What to Expect After Fundraising with Yami Payano

Intro: Welcome to the Daily Bolster. Each day we welcome transformational executives to share their real world experiences and practical advice about scaling yourself, your team, and your business.

Matt Blumberg: Welcome to The Daily Bolster. I'm Matt Blumberg, co- founder and CEO of Bolster, and I am here today with Yami Payano. Yami is the first generation Afro- Latina CEO of a company called Sign Speak. Sign Speak is in the Bolster Ventures portfolio, which we are very excited about. And Sign Speak is a realtime sign language recognition avatar and transcription solution. So that is what Yami does every day. Yami, thank you for being with us today on The Daily Bolster.

Yami Payano: Well, thank you so much for inviting me. It's a pleasure being here today.

Matt Blumberg: Great. All right, so you have a question for me today?

Yami Payano: Yes, I do.

Matt Blumberg: What's your question?

Yami Payano: I think the question that as a first time founder, that I'm asking myself after fundraising recently is, what are some of the biggest challenges faced by first time founders after they get their first financing round? I think we often talk about fundraising, but we don't talk enough about, what do we do after that fundraising? And I would love to hear your thoughts.

Matt Blumberg: That's such a great question, and I'm so glad you asked it. Because you're right, most founders, it's like the expression of you know how to go to war, but you're not quite sure how to win the piece.

Yami Payano: Yes, exactly.

Matt Blumberg: So it is a great question. And I think there are three things that I've seen early- stage CEOs, particularly first- time CEOs, do post- financing that don't go well. So the first one is kind of obvious, which is they overspend. And even if you have a budget and you want to spend to your budget, there's this temptation. If you've been living hand- to- mouth, and you've been bootstrapping your company in particular, and you finally wake up and you have over a million dollars in your bank account, that all of a sudden you don't care as much about spending as you should. So that's the first thing, and there's nothing but discipline that you can do around that, other than having a good accountability partner internally, even if you don't have a CFO. The second thing is under- reporting. So typically right after you raise money, the first time you get an institutional check, you now have a major investor. And you may not have been doing a lot of reporting or financial reporting. Maybe you and someone on your team look at QuickBooks every month, you look at the cash balance. But once you have more money, and once you have another party to be really more accountable to, whether they're on the board or not on the board, making sure that you're asking them what kind of reporting they expect to see and on what frequency. And that's usually a good starting point for not under- reporting on the business. The third thing is not doing a good enough job at forecasting. So again, when you're hand- to- mouth, you don't worry about the exhaustive forecasts. Every nickel in and every nickel out is something that you're scrutinizing. But once you have more money in the bank, and once you're in more of an investment mode, it's really important to get good at doing a cash forecast. So not just a P& L forecast, but a cash forecast that takes into account the timing of payables and receivables, and how that balance sheet and the income statement work together in the form of a cash flow statement. So doing a really good job of forecasting out not just a month, not just a quarter, but a year is great. And you know it's wrong. It's a forecast, so it's not going to be right. But the discipline of every month or every quarter, renewing your forecast for the coming quarter and even the coming year is a really good practice. And it's forecasting both expenses, which are largely controllable, and revenue, which is frequently not controllable. But the days of the 12 month static budget are over.

Yami Payano: Yeah.

Matt Blumberg: Getting really good at doing a recurring, forward- looking forecast for both revenue and expenses, and particularly cash, becomes super, super important. So those are my top three things. And because this podcast is being recorded at hopefully the tail end of the Silicon Valley Bank financial crisis, my bonus fourth thing, in case everybody doesn't know this yet, is after you raise money, make sure that you are respecting the FDIC- insured deposit limit. Which either means you're having multiple bank accounts.

Yami Payano: Yes.

Matt Blumberg: And you should probably do that anyway. But also that when you have more than$250, 000 at your primary financial institution, that you're putting the amount over 250 into some kind of a sweep account, which your bank will set up for you, in money market or in another government- backed security that is held off the balance sheet of the bank.

Yami Payano: Yes.

Matt Blumberg: So with that, I think we will close up for today. Yami, thank you so much for being here.

Yami Payano: Thank you.

Matt Blumberg: And a great question for everyone.

Yami Payano: Thank you, bye.