Congratulations, you just closed a funding round, and the money is in the bank.
Before you become very excited, I suggest you take this piece of advice very seriously: DON’T SPEND THE MONEY
Or at least, don’t overspend. If you raise $10m, this can last you 18 months or it can last you three years or maybe even five. If you spend all the money too fast, all sorts of bad things will happen:
- You will have the need to raise more money, meaning your shareholding will get further diluted.
- The post money valuation of you company increases, increasing the size of a meaningful exit for your investors. Don’t get me wrong, building a large company is a good thing. But having the absolute need to build a company that is larger than the opportunity really allows for can cause a company to fail unnecessarily. I have seen that happen in the past, it is not fun at all. Build the biggest company that you can build, but give yourself the luxury to make your investors happy even should the company only sell for a comparatively modest amount of money.
This concludes the VC Fund Raising Manual. Last thing from me is: Good luck.
This article is part of a series, you can find the index here.