Have you just completed a fundraising round? Congratulations!
The post-fundraising period is generally a moment of relief for business leaders.
However, this is only the beginning of the journey. Indeed, post-funding follow-up is almost as decisive for the development of the company as its preparation and conclusion. New challenges arise and new strategic choices need to be made.
Raising money is a means to achieve objectives, not an end in itself. It's a new stage!
So, what should be done after a fundraising round? What are the operational practices to sustain the business? How should relationships with investors be managed? How to master cash flow management? How to cope with the strong growth generated by the new funds?
Here are the 5 important points after a fundraising round:
Even if this first point seems obvious, it is nonetheless fundamental. After a fundraising campaign, there is no question of running the business haphazardly. Organization and rigor are indeed necessary to ensure the operational follow-up of the business plan.
The entrepreneur must retain the innovation strategy of the BP and put it into practice. They must therefore think about the actions to be implemented to generate leads and convert them into customers. This involves following the sales and marketing strategy presented during the pitch deck to investors.
Your credibility with your financial partners also depends on this. Indeed, you have committed to a quantified commercial development plan and a financial forecast to convince investors. You must therefore give yourself the means to meet your commitments and achieve the objectives presented in the BP.
After a capital raise, it is fundamental to construct a reporting table and regularly update it. The numbers indeed reflect the activity of the start-up and its financial health.
Reporting thus allows the business leader and their associates to evaluate their management of the company, measure the impact of their actions, and make decisions accordingly.
Furthermore, your financial partners will typically ask for complete reports of your commercial and marketing actions. Indeed, if investors support your project, it's because they believe in its profitability. This numerical table is thus intended to show them your results and reassure them. It also allows them to see how funds are spent, in the interest of transparency.
The raised money must be invested to expand the company's staff. Indeed, after a fundraising, the start-up is in full growth. It thus needs to surround itself with talented and ambitious profiles to support its development.
However, recruitment must be careful and subject to prior reflection. The human needs of the company must indeed have been identified and anticipated by the entrepreneur.
The major risk for the structure is to waste the capital investment by recruiting hastily, without prior organization. Poor recruitments can indeed significantly impact the company's finances.
In this perspective, it is opportune for the company to appoint a human resources director. The founder indeed generally does not have the time to manage this function and the company needs an expert capable of recruiting the best collaborators and building a productive and motivated team.
The management of the company's finances is certainly one of the most crucial points after a fundraising. Indeed, the financial contributions create new challenges that imply making strategic choices.
The risk is that these issues are not correctly understood by the entrepreneur and his collaborators, and they are overwhelmed by the abrupt evolution caused by the input of substantial funds.
That's why it is essential to rigorously respect the strategies developed in the business plan, to surround yourself with competent people, and to scrupulously follow the company's figures. Expenses must be structured and thoughtful to intelligently use the raised funds.
As you will have understood, raising funds disrupts the internal organization of the company. And all the more so since investors are now part of the company's capital. If their participation is framed by a shareholders' pact, managing relations with these new financial partners is another challenge.
1️⃣ Encourage communication
Communication and transparency are key to gaining the trust of investors and making them true partners. The company manager must thus maintain exchanges with them on a regular basis.
For this, he can communicate additional information, other than that required by law, during general meetings.
He can also organize telephone appointments, meetings and even informal lunches to discuss the current performance of the company, its development potential and short and medium term prospects.
2️⃣ Do not ignore conflict
Disputes can sometimes arise. They generally result from a loss of investor confidence in the entrepreneurial project.
In such a situation, it is important to face the difficulties. Listening to the investor's fears and being transparent towards him is the best way to stem any potential conflict.
Furthermore, it is important to reassure the financier about the good monitoring of the objectives of the innovative company and its developments. Favor as much as possible an amicable solution!
3️⃣ Develop a lasting strategic and financial collaboration
The entrepreneur has every interest in creating a real collaboration with his shareholders. More than investors, they can provide valuable advice during strategic committees.
The construction of a strategic and financial partnership between the business creator and his investors is thus really opportune.