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> My 12-person startup gets a $10M series A and my first priority should be to find 40 banks to put it in? CDs don’t work — my job is to spend that money in the
by mlyle 4y ago
> My 12-person startup gets a $10M series A and my first priority should be to find 40 banks to put it in? CDs don’t work — my job is to spend that money in the next 18-24 months, not save it.
You just ask your bank to place the money using IntraFi. You can get a little more interest by locking up some of the money on a 9-12mo ladder, which makes sense if you have 18 mos of runway.
If you have an unanticipated expense or opportunity and need to spend some early, it's a small penalty to get the money out-- usually 6 months of interest, so as long as the probability of having to spend a bunch more is low you're ahead.
- ithkuil 4y agoSorry, dumb question, I'm just a software engineer: If it's so easy to get it right, why so many companies got it wrong? Could it be because startups don't usually start by hiring people with a lot of expertise in finance?
- mlyle 4y agoI think people mostly just ignored the risk. Venture capitalists provide banking advice to the companies they fund, and this isn't on the list of things most mention. Now we're reminded why it's a best practice. I think it's hubris to think that you can have tens of millions of dollars and can ignore vital things with it (account security, systemic risk from counterparties, etc).
- itronitron 4y agoMost startups aren't around long enough for it to be a problem.