Congratulations! You’ve just raised $2 million for your seed round! You’re flush 💰

Now what?

Before you start investing in company offsites to align your team and scale your biz (did someone say Hustlers’ Retreat?), there’s something you gotta do first. 

Communicate with your team about expectations. 

There are three things you should cover:

1. What you’re gonna do with the money
2. How these funds affect your runway
3. How this could be your last fundraise, ever… 

Let’s hear Eric and Janel’s advice to founders in this week’s episode of Uncapped Notes (if you’d rather watch our video on this topic, click here). 

#1 What are you going to do with the $?

You’ve pitched a roadmap to investors on what you’re going to do with this cash. Now it’s time to bring your team up to speed on what you’ve told them.

Will you hire more employees? Boost your marketing efforts? Buy new office chairs for your team? 

Be super clear on how the money will be spent. Then actually do those things. 

Note: Employees might feel this is a good time to mention that they want raises. It’d be smart to prepare for these potential conversations. 

#2 How these funds affect your runway

Now you want to explain how these funds are going to affect

1. your company’s runway 
2. the timing of your next fundraise

Tell your team what milestones you plan to hit before the next fundraise. 

Imagine I had a fake company called Quantus Solutions that just raised $2 million. I told investors I will generate $10 million in revenue with 20 massive enterprise clients by this time next year. 

Quite a big goal, eh? 

I’m going to raise the next round of funding only when I accomplish this milestone. We currently have 18-24 months of runway. So we have some buffer in case we don’t hit $10 million in 12 months. But the goal is crystal clear.

Founders often forget to share this crucial piece of info with their team. They usually go out for a nice dinner and celebrate. Then everyone just goes back to work. 

Your team needs to be in the loop. This builds trust. Share how much runway the company has left and what the team needs to achieve together.

#3 This could be our last fundraise…

The final thing you should share is the most cheerful point of all: everything could go in flames tomorrow. 

It’s the summer of 2023. We’re in a downturn right now. Raising capital has gotten harder. Maybe the economy will get worse. 

We don’t really know what’s going to happen. 

With all this uncertainty, it’s hard to predict whether or not you’re able to raise money in the future. So the goal here is to stay alive. 

First, stop the bleeding.

Second, use the capital that you’ve raised to create a great business. Maybe even a profitable one. So if the downturn slaps us in the face, you’re still standing. 

Founders need to communicate with their team to stay a little bit paranoid. No need to incite panic, but help them understand that every dollar is precious. Just because you have more of it now than you did a few months ago doesn’t mean you can waste it.

Raising money after you achieve your big milestones is not guaranteed. Continue to be lean, disciplined, and resourceful. Don’t forget your bootstrapper roots. 

It might even be easier to ignore the fact that you have all this money in the bank. 

Whatever helps you stay alive.