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Startups, what are you spending your first-round money on?

So you’ve raised your first round of funding and you’re looking to invest in your business. But what should you spend that money on?
May 3, 2022

Venture Capitalists invest in startups for a return on their investment as the company grows. Over time, these investors aim to make money off of what they put into companies by owning both stakes and some control over them when it comes out IPO or otherwise selling-off parts later down the line.

The average venture capitalization rate hovers around $1 million dollars with an additional funding requirement that ranges between 1/2 – 3x this amount depending upon how quickly you want growth objectives met.

As a start-up, you may be wondering which areas of your business are the most lucrative to focus on. So if you’re curious about what your favorite startup is spending its cash on, read on!


New staff are often a necessary component to the success of any business. With large amounts of VC funding available, it is vital that you have enough time and money spent on developing your team before expanding production or promoting new products/services in order for them be effective at their jobs.

Hiring and training new staff is expensive. But if you invest in people, your business will be able to produce more with less investment – which means higher profits for the company!

New products

With a capital investment of $1.5 million, business leaders are able to put some money aside for new product development and come up with unique ideas that will gain them market share in their industry.

With an average cost at about 1/2 billion dollars (depending on the size), entrepreneurs have been known not only use this amount as working capital but also invest it into collaboration efforts between themselves or partnering firms so they can develop innovative products.

A great way of encouraging growth within niche markets lies at creating new opportunities by using VC investment as an aid on developing products that will make it easier than ever before possible to succeed even if one lacks resources like manufacturing or marketing skills.

When you’re looking to grow your business, it’s important that the investment pays off. By using VC funding for product development and manufacturing (not just planning), startups can get an early lead on their competition by ensuring they have all resources at hand before any other company does!

Marketing efforts

Prioritizing marketing efforts is important if you want your company to grow. In a study conducted after the COVID pandemic, 46% of business leaders are investing more capital into their market spend when compared with just 12%. As businesses continue online and prioritize what they invest in-marketing or otherwise – it’s vital for startups that remain alert about components so as not miss any crucial updates!

The use of VC capital funding, smart founders can invest more money into Google or Facebook/Instagram ad campaigns and social media content in general. This will increase the engagement level with your target audience which then results in higher conversion rates for startups’ products or services they offer!

Of course, these aren’t the only things your start up can spend its cash on – but they are some of the most important and will help you get started in the right direction.

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