What happens after you raise money? What’s next after your startup closes a round of funding from investors?
The last few months may have had you consumed with the fundraising process. Now that to-do item has been crossed off of your list, what should you be focused on now?
What post-closing items should you already be working on now to keep up the momentum?
You may have a few extra seconds to breathe and pat your team on the back for a successful fundraising campaign, though this is when the real work starts. As soon as the documents are signed and the wire hits the bank, it is time for a new sprint.
Here are the items you should already have been working on so that you can hit the ground running, without wasting any precious time or lead over your competitors. Not to mention keep these investors happy so that they’ll stay actively involved in helping you, be there for the next round, and be spreading the word about your venture to others, including more investors.
Putting The Money To Work
If investors just wanted their capital to sit idle they would have left it in their own bank accounts or under their mattresses. They took all this risk and went through all of this effort and expense to grow and multiply their money.
Every day capital sits idle in your accounts means there is even greater pressure to generate much higher multiples on that money on the days you are actively deploying it.
Too much pressure leads to poor decisions, and often choices that sabotage the sustainability and longer-term potential of your venture. So, the sooner you start deploying and leveraging those dollars the better.
While the fundraising process can be an off again, on again rollercoaster, waiting until the transaction is closed and funds are in the bank to start taking the next steps is going to put you far behind in the game.
You need to be thinking ahead, planning ahead, and taking all of the actions in the background that enable your company to start getting the most out of that funding the moment it shows up in your account.
So, what should you be working on? What happens after you raise money?
Refresh Your Budget
Now that you have the money in the bank make sure to readdress your budget and spending. You now have the exact figures on the funds you have brought in, as well as any extra debt service if any of those funds were in the form of debt financing or convertible notes.
Recast your spending allocations. Where will this money be made available? Which departments will have access to how much of it? What happens after you raise money?
How much of this money needs to stay in capital reserves and in working capital to keep you afloat in emergencies or through unexpected expenses and interruptions of income.
Make sure you are accounting for any new debt or financing commitments you are taking on, including new contracts, financing, salaries, benefits, leased space, taxes, etc.
Where will the bulk of this money be funneled to multiply it, versus ending up in sunk costs? Knowing where to say no to spending and increasing budgets may be just as important as where to say yes.
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