WHAT TO DO AFTER A FUNDRAISING?
You have raised funds. The real work begins now! The Post-Fundraising Odyssey is starting.
Congratulations, you’ve just raised funds! It’s a monumental step, a moment of celebration that validates months or even years of hard work, sacrifices, and perseverance. It’s proof that investors believe in your vision, your team, and your ability to execute. The euphoria is legitimate, and you should take the time to savor this victory with your team.
However, and this is the central message of this article, make no mistake: this fundraising is not the end of the road; it is the true beginning of a new era for your startup. The money is now in the bank, and with it, comes immense responsibility. The pressure is rising, expectations are increasing, and the challenge is to transform this capital into sustainable, healthy, and exponential growth.
In this article, I will share in-depth insights based on observing numerous startups and my own experience. We will explore together the fundamental pillars for successfully navigating this post-fundraising phase: from surgical capital management to establishing impeccable corporate governance, steering healthy and controlled growth, building a strong team, and strategically preparing for the next funding round. Get ready, as the adventure is just beginning.
1. Manage Your Capital Wisely: Every Euro is a Strategic Investment
The most common and potentially most devastating mistake after raising funds is to spend without a strategy. This new capital isn’t a bottomless piggy bank to empty for fun or out of panic. It’s precious, limited fuel that must be used with surgical precision to maximize its impact and extend your « runway » (your financial autonomy).
1.1. Establish a Rigorous Financial Model and Detailed Budget
Before even thinking about spending, you need to have a clear vision of how these funds will be allocated.
– Revamping Your Business Plan into a Detailed Business Model: Your initial business plan helped you raise funds. Now, transform it into an operational financial model, including ultra-detailed revenue forecasts, fixed and variable cost projections, and a break-even analysis.
– « Bottom-up » vs. « Top-down » Budgeting: Create a detailed monthly budget for at least the next 12 to 18 months. Don’t just say “we will spend X on marketing.” Break it down: “How much for Google Ads campaigns? How much for content marketing? How much for influencers?” Every line must be justified.
– Stress Scenarios and Emergency Plan: What happens if revenues are 20% lower than expected? If customer acquisition costs 30% more? Build pessimistic scenarios to identify breakpoints and anticipate corrective action plans. This will prevent you from panicking if things don’t go as planned.
– Cash Flow is King: Monitor your cash flow daily. Excellent revenue and expense tracking doesn’t guarantee survival if cash flow is poorly managed. Understand your customer and supplier payment cycles.
1.2. Avoid Premature Scaling
It’s a major temptation. With money in the bank, the instinct pushes to accelerate everything, everywhere. But too rapid and uncontrolled growth can be fatal.
– Focus is Everything: Resist the urge to launch ten new projects simultaneously. Concentrate on one or two major strategic objectives that will prove the viability of your model and attract the next round of investors. Is it massive user acquisition? Improving a critical KPI like « churn »? Product diversification?
– Proof of Concept Before Scalability: Don’t scale a process or feature until it has been proven effective and profitable on a small scale. It’s like building a skyscraper on sandy foundations. Test, iterate, prove, then only, scale.
– Strategic Recruitment, Not Mass Hiring: Don’t hire just because you have money. Every hire must be strategic, filling a critical need to achieve your objectives. An oversized and unstructured team can generate astronomical fixed costs and a loss of efficiency.
1.3. Extend Your Runway: The Art of Survival
Your « runway » is the number of months you can survive with your current capital without generating significant revenue or raising new funds.
– Control Operational Costs: Review all your expenses. Are there unused SaaS subscriptions? Offices too large for your size? Every euro saved extends your runway.
– Investments with Maximum Impact: Focus your spending on initiatives with the greatest potential to generate revenue or validate your key hypotheses (e.g., R&D for a minimum viable product, first targeted marketing campaigns).
– Clear Goals and Milestones: Your runway should allow you to achieve precise milestones (e.g., « X » recurring monthly revenue, « Y » number of active users, « Z » retention rate) that will justify a new valuation for the next funding round. If you don’t reach these milestones before running out of cash, you’ll be in a weak position.
2. Establish Solid Governance: Trust is Your Most Precious Currency
With the arrival of new investors (and often board seats), the startup must transition from informal management to a more formal corporate governance structure. This is not only a legal and contractual obligation but also an essential pillar for maintaining trust, aligning interests, and making informed strategic decisions.
2.1. Structure and Animate Your Board of Directors (BoD)
Your investors, especially VCs, will likely sit on the BoD. This is not a mere formality; it is an invaluable strategic resource.
– Define Roles and Responsibilities: Clarify who is a BoD member, who is an observer. Define the powers of the BoD (approval of budget, key recruitments, major strategic orientations).
– Frequency and Agenda: BoD meetings should be regular (monthly or quarterly, depending on the maturity stage). Prepare clear and concise agendas focused on strategic decisions, performance, and challenges.
– Prepare Quality Documents: Reports for the BoD (performance presentation deck, financial statements, project progress points) must be clear, factual, and anticipated. Less is more: highlight crucial information and decisions to be made.
– Leverage BoD Expertise: Don’t see the BoD as a mere control body. These individuals have valuable experience, extensive networks. Use them as mentors, advisors to help you overcome challenges and identify opportunities. Don’t hesitate to reach out between meetings for specific advice.
2.2. Implement Transparent and Regular Reporting
Transparency is key to your relationship with investors. They have placed their money and trust in you; they expect visibility into your operations and performance.
– Financial Reporting: Balance sheet, income statement, cash flow table. These reports must be up-to-date, accurate, and audited if necessary. Your investors will want to understand your burn rate (spending rate), your runway, and the profitability of your operations.
– Operational Reporting (KPIs): Identify the Key Performance Indicators (KPIs) most relevant to your activity (CAC – customer acquisition cost, LTV – Lifetime Value, churn, conversion rate, number of active users, etc.). Follow them religiously and present their evolution. Investors like to see that you understand your numbers.
– Qualitative Reporting: Beyond numbers, share successes, challenges, lessons learned, strategic pivots. Be honest about the difficulties encountered, but always present solutions.
– Reporting Tools: Use appropriate tools (custom dashboards on Excel, or financial reporting software like Toucan Toco, or business intelligence tools) to automate and visualize your data.
2.3. Understand and Respect Your Shareholders’ Agreement
This document is the « constitution » of your startup post-fundraising. It is signed by all shareholders (founders and investors) and governs their rights and obligations.
– Rights and Obligations: The agreement defines crucial elements like voting rights, exit clauses (liquidation preference, drag-along, tag-along), anti-dilution clauses, stock transfer conditions, and sometimes even performance objectives.
– Liquidation Preference Clause: Understand this clause well. In case of a sale or liquidation of the company, investors are reimbursed in priority before founders and employees. This can have a major impact on the return for founders.
– Protection Clauses: Some clauses protect investors (enhanced information rights, veto rights on certain strategic decisions). You must be aware of them and integrate them into your decision-making processes.
– Consult Your Lawyers: After signing, continue working with your lawyers to ensure that you comply with all the clauses of the agreement. A breach could have severe consequences.
3. Drive Healthy Growth: Balancing Ambition and Sustainability
Raising funds generates immense pressure to accelerate growth. However, the goal is not growth at all costs, but controlled, measurable, and sustainable growth that builds long-term value.
3.1. Focus on Hypothesis Validation and KPI Achievement
Every euro spent must serve a clear objective.
– Proof of Concept: Use the funds to prove that your key hypotheses (product-market fit, acquisition model scalability, customer unit profitability) are valid on a larger scale.
– Prioritization of Critical KPIs: Identify the 3 to 5 most important KPIs for your growth and for future investors (e.g., MRR/ARR, CAC/LTV, retention, NPS, DAU/MAU). All teams must be aligned on improving these metrics.
– Agile and Iterative Methods: Adopt agile approaches (Lean Startup, Scrum) for your product developments and marketing campaigns. Test, measure, learn, and iterate quickly. Don’t invest massively in a direction without concrete proof of its effectiveness.
3.2. Leverage Mentorship and External Expertise
You don’t have all the answers, and that’s normal. Surround yourself with the best resources.
– Role of Investors: Your investors are not just financiers. They are also strategic partners. They often have valuable experience, a vast network, and a macro view of the market. Seek their advice, introductions.
– Form an Advisory Board