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?
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.
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.
Having acquired the funding you need, one of the first things you should learn is how to write powerful investor updates. Not sure how that’s done? Check out this video I have put together explaining how to get it done.
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.
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