Startup Funding Management

"Why are you raising money?" It's easily my most asked question, and to be honest I usually know the answer before I've asked it, but it's great hearing the responses. If you’ve ever wondered where the money REALLY goes between pre-seed and Series A, here’s the breakdown, based on real data across Europe. 1. People dominate the budget Salaries, hiring, and recruitment costs eat up 50%+ of early funding. The founders often pay themselves modestly, but key hires (engineering, product, and leadership roles) make this the single biggest expense. 2. Building product is next 30–40% of funding goes into product development and R&D — especially for deep tech and SaaS companies. This includes dev work, design, infrastructure, prototyping, and testing. I wonder how low this will go over next few years due to AI? 3. Marketing is where things shift At seed, most startups spend very little on marketing. But by Series A, 20–30% of the round can go straight into customer acquisition. Startups are expected to scale growth quickly — so this is where paid ads, content, CRM tools, sales hires, and GTM strategies show up. 4. Operations and Infrastructure Think cloud hosting, SaaS tools, dev software, IT setup. Thanks to startup credits and modern tooling, most startups keep this lean — around 5–15% of total spend depending on complexity. 5. Legal, Compliance, Admin This includes legal fees, accounting, insurance, data protection, and any regulatory requirements. These costs spike during fundraising or contract negotiation, but typically stay in the 5–10% range overall. 6. Office and admin overhead is shrinking Pre-2020, rent was the #2 cost. Now? It’s closer to 3–5%, with remote work, coworking spaces, and lean ops setups being the norm across Europe. → Your budget isn’t infinite — treat marketing and hiring like high-leverage investments, not default checkboxes. → Get clear on your business model before scaling spend. → Make sure your burn reflects your actual stage — not what others are doing. → A great product still needs great distribution — spend accordingly. → Keep legal, admin, and ops tight — they matter, but they shouldn't steal runway. This is how funding gets spent...whether you plan for it or not. So plan for it.

Burned through Series A in 8 months. Here's the cash management framework that saved us. Growing fast and running out of money isn't ironic - it's predictable. Revenue growth without cash flow discipline kills more promising startups than product failures. The 5-3-1 Cash Rule: • 5 months: Minimum runway before raising next round • 3 scenarios: Best case, likely case, worst case planning • 1 person: CEO owns cash flow, updates weekly Monthly cash flow tracking essentials: contracted ARR, pipeline probability, fixed vs variable costs, and customer payment terms. Real example: SaaS company with $200K MRR looked healthy until we mapped payment terms. 60% of revenue came with 60-day payment cycles. They needed bridge funding despite strong growth metrics. Build a 13-week rolling cash flow model this Friday. Update every week without exception to avoid cash crunches. #CashFlow #StartupFinance #Fundraising #StartupAdvice #BusinessMetrics #Entrepreneurship #StartupStrategy #FinancialPlanning

As founders climb the startup growth ladder, the funding landscape evolves. Each rung requires a different approach to capital raising. This guide breaks down four key funding instruments, aligned with typical startup stages: ✅ SAFE (Simple Agreement for Future Equity) When: Pre-seed to seed, <$1M raise Why: Close deals quickly (often within a week) How: Use Y Combinator's SAFE templates Pro tip: Cap tables can get messy; use tools like Carta ✅ Convertible Notes When: Seed stage, $1M-$3M raise Why: More investor-friendly than SAFEs How: Work with a startup lawyer to draft terms Pro tip: Discuss discount % with your CFO and an 18-24 month maturity ✅ Priced Round When: Series A+, raising $5M+ Why: Establish clear valuation and rights How: Engage a top-tier law firm (e.g., Cooley, WSGR) Pro tip: Aim for < 20% dilution; consider insider-led rounds ✅ Venture Debt When: Revenue > $1M ARR, after Series A Why: Extend runway by 6-12 months without dilution How: Approach Silicon Valley Bank, TriplePoint, Hercules Pro tip: Negotiate for 25-50% of your last equity round 🔑 Key Action Items: Assess your stage, traction, and funding needs Research recent comparable deals in your sector Build relationships with potential investors early Have your financials and pitch deck ready before approaching Always have a Plan B - bootstrapping or extending runway What stage is your startup at, and which funding instrument are you considering?

How This Space Tech Startup Secured $5.5M (Without Giving Up Equity). Last year, I invested in Raven Space Systems. They developed a novel way to 3D print aerospace hardware: • Faster • Cheaper • More efficiently Before pursuing VC money, they secured $5.5M through grants from NASA, Air Force, and The National Science Foundation. This was pure capital for R&D to: • Validate their technology • Access specialized facilities • Build government & commercial credibility Incredible benefits, yet not without challenges. Applications are competitive, time-consuming, and often come with restrictions on fund usage. 6 steps for capital-intensive startups to access non-dilutive funding: 1) Find the Right Grant Programs → Focus on SBIR (Small Business Innovation Research) → STTR (Small Business Technology Transfer) programs. → These offer billions annually in non-dilutive funding for early-stage R&D. Key Agencies: NASA, NSF, DoD, (AFWERX), USDA, and others. 2) Prove Your Tech Solves a Big Problem → Funders want mission-critical solutions over "cool" innovations. → Eg: NASA funds projects that improve performance in space exploration. → Use data or case studies to demonstrate the urgency of the problem → And the effectiveness of your solution. 3) Develop a Clear Proposal → Specific R&D milestones → Measurable outcomes → Commercialization plans Align your proposal with the funder's mission and values and highlight how your project advances their goals. 4) Leverage Strategic Partnerships Strengthen by collaborating with universities, labs, or prime contractors. E.g: Raven partnered with the University of Oklahoma for material testing and technical validation. Partnerships mean specialized equipment and critical expertise. 5) Engage with Grant Officers → Reach out to program managers before applying → For insights on aligning your application with agency priorities → Clarify any ambiguities and tailor your proposal accordingly 6) Iterate And Improve → Treat rejections as opportunities to learn → Many startups win grants on attempt 2 or 3 → Refining on feedback can significantly improve success rates After validating their tech with grants, Raven then raised VC to: • Scale manufacturing • Build sales teams • Enter new markets Validate with grants. Scale with VC. Combine both for a winning position. ____________________________ Hi, I’m Richard Stroupe, a 3x Entrepreneur, and Venture Capital Investor I help early-stage tech founders turn their startups into VC magnets Enjoy this? Join 340+ high-growth founders and seasoned investors getting my deep dives here: (https://lnkd.in/e6tjqP7y)

𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗥𝗮𝗶𝘀𝗶𝗻𝗴 𝗚𝘂𝗶𝗱𝗲 𝗳𝗼𝗿 𝗦𝘁𝗮𝗿𝘁𝘂𝗽𝘀 Raising capital is one of the biggest hurdles founders face. Here’s a clear breakdown of funding stages, options, and what investors look for. 1. Funding Stages • Pre-seed: $150K or less, often friends/family • Seed: $150K–$1M, traction + MVP focus • Series A: $1M–$5M, scale with product-market fit • Series B: $5M–$20M, expand market share • Beyond B: larger VC/PE rounds for scaling or exit prep 2. Capital Options • Bootstrapping: keep control, but limited growth speed • Angel Investment: early believers with networks + mentorship • Venture Capital: institutional checks, big growth push • Corporate VC: capital + strategic leverage from industry players • Debt & Revenue-based: less dilution, more repayment pressure • Crowdfunding: build community + validate product 3. What VCs Look For • Market size and growth potential • Strong founding team with execution capacity • Defensible product/IP • Traction metrics (revenue, KPIs, users) • Clear exit opportunities 4. Issuing Equity • Understand term sheets, shareholder agreements, and dilution impact • Preferred vs ordinary shares → know your trade-offs • Always read the fine print (liquidation preferences, anti-dilution rights) 5. Valuations • No single formula—depends on sector, traction, and investor appetite • Common methods: Berkus, VC approach, comparable multiples • Milestones matter: raise only what gets you to the next inflection point Raising capital isn’t just about the money. It’s about finding the right partners, protecting your equity, and setting up for long-term success. If you were raising today—would you prioritize less dilution with slower growth or faster growth with more dilution? PS. check out 🔔 for a winning pitch deck the template created by Silicon Valley legend, Peter Thiel https://lnkd.in/eQFrsUnE

Welcome to the second edition of our four-part series diving deep into early-stage business funding. Thanks for all the great feedback last week. This week, we're exploring Non-Dilutive and Debt Financing. Non-dilutive funding, especially R&D grants, government programs, and innovative debt options, can be transformative, preserving your ownership and significantly enhancing valuation. In this newsletter I look at: R&D Grants: A deep dive into opportunities like Innovate UK Smart Grants and the U.S. SBIR/STTR programs, highlighting how these grants validate your technology and increase valuations by 15-30%. Traditional Debt Financing: Discover how UK startups leverage British Business Bank guarantees and U.S. founders use SBA loans to strategically extend their runway without dilution. Invoice and Revenue-Based Financing: Flexible, scalable solutions ideal for managing working capital, maintaining equity, and aligning payments with your growth. The goal is to help you understand how to strategically combine various non-equity funding mechanisms to accelerate your startup's growth while maximising founder control. Check out the full newsletter 👇 Stay tuned for next week's instalment on Equity Financing..... #StartupFunding #NonDilutiveFunding #DebtFinancing #Grants #StartupGrowth #FounderAdvice #IdeasforaBetterWorld

My inbox has been flooded since I posted about the enhanced Credit Guarantee Scheme for Startups (CGSS). One question keeps coming up: "How exactly do we access this ₹20 crore with no collateral?" I promised to share the exact process, so here it is. CGSS now offers guarantees up to ₹20 crore. debt funding that doesn't dilute your equity. The government covers 65-80% of the default risk, making banks more willing to lend to startups. But good schemes often fail at implementation. Let me show you how to navigate this one successfully. Here's the 5-step process many founders use to secure CGSS funding 1. Register on Startup India & get DPIIT recognition first ⤷ This is non-negotiable and takes 2-3 weeks ⤷ Create a comprehensive profile on [startupindia.gov.in] ⤷ Ensure your incorporation documents, address proofs, and director IDs are ready ⤷ Follow up with the DPIIT team if there are delays beyond 3 weeks 2. Select the right bank/NBFC ⤷ Research which ones have active CGSS disbursals (SBI, Bank of Baroda, and Punjab National Bank are currently most active) ⤷ Target institutions with dedicated startup teams (many now have specialized branches) ⤷ Public sector banks often more receptive than private banks for this scheme ⤷ Pro tip: Find out which relationship manager has processed CGSS applications before 3. Prepare bank-specific documentation ⤷ 3-year financial projections with clear debt servicing ability (focus on DSCR ratios) ⤷ Business plan focused on risk mitigation (unlike VC pitch) ⤷ Market validation evidence (contracts, LOIs, customer testimonials) ⤷ Detailed use of funds with timeline and measurable outcomes ⤷ Management team credentials emphasizing operational expertise 4. Apply and address feedback quickly ⤷ Typical processing: 4-6 weeks ⤷ Be responsive to queries within 24-48 hours (delays kill applications) ⤷ Have supporting data ready for common questions on market size, competition, and financial assumptions ⤷ Be prepared for multiple meetings and clarifications (persistence matters) ⤷ Consider getting advisory support if needed (many banks have empaneled consultants) 5. Post-approval compliance ⤷ Meet all conditions precedent (these can be numerous but are critical) ⤷ Set up proper financial reporting systems for ongoing bank requirements ⤷ Maintain open communication with bank relationship manager ⤷ Document milestone achievements to build credibility for future funding What most founders miss is that bank financing requires a completely different mindset than equity funding. Banks are looking for: → Steady, predictable growth rather than hypergrowth → Conservative projections that you can beat, not moonshots → Clear evidence of repayment capability → Risk mitigation strategies for various scenarios The founders who win in the long run often aren't the ones who raised the most but those who raised most efficiently. #StartupFunding #CGSS #DebtFinancing #EntrepreneurshipIndia