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You Just Got Funded! Now What?

With the excitement and flurry of opportunity presented with the receipt of investor funding, other important functional areas can easily be overlooked – such as your Company’s financial accounting needs. Keeping your eyes on the areas below can help you use that funding most effectively and to set your company up for continued growth.

Operations of the Business 

Although your investors were happy to give you funding to grow your business, they want you to spend it wisely. Creating a budget for the monies received, spending in accordance with that budget, and keeping track of budget overages, surpluses, and overall cash usage. This documentation will be beneficial if the Board of Directors has questions, or when you need additional financing to continue operations.

Additional Funding

It is not uncommon for a Company to receive multiple rounds of financing during its start-up stage. Although the product and core business idea are the most important aspects of consideration for investors, clear and accurate financial data is an essential tool for entrepreneurs.  Providing a history of the past 6 to 36 months of financial detail, essentially your "burn rate," is useful to communicate funding requirements needed to continue the future development and operations of the business. More importantly, when you go to raise your next round of financing you will need to be able accurately forecast your future spending.  Without a good handle on your consistently recorded historical financial information, this job is going to be very tough. 

Sell! Sell! Sell?

Many entrepreneurs dream of the day when their product or service idea grows from being a business plan on paper, to a functioning, sustainable and successful business. Whether it’s a beta customer or you have moved into a full launch of your product, once you start selling you have a whole new realm of financing information to understand.  How much does it cost you to acquire new customers?  How long is the sales cycle?  Are you getting the product pricing you were expecting?  What is your profitability at the customer level? What will it be when your number of customers has grown by a factor of X?  With this type of validated customer data, future investors will expect you to have a much deeper understanding of these types of relationships.

Keeping these areas in mind as you progress in your business will help you develop a strong foundation for future fundraising.  You will also be in a much strong position when your investors, now or in the near future, require that you get your financial statements audited by an independent CPA firm.  The more insight you have into your financial information the better prepared you are for the future questions of your investors.