What are the things to take care of post startup funding? The wire finally hit the bank and at last you can say your startup is really funded. What’s next?
For the past few weeks, months, and maybe even years you have been consumed with raising this round of funding for your startup.
Your days, nights, and weekends have been all about putting this money in the bank. Now it is there. What do you do? What are the next steps for you and your team and business?
The Ultimate Guide To Pitch Decks
You’re Funded: It’s Time To Get To Work
If your fundraising process was a lot of work (and it virtually always is), logging into your bank account and finally seeing that money may be a little surreal at first.
If it wasn’t for the energy boost from actually seeing the fruit of all of that work, hype, stress, and sleepless nights, you might just want to slump into your office chair and finally decompress for a few hours.
However, while you might deserve a day off from this sprint, getting the money in the bank is really just when the work begins.
Can you imagine betting your hard-earned nest egg on someone else’s startup, only for them to throw a giant and expensive party as soon as you send the money, and then for them to disappear on vacation for a few weeks?
You should absolutely celebrate. You should definitely take a moment to breathe, destress, regroup yourself, and celebrate your success with your team and all of those who helped make this round possible. They deserve it.
However, do not mistake the fact that everything done up to this point has just been to set up this moment and opportunity. Investors will also be watching closely to see what you are doing.
This is not an allowance to go party with, it is a carefully structured legal agreement, with a lot of responsibility.
It’s time to really get to work. So, where do you start? What are the main things to take care of post-startup funding?
Organize The Paperwork
Most of this should have been tidied away at the closing by the lawyers. Though there can be edits to be made and cleaning up to do after the fact.
Stock transfers, shareholder agreements, updating information with the state department of corporations, and installing new board members can all be a part of this.
If you haven’t, you may also need to begin hosting more regular and professional board member meetings and recording those minutes for your legal records.
Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Make A Big Deal About It
Getting funded is a big deal. It can be a pivotal moment for your company, team, your investors, the mission, the world, and of course, you personally as well. Make the most of it.
Use this moment and news to propel your success, visibility, and credibility.
It can make a lot of difference for recruiting and hiring, positioning your company and brand value, winning customers, and business partnerships, suppliers and vendors, and making your investors feel great about their decision. As well as for catching the attention of future investors and acquirers as well.
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Have press releases ready to roll out and get them syndicated in the news and across industry and startup news sites. Turn this event into more content creation opportunities, podcast and interview opportunities, social media posts, articles, and blog posts.
You may also be updating your company website with your new board members and logos from any notable investment firms.
Be sure to include the news about this funding and bringing in these investors in your updates to any existing investors and shareholders. It’s one of the first things to take care of post-startup funding.
Now this fundraising round is closed and the money is in the bank, what will you work on?
What have you been waiting for capital to be able to do? What milestones did you promise your investors in your pitch decks and presentations?
Get laser-focused on these things and execute on them. Have a very minimalist approach to your to-do list. Gary Keller’s ‘The One Thing’ method is a very good way to tackle this. If you can’t focus that well, then keep your action plan and to-do list to three items.
Be extremely clear on your priorities and VIPs.
Be sure your teams are getting refocused in line with these priorities too. If you don’t tell them and make it very clear, then you can’t expect them to guess and get it right. They are still focused on the last set of commands and goals.
Layout the new path for them and exactly what they should be focused on and spending their time on. Let them know what you will be measuring their performance based on.
Chart Your Way To An Exit
Once you accept funding you are invariably committing to an exit. Or at least a major liquidity event.
This is typically in the form of an IPO (going public) or a merger or acquisition (M&A) transaction.
This is how your investors actually realize a return on their investment, their gains, or at least hopefully recouping their original capital.
Everything you do now from the business relationships and contracts you sign to branding choices, leasing, financing, and other debts you take on, as well as hires can impact this trajectory.
While many things can change along the way, you at least need to be aiming for this exit, have it on your radar, and be planning your path to a very successful one. This step is one of the critical things to take care of post-startup funding.
Revamping Your Budgeting & Accounting
More money means more complex accounting. More outside investors and shareholders and the new trajectory you are on also brings more responsibility and accountability when it comes to bookkeeping and finances.
If you were simply bootstrapping yourself like a small business prior to this funding, then you probably need to step up your game here. Even bringing in a significant amount of new funding may require a new level of accountants, CPAs, tax help, and record keeping.
Be clear about where you are allocating these new funds, and not.
You don’t want team members or departments making the wrong plans of committing to splurging chunks of this money when it won’t be made available to them.
On the other hand, you don’t want departments and team members who should be ramping up spending to be holding back. They should be working more furiously than ever.
Sales & Marketing
Sales and marketing is probably going to be one of the biggest areas of expansion and dedication of these new resources. It will certainly be one of the most influential in your success and delivering on your promises to your new investors.
In addition to using this event to make some noise as already laid out, you should be using this capital to gain momentum and traction and scale what is working.
You also want to stage this funding and marketing to make sure you are pushing consistent growth and can show that as you approach your next fundraising round.
You do not want to burn out, and then have to show your next group of investors that you are nose-diving and contracting. That isn’t going to be a great selling point, nor attract the most attractive term sheets.
Ideally, you will already be ahead of the game with these sales and marketing plans so that you can hit the ground running right out of the gate. Know what content you will be putting out. Have your strategy and tactics planned out already? Have as many materials already created as possible.
Put The Money To Work
You made all of those sacrifices, put in all of that work, energy, and effort to raise this money. Don’t waste the opportunity.
Every day counts. If getting this money was so important and vital, then don’t waste a moment in using it. The clock is ticking with investors from the moment they signed the paperwork. Maybe even before the money hit your bank account.
They are watching keenly to see what you do with it. To see you are doing what you said you would, and that you are maximizing the possible returns with it. Otherwise, they could have just kept it in a bank savings account or under their mattress.
It is not working and multiplying if it is just sitting in your bank account. Every day each dollar is not deployed means another day you will have to make up for in the time you have left.
For example, you planned to deliver a 10x return over the next 12 months before asking them for more money. Well if that capital sits idle for the first six months, then you actually need to achieve a 20X return in those final six months, or you are going to miss your goal.
In fact, since you’ll be starting campaigning even earlier you’ll have even less time and will need to deliver even bigger gains.
If more resources and budget has become available, make sure your team knows, and they are actually making the most of it as well. Relaying this information is another of the things to take care of post-startup funding.
Define New Metrics & KPIs
How will you track and measure what you are achieving and the value of your efforts and returns on this money?
Identify and layout the most important metrics, KPIs, and goals for each department. Whether they still have a job, the mission gets to continue, and their options are worth anything in 12 to 18 months from now may all rely on them hitting these numbers. So, make sure they know what they are.
Make New Hires
Aside from sales and marketing, or in tandem with it, one of the most important spending categories from this funding is likely hiring.
It is bringing in better talent to fill the gaps, level up, and add more value to the company. As well as scaling your results and multiplying outcomes.
This may include new executive management hires, including a CEO. It could be engineering and marketing talent. Or frontline sales and customer service.
Make the top-level hires, and empower them to in turn identify their own team needs in line with the goals and budget, and multiply your staff accordingly.
Just like your sales and marketing efforts, don’t wait until after the funds hit the back to get started on this. Be ready to go full speed ahead by having recruited, screened, and negotiated hires in advance.
Systemize & Automate Investor Updates
Regular investor updates are going to be a critical staple after closing your last round of funding. Investors want to know what is happening. What are you doing? And, what are you doing with the money? What results are you getting? Where might you be stuck, and they can help?
If you aren’t proactive you may be flooded with inefficient and time-consuming and stressful calls and emails. You don’t have time and mental space for that.
Instead, set clear expectations about when and how they will be updated. Most likely by weekly, monthly, or quarterly investor update emails.
Then as much as possible systemize and automate the creation and sending of these updates so that you can stay focused on getting the results. You might want to plan ahead all these things to take care of post-startup funding.
Start Raising Your Next Round Of Funding
Once you start fundraising, you are always fundraising.
Savvy entrepreneurs don’t even wait for the current round to be closed before they are working on the next round. In fact, they’ve strategically worked this round to set up the next.
Your runway will run out before you know it. Be ahead of this.
- Identify your next target investors
- Begin nurturing relationships with them
- Include them in investor updates
- Ask current investors for introductions
- Enroll your next set of advisors to take you to the next level
- Revise your pitch deck
- Update your online data room
- Show what you achieved with the last round of funding, and how this round will multiply those successes
Keep these essential factors in mind as the top things to take care of post-startup funding.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
In the video below Things To Take Care Of Post Startup Funding you will be able to find this topic covered in detail.
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FULL TRANSCRIPTION OF THIS VIDEO:
Hi, everyone. This is Alejandro Cremades, and today we’re going to be talking about things to take care of post-startup funding. Before we get started, make sure that you hit that Subscribe button, and this way, you will never miss out on any of the videos that we roll out every week.
So, closing your round of financing is going to be just the beginning of multiple steps and multiple things that are going to happen and that need to happen. In today’s video, we’re going to be breaking down for you all the insights, all the tips so that you’re ready to really tackle what’s coming your way with a bang. So without further ado, let’s get into it.
You are funded, so now it’s time to get to work. What this means is that financing, getting money from investors is not a milestone. It’s a stepping stone because now the expectations begin. What you need to do is, yes, you want to celebrate and do all of that stuff, but you haven’t achieved success. You just got the money to get you to where you want to be.
Now, what you want to do is you want to get clear as to what is that strategic roadmap and what execution or things you need to be doing with your team in order to deliver on your promise to those investors that gave you the money.
You also want to really get organized with all your paperwork, whether that is legal or whether that is admin. Make sure that you have all the paperwork from whatever those investors signed to really well-organized folders, whether that is a Google Drive or Dropbox. Have the stock certificates, that equity that you have promised to your own employees or to advisors or to directors of your board, also well-organized and just keep it clean because one thing that people do after getting those rounds of financing done is that they just become lazy. Then, it’s going to be a really painful process to get everything cleaned up, so why not just organize everything as you keep moving forward? You are essentially putting whatever you need to be putting on those folders that you have in the Cloud.
While I say that getting financing is just a stepping stone, it’s actually a Big deal. If you take a look in the U.S., for example, there are a thousand pitch decks that are being created every couple of minutes. There are over 500,000 new companies that are launching every month in the U.S., and only 1,500 companies get money from venture capital firms on a yearly basis.
If you actually also take into account the companies that are getting follow-on rounds of financing, meaning that you’ve already gotten financing and are getting an additional investment from those investors that placed the bet on your earlier. That’s like 3,000 all-in-all, which is nothing taking into account all those numbers and all these people that are out there also seeking the money that you just got.
One of the things that you could do is promote whatever you can out of this round of financing that you just got because you can signal this to the press, to the market, to potential customers, especially if you’ve got that venture capital firm or that investor that is well-known in the market. This is your opportunity to use that as social proof, a stamp of approval towards the audience, towards your market. Again, this is your chance to get the marketing and the PR going so that people really know that you’re coming out swinging and that you’re ready to expand things and scale things out.
Then you need to refocus. Now that you’ve got the money and that you’ve really put behind all that distraction that this round of financing essentially was or was meant for you and for the business and for your team, now it’s time to execute. Now, how are you going to shift that attention so that you can push things forward?
One of the things that you also want to keep in mind is that as the company scales and as the company grows, you as the founder also need to grow in parallel. So you need to develop that self-transformation because the last thing that you want is for your own investors to see that the company is outgrowing you, and they end up kicking you out of the business, and that happens all of the time, so you want to be in a position where you’re learning and where you’re growing at the same pace of your business.
You now want to start thinking about your exit. What is going to be your exit? The moment that you receive an investment from anyone, they are expecting returns. That means getting their money back with returns, obviously, and that is going to be in the form of an IPO, a secondary sale, where existing investors are selling shares to new investors that are coming in. The IPO is the Initial Public Offering where you’re taking your company public, ringing the bell at Nasdaq or the New York Stock Exchange. And lastly, an acquisition can also happen by a larger player where it’s either in stock or in cash as a way to really buy out everyone that is an equity holder in the business.
More money means more complex accounting. Here is your turn to really get your accountant up to date, to also make sure that you have the budgets in place and that you understand very well where the money is going to be allocated and how that is going to be recorded from an admin perspective.
This is critical. You want to have things clean because having things clean and organized is going to allow you to move fast, especially perhaps when someone wants to come in and acquire you or someone wants to come in and put another investment in your business. Right away, if you have things clean, you will be able to just open it up for them to see, to take that money in, and to continue to run without having a lot of distraction.
Sales and marketing are going to be one of the biggest areas of focus. Once you’ve got that money in, then you need to deploy, and you need to expand. Now is the time to put your product or your service in the market to capture those customers and to go faster. Because going faster is going to allow you to be in a position of strength when in 18 or 24 months you need to go back to market to raise more money because you’ve been able to achieve certain milestones or goals.
Here, again, with sales and marketing, you want to be able to lead the way forward. It’s good to have people that you can bring on board, that you can hire, but always, always, always make sure that you understand your customers and that you understand the channels that are going to be the most effective and the channels where you should be deploying that capital, and perhaps, you hire people that you can delegate on, but you need to understand it yourself. Otherwise, it could be catastrophic.
Now, you also want to define new metrics and KPIs. Those KPIs, which are the metrics and the goals, are going to be much different from the time before you were raising that money. Now that you’ve got the money, you have more resources, you have more dry powder, and you should be in a position to achieve bigger and higher metrics.
You want to get your team aligned. You want to get them enrolled into that vision and that future that everyone is living into so that it’s compelling enough to really be rowing at the same time with the same moves as everyone else.
Now that you have more money, you can make new hires. Probably, at this point, what you want are senior executives, people that maybe before, you didn’t have the budget to accommodate. Now, you can bring them in. Maybe you can give a balance there between cash and also equity in the form of stock options that you give them to really create that incentive for them to stick around in the long-run.
Now, what you want here, is to make sure that they are not only a fit with the culture, and that they’re A+ players, but also you need to look for people that are going to work very well with the employees that you already have in the business because even if it’s a rock star, it may not be a fit with the other players that you have in your team, and that could be an internal cancer and completely toxic and something that you want to avoid.
Now is the time to systemize and automate investor updates. Now that they’ve given you the money, you want to be keeping them up to date as to what are some of the milestones and the progress that the company is making. The further that you are in the life cycle of the business, probably the longer that you’ll wait to be sending those updates.
The younger that you are, probably the more often you’re going to be sending those updates. Typically, you’re going to be starting those updates on a monthly basis, and then you will be shifting to a quarterly basis. Probably, quarterly if you are at a Series B and past, which is $5 million+ in revenue. If you’re $5 million and under, you’re probably going to be going on a monthly basis to keep people warm.
The reason why you’re doing those updates is so that whenever you need the money, they already know what’s going on. Or maybe they are even the ones that are offering you the money because they’re excited with how things are going.
So, at this stage in the game, what you want to avoid is getting to that point where you’re needing the money, you’re going back to those investors, and you need to re-educate them, and it’s going to take you more time in order to get them excited because they don’t know what’s going on.
That’s why you’re using updates. You’re using updates where you are updating them on milestones that you’ve achieved, on mentions on the press, on new hires that you’ve made for the business, so some of those critical things that are going to get them excited and for them to really understand that you are delivering on the promise that you made when you initially got that investment in.
Also, I know it’s counter-productive, and you will never think to do this, but the minute you close your round of financing, that’s the moment that your next round of financing starts. Some of the things that you want to do at this point are the following:
- Identify your next target investors
- Begin nurturing relationships with them
- Include them in investor updates
- Ask current investors for introductions
- Enroll your next set of advisors to take you to the next level.
- Revise your pitch deck
- Update your online data room
- Show what you’ve achieved with the last round of financing
So, keep these factors in mind. Now, get out there. Go get your milestones because you’ve just got the stepping stone, which is a great one. So, congratulations. Then, also, hit a Like on this video. Leave a comment and let me know how things are going and how you’re thinking about financing rounds.
Also, Subscribe to the channel so that you don’t miss out on all the videos that we’re rolling out every week. Then, as well, if you’re raising money, send me an email at email@example.com. I would love to help out. Thank you so much for watching.