Hey - it’s Jason Yeh 🕺🏻

This is my Friday recap of thoughts I’ve had while helping founders solve their fundraising challenges this past week (2.25.22)

If you have any questions, please reply! I try to get to every comment/question I get :)

On to the Fieldnotes for 2.25.22…

Ok, but how should you USE funding?

We mostly cover how to get fundraising, but a month ago I ventured into the world of things to do after you raise. What about more specifically how you should USE the money you raise?

It’s one of those questions that SO many people have but feel dumb to ask.

Not too dumb for us though!

My teammate Jonathan took on the assignment by going straight to the source.

So, Jonathan, what’d you find?

After the positive response to our last article on post fundraise strategies, it made sense to go deeper. I personally had the question of how best to use a newly closed round of funding to setup a startup for success and to get to the next raise.

To get to some answers, I asked startup owners and business consultants to share their best advice. 

From speeding up processes to hiring an M&A expert, there were several suggestions I thought stood out.

Here are nine ways to use funding to prepare for the next raise:

• Speed up Processes to Gain a Competitive Advantage

• Place It into Savings and Investing

• Find Ways to Cut Costs

• Fund Product Development to Ensure a High ROI

• Invest in Foundational Aspects of Your Business

• Invest in SEO Tools

• Search for a Repeatable and Scalable Sales Model

• Increase Salaries and Hire Top Talent 

• Hire a Merger and Acquisition Expert

Speed up Processes to Gain a Competitive Advantage

“Many successful startups require capital to achieve their goals fast because delaying that can wipe out their advantages. Whether it's launching an innovative product or a favorable regulatory landscape, the speed of coming out with the MVP is often the crucial determinant of long-term strategic advantage. Using raised capital to speed up the route to a strong market position is also the best way of showing the growth execution potential to future investors.”

-Michael Sena, SENACEA

Place It into Savings and Investing

“To get your company ready for the next raise, place the money directly into the savings and investing accounts. Make the money work for your business before you are able to start up the next raise for the business stage. It makes it easier to stay within the current market.”

-Olivia Young, Conscious Items

Find Ways to Cut Costs

“Now that you have received funding for your start-up, it's time to invest that money in ways that will help you out in the long term, rather than the short term. A great way to do this is to invest in ways that will lower costs that are required to offer your product. Maybe consider buying the goods necessary to create your product in bulk, so overall the cost of purchase lowers. Or you could invest in purchasing the tools required to make your product instead of having to rent or pay someone else.”

-Brandon Brown, Grin

Fund Product Development to Ensure a High ROI

“Use your first round of funding for product development. Ensure you have enough products to meet the demand of your customers. Use the money to source materials for your current products, as well as develop additional products. You’re more likely to receive another round of funding from business contacts if you can prove the success of your original idea and the astonishing return they'll receive.”

-Jean Gregoire, Lovebox

Invest in Foundational Aspects of Your Business

“A lot of times after founders get their first round of funding, they spend it on useless expenditures. The first is usually a new office space with lots of glass and exposed brick, followed shortly by a harebrained growth strategy that doesn’t pan out. Instead, my best advice would be to invest in the foundational aspects of your business that will keep you growing steadily. To me, this means investing in your team, and your products and services with the highest ROI. By building a solid foundation, with a happy and productive workforce, as well as steady cash flow, you won’t be at risk of downturns (or complete collapses in some cases). In short, by spending your first round of funding wisely, you’ll prove yourself trustworthy and capable for the next round. VC’s and angels don’t want to see money spent carelessly with no return. To me, steady, incremental gains across all parts of your business are more valuable than giant swings and misses.”

-John Ross, Test Prep Insight

Invest in SEO Tools

(continue to read the last 4 tips…) 

Smart Twitter Takes

YC has a great filtering process. Learn from interview best practices to prep your raise…

Worth a skim but…it’s worth sharing that there have been these “winter is coming” thoughts for the past 8 yrs….

Till next week. Stay adamant and be chased.

Jason

p.s. Spent 10 days in Miami. Caught up with old investor pals. Can confirm 😂👇

In case you missed it…

Last week’s article was killer 👑👑👑👑👑

Small asks!

If you thought this was helpful or enjoyable in anyway, I’d love for you to:

• Forward this newsletter with others who would enjoy it

• Follow me on Twitter where I’ve begun building in public (my course, my podcast, etc)!

• Listen with a friend to Funded, my podcast that tells the rollercoaster stories of how founders raised millions (and subscribe🙏)

• Ask me your fundraising questions so I can help you and cover them in a future issue