Do investors care how you spend the money?

Some investors care A LOT about how you’re going to spend the money you’re raising. And that’s exactly why you need to talk about it as little as possible. 

You might’ve had people tell you you need to include a breakdown of spend in your pitch deck. Typically, this takes shape as a “use of funds” pie chart or something similar on the “ask” slide.

It’ll say something like x% on advertising, y% on hiring, etc. Or better yet, exact dollar amounts.

But nobody can predict their spending down to the last cent. You learn things, priorities change, and you spend money where you get the highest ROI.

The best investors know that, and aren’t going to ask a thousand questions about something you could never really predict.

But some investors will find places to pick on your use of funds. They’ll ask things like “Why is so much being spent on that?” or “Is that amount really going to be enough for XYZ?”

So our suggestion: don’t break it down. That way, there’s a lot less to pick on.

Just give a high-level list of what the money will go towards. Something like “Hiring a lead engineer, increasing ad spend, expanding sales team.”

You don’t need to justify the money you’re raising by showing how you’re going to spend all of it. Investors would actually MUCH prefer you never touch it and exit without needing it. 

So just check the box of “we have a plan post-raise” with a high-level list and save yourself the potential scrutiny.

Best,

Nathan