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Matherson: Financial steps to take after raising capital for your startup

Business Tips

An infusion of capital—via a venture capital investment, loan or accelerator program—helps a business grow. No matter how you got the cash infusion, it’s time to jump into action so that you can quickly deploy those funds.

As the founder of LendEDU, an online loan marketplace, I’ve worn those shoes. But here are five financial steps we took after we got funding that made a big difference in the growth of our company.

Open a Business Bank Account

Think you can use your personal bank account and credit card in order to pay for your business expenses? That’s a bad move and one you will wind up regretting. The first reason you’ll likely regret it is that it will become too complex to do your accounting and make sure that you separate your business and personal expenses.

But another reason that not having a business bank account is a bad idea is that you could compromise yourself if your business is a corporation or LLC. If you’re ever sued, someone could argue that there is no distinction between yourself and your business and you could become liable in a lawsuit. In addition, not having a business bank account makes you look unprofessional to clients and investors.

You’ll also want to get a business credit card because by getting one now you’ll be able to start building your business credit right away. This is critical in case you ever need to borrow money for your business in the future. Having great business credit will ensure that you’re able to borrow more than you might personally qualify for and that you’ll get better terms on your loan.

Set Up Accounting Software

Do you save all your receipts in an envelope and then stress out at the end of the year or month about having to input them into Excel in order to do your taxes? You can’t do that with your business. You need to have an up to date view of your finances at all times so that you can better understand things like your burn rate or your profit margins.

It’s pretty simple to get this set up. Quickbooks is a great option for business accounting software and is easy to use. You might also want to get a bookkeeping service like Bench which does your accounting for you and provides great visual reports that allow you to see your business’ financial position.

Calculate Your Burn Rate

Your burn rate is how much money you’re using of your available cash in excess of the income you bring in every month.  If you’re a new startup, you might be bringing money in, but you’re likely also spending a lot of money. For many companies, that means that early on they are spending more than they’re making.

It’s important for you to know how much more you’re spending than making so that you can understand how long your company can continue to operate without either increasing revenue, reducing expenses or finding new sources of capital.

New businesses fail every day and part of the reason is that they run out of money.

Don’t let that happen to your business. If you know how much you’re burning through, you can start looking for new sources of money or tweak how you’re spending money so that your cash lasts longer.

Establish Financial Key Performance Indicators

A key performance indicator (KPI) is a way for your business to evaluate whether you’re successful at a particular business objective. KPIs are essential. Stay focused on the things that are most important to your business because they’re most likely to contribute to their success.

For example, if you run an online business a KPI might be the traffic your site gets or the number of new subscribers or customers you get per month. It could also be the number of returning customers or the cost of acquiring a customer versus the amount each customer spends.

Running a business is stressful and often you can be pulled in many different directions, but KPIs allow you to focus on and track the things that are most likely to add value and be important to the success of your business.

Organize Your Business Plan

When it comes to getting funding the reality is that you usually don’t get as much as you thought you needed. So, your business plan should reflect expenses and goals that could be outside your current capacity. It’s critical to take a look at your business plan after you get funding and adjust it to reflect your current capacity.

Maybe you need to delay the launch of a secondary product line and focus your resources on the product line with the highest potential profit margins. Or maybe you need to get creative with how to deploy your marketing budget.

The worst thing you could do is try to achieve the same goals that you had in your original business plan with less money. You’re likely to underfund your projects or run into cash flow issues. You’re better off doing fewer things, but doing them well.

Nate Matherson is the CEO/Co-founder of LendEDU. LendEDU helps consumers learn about and compare financial products. LendEDU was originally founded in Cedar Rapids in 2014.

Matherson: Financial steps to take after raising capital for your startup | Clay & Milk
A central Iowa ag-tech accelerator has secured more backers and finally has a name. The Greater Des Moines Partnership first announced the accelerator last year, naming four initial investors. On Monday, the Partnership said the program will be called the "Iowa AgriTech Accelerator" and named three new investors. The new investors include Grinnell Mutual, Kent Corp. and Sukup Manufacturing, all Iowa companies. They join investors Deere & Co., Peoples Co., Farmers Mutual Hail Insurance Co. and DuPont Pioneer. Each investor has agreed to put up $100,000 for the first year of the accelerator. Startups entering the program will receive $40,000 in seed funding in exchange for 6 percent equity. Tej Dhawan, an angel investor and local startup mentor, is serving as interim director until the AgriTech Accelerator names a permanent leader. Dhawan held a similar role with the GIA before Brian Hemesath was named as managing director. As interim director, Dhawan said his main job includes hiring the accelerator's executive director, establishing a business structure and initial recruiting for the first cohort. The accelerator will place few filters, such as location and product, on the applicant pool, Dhawan said. "When you’re seeking innovation, innovation can come from every corner of the world so why restrict ourselves," he said. One area the the AgriTech Accelerator won't recruit from is biotech. For its first cohort, the AgriTech Accelerator will work out of the GIA's space in Des Moines' East Village, Dhawan said. A future, permanent home is still to be decided. The accelerator's program will host startups from mid-July through mid-October, ending with an event connected to the annual World Food Prize. The GIA, which the AgriTech Accelerator is based on, also ends with presentations at an industry event. The accelerator has also started lining up a mentor pool. The Iowa Corn Growers Association, Iowa Soybean Association and the Iowa Pork Producers Association have agreed to provide mentors, as has Iowa State University. While the AgriTech Accelerator is loosely based off of the GIA, it will differ in its business structure, Dhawan said. The GIA runs through a for-profit model for both operations and its investment fund. The AgriTech Accelerator will have a nonprofit model for its operations and a for-profit setup for its fund. Dhawan said the nonprofit model is being used so the accelerator can better work with other nonprofit partners, such as trade associations. "These are all organizations that are nonprofits and can be amazing stakeholders without ever having to be investors in the accelerator," he said. "It becomes easier to work with trade associations in their nonprofit role when we are also a nonprofit." When it's up and running, the AgriTech Accelerator would be one of a handful of ag-focused startup development programs in Iowa. Others include the Ag Startup Engine out of Iowa State University and the Rural Ventures Alliance from Iowa MicroLoan. Matthew Patane is the managing editor and co-founder of Clay & Milk. Send him an email at
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