Dear Startup, here are two ways to spend the money you just raised

Ope Adeoye 3 minute read

When a startup just raises money (at times for the first time). There are usually so many pending needs to clear out. Like getting a real office (at last!), having official cars with the company logo on it, hiring a highly qualified C-Suite to make the investors happy, etc. These things have been needed for so long while the startup was being scrappy trying to survive. Therefore they should (and usually are) the first set of things folks seem to spend on.

But is there another way? Can those very pressing needs wait till one is sure revenue is sustainable? Or at least chances of raising next round is guaranteed? Is it okay to remain scrappy for just a little longer?

Here are two possible ways to spend money you just raised:

The "default" way

Rent an office and make it a cool, fun place to work. 

Beef up the C-Suite with some experienced hands. Very nice if they are ivy-league people. Investors love those.

Hire a professional software development studio abroad. The quality is much better.

Start an ATL marketing campaign. Good for brand building.

Get 2 or 3 official cars with the company branding.

As a founder that has been suffering, now pay yourself. Finally!

Fly all over the world to attend conferences and "engage" potential investors for your next series.

The "scrappy" way

Hire 1 or 2 business development people and set them loose on the streets of Lagos.

Stay where you are, don't move just yet. Rent is a killer in Lagos.

Start an internship program to get a feeder team for your engineering and operations. You can afford it now.

Furnish your current location a bit better. Get more functional equipment.

Cover your infrastructure costs for a few years out.

See if the money can cover your payroll till profitability. And guard that jealously.

Keep some cash in the bank just in case!

Two ways to spend your newly raised money. Or a combination of the elements of the two depending on how much you've managed to raise. 

Of course I'm just being cheeky! The bottom line is: because you may not be able to guarantee your next raise, don't run off and fulfill ALL of your pending needs and those the investors just threw at you. Try and be as frugal as you can about it and spend small small. The next raise may not come.

But hey, what do I know, I'm not a "startup guy".