Congratulations! You've successfully closed a seed round of funding. But now what? As a startup founder, it's important to take the right steps to make the most of that funding and keep your investors happy. Here's a checklist of six steps you should take after closing a seed round:
- Cash management: Develop a clear cash management policy for your venture capital investment. Keep some of the money in an operating account and the rest in a safe account that generates some yield, such as a money market savings account. Capital preservation should be your main objective, so avoid risky investments. There are many templates available online to help you put together a cash management policy that can be quickly ratified by your board of directors.
- Corporate credit card: Set up a corporate credit card to separate your personal finances from your startup. While you may occasionally have to use your personal card, it's best to use a corporate credit card for most business expenses.
- Hire an accountant and set up QuickBooks: Hiring your own accountant brings dual benefits: you'll get back some of your own time since you're not doing the accounting yourself anymore, and you'll have a second set of eyes to reduce the threat of errors or fraud. QuickBooks is a great tool for startup accounting and bookkeeping and it integrates with all the new SaaS financial tools.
- Update your financial model: Tune up your financial model and make sure to project out the next couple of years, including budget to actuals. This will tell you where you're overspending and underspending and it's a great tool for communication with the board.
- Start making monthly updates: Send your investors monthly updates early in the month to give them the best update possible. Many companies don't do this and it puts them at risk. If they're silent for a long time and all of a sudden they're in a crisis, or short on money, when they go back to their investors asking for more money quickly, the investors don't have any context. This could land the company in trouble.
- Hire a recruiter: Hire or contract with a recruiter to help you build your team. Among our clients, something between 70-75% of all venture capital raised goes to salaries and contractors. This means you'll need people to help build the product you raised the money for. We often see companies missing their early plan after they raise money because they weren't quick enough to start the hiring engine. A recruiter will help speed that process along.
Stay focused and be methodical. There will be plenty of things whizzing through your head once you close a seed round, but following these steps will help you stay focused on making progress quickly, making the best use of your funding, and keeping your investors happy.
