Getting your startup idea funded is a significant accomplishment that should be celebrated. Getting funded, on the other hand, is just the beginning.

The actions you take following your investment are more important than the amount of money you raised.

Here are 10 Steps to be taken after Raising Funds from Investor

1. Deliver on your Promise

When you pitched your investors, you told them what you intended to do with the funds. Once the funds are in the bank, your top priority should be to keep your promise.

"What steps do we need to take to deliver on our promise?" ask yourself.

Execute your plan, whether you intended to use the investment to build your team, test new acquisition channels, or something else.

2. Set Your Next Goal

You most likely had specific objectives in mind in order to obtain funding. You need to set your next goal now that you've accomplished your previous ones.

Your objectives will most likely be determined by the stage of your startup.

For example, if you recently raised a seed round and have discovered product-market fit, your next goal may be to demonstrate the viability of your revenue model.

If you already have a proven revenue model, the next step could be to develop a consistent acquisition strategy.

3. Re-align the team

There will undoubtedly be a lot of excitement and energy running through your company after you raise a round of funding. While this can be motivating, it is critical to ensure that your team is focused and aligned on what is to come.

Make it clear what the new funding round means not only for the company, but also for your team. This includes ensuring that everyone understands and supports the new objectives.

For example, if your new goal is to reduce customer churn by X%, each department should develop initiatives to assist. Marketing may shift its emphasis to customer marketing. Customer service can increase its efforts to resolve tickets as quickly as possible. Product bugs can be fixed by engineering.

4. Update your Financial Model

We ate Jordensky constantly update financial model of our clients. However, we've noticed that many startups only update their model when a major event occurs, such as raising a new round of funding.

It's easy to skip this step, especially if you're a new startup. However, once the money is in the bank, you should update your model.

Your balance sheet, cash actuals, budget, forecast, hiring plan, and everything else should be updated to reflect the new investment and your plans for how to spend it.

5. Decide how much goes to Reserve

Just because you got $5 million in funding doesn't mean you have to spend it all right away.

If 2020 taught us anything, it's that you never know what the future holds. Having money set aside in capital reserves can help your startup stay in business in the event of an emergency or unexpected expense.

Capital reserves are used for more than just major economic events. What if your growth strategy doesn't go as planned, resulting in slower revenue growth or higher churn than expected? Capital reserves can give you some breathing room to make changes without worrying about running out of money.

6. Avoid Unplanned Purchases

You most likely devised a detailed plan for how you intended to spend your new funds. You knew exactly how much money was going to new hires, marketing, new services, and other expenses.

However, those plans may change for whatever reason once the money is in your account. Having millions of dollars at your disposal can make it very tempting to make unnecessary purchases that weren't planned.

When you're on a tight budget and don't have the funds, it's easy to be fiscally responsible. Companies that truly stand the test of time are those that can maintain control even when their resources are not so limited.

7. Plan for your next Investment Round

Believe it or not, now is the time to start planning your next round.

I'm not saying you should update your pitch deck and start approaching investors. However, you should start thinking about what you want to accomplish between this round and the next so you know when it's time to start raising funds again.

8. Don’t Forget about Investor Updates

How would you feel if you loaned someone a large sum of money and then they disappeared?

Would you be confident that you'd get your money back, or would you be worried?

That's exactly how your investors will feel if you stop communicating with them the moment their funding is approved. Regular investor updates can help to instill confidence and trust among your investors.

You are not required to send them daily emails informing them of your financial activities or to seek their advice on every decision. Monthly or quarterly updates, on the other hand, let investors know that you're making progress and that their money isn't going to waste.

When it comes time to raise your next round, you can reach out to your existing pool of investors, and they will gladly write another check.

It's also a good idea to establish expectations for when you'll update investors early on. If you inform your investors that you will send out monthly updates, you will be less likely to be inundated with emails from them every week checking in.

As for what should be in your investor updates, keep it simple:

1. Major victories and accomplishments (new customers, revenue growth, etc.)
2. How far have you come since the last update?
3. Current financials and any adjustments to your forecast
4. They can assist you with any major obstacles or hurdles.
5. To summaries, do not abandon your investors.

9. Start Hiring

Hiring is frequently one of the most common reasons for startups to raise funds. What makes it even more difficult is that you're usually hiring for completely new roles that don't exist in your company. That is why hiring in stages may be preferable to hiring in waves of new positions you believe you require all at once.

This allows you to assess the impact of new roles and identify gaps.

Over-hiring is one of the most common mistakes I've seen startups make after receiving funding. As a result, they have a lot of employees they don't need, an insane burn rate, and unfortunate layoffs.

Another thing to keep in mind is that you should begin the recruiting process as soon as you know you're about to receive a new round of funding.

The hiring process, as we mentioned in this guide, can take months. Consider all of the steps involved in hiring a single new employee:

1. Creating job listings
2. Reviewing resumes
3. Interviewing
4. Sending offers
5. Onboarding
6. Ramp time

Now multiply that by however many employees and departments you’re hiring for. You also need to consider the fact that not every new hire will work out, which means you’ll end up repeating this process for certain positions.

That’s a lot of moving parts and a lot of time. The sooner you can get the process started, the better.

10. Measure Growth from your Benchmarks

Every time you raise funds, you now have new targets for the next round. Your current and prospective investors will want to see what you've done in between fundraising rounds to determine whether it's a good investment(a.k.a. does this company know what they're doing?)

Begin by determining which metrics are the most important indicators of your progress and making them your top priority. These are the metrics you will report on to your investors and your team.

About Jordensky

At Jordensky, we are committed to providing an experience of the highest caliber while specializing in accounting, taxes, MIS, and CFO services for startups and expanding businesses.

When you work with Jordensky, you get a team of finance experts who take the finance work off your plate– ”so you can focus on your business.

Also Read

Detailed Checklist For Raising Money For Startup Idea from Angel Investor or VC

Startup Compliance Checklist : Pre And Post Funding