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Got Seed Funding? Here’s How to Manage It And Make It Last

by Muriel Vega

You rocked your investor meeting and now you’re ready to put your new seed funding round to work — but where do you start? Scaling too fast or allocating too many funds to one area in particular could lead to burning through that money faster than you think.

Langley Respess, financial and wealth management advisor at UBS Financial Services, talks to Hypepotamus about the main mistakes he sees founders make upon receiving their first round of seed funding and provides tips on how to make your money last through your next round. Here are his best nuggets of wisdom:

First, celebrate

The very first thing an entrepreneur should do after securing seed funding from a venture capitalist is to celebrate! Persuading a successful VC to fund your startup is exceedingly difficult — it’s quite a compliment. After that, two things should follow in rapid succession: first, work like hell to make your business successful. Second, start thinking about raising the next round. Startups nearly always take more time and money to be successful than originally budgeted.

Stay lean

One of the most common mistakes new founders make is to spend too much money too soon. A startup should be thrifty in spending their newly-raised funds. The money needs to last until the timing is appropriate to consider a Series A round of funding.

Rule number one in managing the funds from a VC-led round of seed funding is be careful with the funds you have raised and start thinking right away about the next round of funding. Keep in something very safe and liquid because you will probably need to tap into it quicker than you think!

Hire talent — purposefully

CEOs need to hire highly talented rockstars to make their business successful, but you can’t hire too many people too quickly. It can be a real mistake to bring on too many people too fast, creating an unsustainable cost structure.

Make a viable product

The most important use of VC seed funding by far is to ensure a minimally viable product and to prime the revenue pump. Without a successful product and revenue, there is no business. The three most important aspects of running a start-up are revenue, revenue, revenue.

Got a product? Time to create revenue

The most important investment that a new business can make is creating revenue. This means hiring the right people early on with a focus on creating a product that create sales. While it may be important to be working towards product perfection, it is also important to get a product out the door to test the market and to ensure that customers want to buy it. Improvements and features can be added along the way.

Stay focused

Startups are risky by their very nature. Founders — keep your heads down. Stay focused on the task at hand, creating a new business that sells products people want to buy.  It is easy to get caught up in the hype of the ecosystem, but every year many new businesses are successfully launched below the radar and go on to have marvelous success. CEOs need to stay on track, create revenue and delight their customers.  Everything else is just a distraction.

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