Once you’ve started up and are getting some traction, Rising Stars is an excellent opportunity to raise the profile of your startup, expand your network and come into contact with an impressive selection of mentors and peers through the Tech Nation Alumni.
“Off the back of Tech Nation Rising Stars, we secured our first commercial customer and raised a further £100k.”Amy King, Co-Founder and R&D Director, People Matter Technology
You must meet the following criteria:
- Seed to pre-Series A funding stage, OR generating annual revenues below £1.5m
- At least one active client or pilot
- Able to demonstrate market traction
- Company incorporated between 1-3 years
- UK HQ
What is a mid-stage tech company?
A mid-stage company is passing through a distinct stage of growth that commonly brings about serious change. Also known as a scaleup, mid-stage companies will by now have achieved a lot, been through their first rounds of funding or be able to demonstrate rapid revenue growth if bootstrapped.
Top 5 challenges for mid-stage companies and how to tackle them
With a mid-stage scaling programme alumni network that now numbers 130, we hear a lot of the same challenges cropping up time and again. Like companies at other stages of growth, talent and funding are important considerations, but sometimes it’s the intangible things that can be the trickiest to find answers to.
As a founder of a company that might have rapidly scaled to 30 people, the challenge of letting go of control can be very real, as can new challenges such as scaling your company culture. So here are the top 5 cited challenges for mid-stage scaleups, and some solutions to help.
1. Raising Series A, B and beyond
Raising a significant investment round is the real marker that your company is reaching “mid-stage”. These are the rounds that will grab you big headlines, that will probably involve institutional Venture Capital firms, and have cheque sizes is in the multi-millions. A Series A round will usually take around 8-12 months to raise, and cost around £10k in legal fees, so it’s important to prepare well in advance to give yourself time and avoid running out of funds.
2. Maintaining culture as you scale
As your company scales rapidly, you can quickly go from a close-knit team where everyone knows each others names, birthdays and how you take your tea, to a team too big to know everyone, and unfamiliar with the company’s history and culture. Maintaining and/or evolving company culture can be a lot harder than it sounds, but it’s essential to ensure that all employees stay on-mission, working towards the same goals, make the right decisions when the founder’s not in the room, and also feel valued and excited to come to work every day.
We tend to hear a lot more about when a culture goes wrong than when it goes right, but it’s certainly a hot topic of discussion.
Explore our archive of content on company culture, have a read of the infamous Netflix culture deck, and watch Naomi Trickey, former Chief People Officer at Brandwatch and Aaron Gelbard, founder and CEO of Bloom and Wild, discuss the challenge.
3. Going global
Most homegrown tech companies with big ambitions will be eyeing international markets from the outset, as their plans are bigger than the UK market alone can cater for. The first international step is an important one, and a key challenge is understanding where your market is. Once you know where you’re going, you might want to consider whether you need to open an office in your new market, if so, in which city, and what are the local considerations such as culture and tax.
With a lot of experience in helping companies scale internationally, RSM’s Going Global guide is a good place to start.
4. People and talent
Companies are made up of people after all, and at mid stage, there are some critical challenges relating to who you hire (and who you keep). As your company grows, you’ll need to build out your C-suite. Employer brand, something that might never have crossed your mind to consider, becomes important for finding the very best people in a crowded market.
How you reward talent becomes an important part of competing for them. Growing pains of scaling a company can include having to let people go, or managing the introduction of hierarchies with people who’ve been with you since day 1. People make and break businesses.
Onefinestay founder Greg Marsh offered us his advice to “hire slow and fire fast” in a scaleup.
5. Growth, leadership and letting go of control
When you’re scaling up it’s easy to feel like you’re getting out of your depth as a leader, though chances are, everyone else is or has been feeling the same.
Some of our favourite books on growth and leadership include Good Strategy Bad Strategy, Mindset: How you can fulfil your potential, The Tribe of Mentors, Radical Candor, The Hard Thing about Hard Things, The Messy Middle, The Five Dysfunctions of the Team,Stepping Up, and of course Upscale. Developed from our mid-stage growth programme, Upscale offers insights from 25 of the UK’s most influential entrepreneurs, investors and industry veterans on how to scale your startup; team, mindset, culture, the lot.
Tech Nation’s Upscale helps the UK’s most promising tech companies to accelerate their growth and unlock the key to scaling successfully.
Based on values of honesty, intimacy and trust, this established, curated programme is designed to reflect companies’ scaling journey. Companies explore fundamental growth challenges with peers and benefit from sessions delivered by expert scale coaches who have been through it all. It’s an extremely valuable programme with an impressive alumni of companies such as Monzo and Bulb.
“Upscale helped us understand we’re not alone in our journey through the “messy middle” - the gap between launching and profitability. Shared experience through the Upscale network and alumni, and a willingness to be really open about challenges will equip other tech businesses in a growth phase with a knowhow and confidence to continue their success”Robert, Fertility Focus
If you’re a UK-based VC-backed company (or generating £1.5m - £5m), who is looking to significantly increase headcount, expand your market share or customer base and expand internationally, register interest or apply to Upscale today.
What is a late-stage tech company?
A late stage company is typically one with a strong market presence, a well known product and a level of proven success. Having reached the point of positive cash flow, they are usually thinking of expanding to tangential markets and might even be considering going public in the near future.
When it comes to our Future Fifty programme, featuring the UK’s most successful late-stage tech companies, you must be at Series B+ funding stage or, if revenue focused, generating annual revenues over £5m and achieving 50% year-on-year growth.
Top 5 challenges of late-stage companies and how to tackle them
Future Fifty involves a series of intimate roundtables for the companies' C-suite, where common problems and challenges are discussed. These are the most common topics covered.
1. Finding talent
A successful company needs working parts, meaning that hiring and retaining talent is a big factor, no matter what the size of your company. Balancing process, culture and progression can take a long time, but getting it right makes a world of difference.
It’s important to remember that, just like your customers, your employees are individuals - and they should be treated with the same level of importance.
“Every staffer in the company, from the receptionist to the leadership team, should be offered employee stock options. Everybody should have some skin in the game.”Dominic Jacquesson, Index Ventures
Things like location can matter a lot when it comes to attracting top talent - and if you're recruiting techy people, you need to keep them inspired. This often means letting them develop their skills, and that might not necessarily mean management. Think outside the box when it comes to traditional progression frameworks. We spoke to Cliff Cohen and Bob Strudwick from ASOS to find out their secrets.
"Hire people who are better than you, and don’t be precious about letting go of the operational know-how of your business."Asi Sharabi, Co-founder and CEO of Wonderbly
2. Increasing PR
Late stage tech companies have a proven product and a decent market presence, but increasing and capitalising on that presence is the key to long lasting success. It might seem that once a product has had some traction, word of mouth does the rest - but every company should be thinking of their PR strategy, and its impact, at every step of the way.
Having a bold brand and not being afraid to consistently embody that brand will help your company strike a chord with people. Being true to yourself as a brand will increase brand trust and make you more memorable. Take a look at your competitors and what worked and didn’t work for them.
And make sure you have a strong SEO strategy.
3. Founder psychology
As your company grows and finds increased success, you would be mistaken in thinking the challenges and struggles start to fade away. There will always be new and unexpected hurdles in business, and how you face them could be make or break. Knowing when to look for support is a skill in itself, and often, the biggest mountain to climb is inside your own head.
“Over the last 15 years I’ve learned how to look after myself properly. It’s a myth that you need to burn yourself out. I now do yoga, kung fu, and write a journal every morning”Wendy Tan White, AlphabetX
4. Expanding internationally
Starting again in a new country can feel like learning how to walk again. New countries mean a new culture, different laws and confusing taxes. It’s important to get the right guidance so you can hit the ground running and make the biggest impact possible.
Get advice from others who have done the same so you can find out what to watch out for.
5. To IPO or not to IPO
Going public might be something you want for your company eventually. It might not be something you're considering at all. However, it's important to make yourself aware of how it works and what it has the potential to do for you further down the line.
If you do decide to list - should you choose the US or the UK market? Getting familiar with both and exploring all the options, allows you to make the best choice for your company. When it comes to IPO - the key is being prepared. We spoke to James Clark from LSE and Andrew Learoyd from Funding Circle for their advice.
Late-stage companies: myths vs. reality
It's a complete myth that once a company reaches late stage they've got it all wrapped up.
While this might sometimes be true, other times it makes better sense to get someone more experienced to take the wheel. Being a founder is tough and sometimes the challenge is realising you might not be the best person for the most important job.
The stereotype of a tech founder being young and wet behind the ears has been around for years, but in our experience it’s simply not true. It’s much more common for a scaling company to be the second or third venture of a particular founder - those past experiences of trying and failing can be exactly what is needed to succeed.
Join Future Fifty
Are you one of the UK’s leading late-stage companies? You should consider becoming a part of Future Fifty - one of the most prestigious programmes in UK tech, with alumni that includes Skyscanner, Deliveroo, Zoopla and Shazam.
Our Future Fifty programme enables the UK’s most successful late-stage companies to come together to form a powerful network and problem solve among peers. If your company fits the bill, apply now or register your interest.