Spend Your VC Funding Wisely

When you finally receive the influx of money you hoped for, what you do next can either make or break your company. How will you invest in your business: human capital, geographic expansion, marketing, or upgrading your offices? Think like a venture capitalist when you make spending decisions. Here are six dos and don’ts. 

Don’t host a blow-out party for your employees. It sends the wrong message. The money isn’t a lottery win, it’s an investment in growing your business. Now is the time to dig into the hard work, not party until dawn. When you accept VC money, you’ve sold a piece of your business. Work hard to provide your investors with a return and get your company in the black. Have a celebration when you pay back your funding, or land your first major contract.

Don’t hire too fast. To build your business to its current level of success, you created a company culture with people who have a shared vision and a base of institutional knowledge. Add new employees slowly and leverage your core employees to indoctrinate your new hires to the company’s mission. It could be a mistake to “water down” the culture you created.

Don’t expand the corner office. Be careful when considering any large expenditures such as moving to new office space in a pricey area of town. Keep your operating expenses low and make capital expenditures carefully and selectively.

On to the Do list

Do monetize your business as soon as possible. Solve a problem that will get people to buy your product and increase customer revenue. You don’t have to pay back customer dollars so monetize sooner rather than later.

Do spend based on your original reason for seeking funding. You had a plan, now is the time to work it. It may be time to branch out into new markets, add new products, or grow your customer support staff. Whatever the reason for seeking funding, don’t let your original plan get lost in the excitement of a big balance in your corporate accounts.

Do plan for financial independence. While you work your plan in the short-term, set a long-term goal to buy your company back. What do you need to hit the break-even mark? When do you reach profitability? Keep those numbers in sight and share the vision with other company executives.

GSX Ventures is a real estate development and consulting firm that specializes in the discovery and the strategic repositioning of properties to support targeted real estate developments. We work with commercial, non-profit, and educational institutions to increase the value of real estate assets throughout the country.

By |2018-12-08T02:17:59+00:00October 27th, 2018|News|0 Comments