Equity education

You’ve just raised a financing round. What comes next?

December 9, 2020
Josh Durst-Weisman

You’ve nailed your pitch, the money is in the bank, and your financing round is finally complete. Congratulations! After you and your team have taken a well-earned moment to celebrate, it’s time for the real hard work to begin. 

The steps you take after raising funds are just as critical to your company’s success as the actual fundraise itself. That’s why it’s important to have a clear strategy of next steps after your financing round is complete — by doing so, you’ll put your company in the best possible position to grow the team, acquire new customers, and (most importantly) keep your investors happy in this next chapter.

Here are a few key things to make sure you do after raising funds:

Step 1: Prepare to issue equity

Now that the round is closed, it’s time to prepare your list of investor securities (typically preferred stock), so that you can send your investors their stock certificates right away. However, if you’re planning to issue options or advisory shares of any kind, you’ll first need to complete a 409A valuation in order to stay compliant and protect your shareholders from tax penalties down the line. 

The 409A valuation will determine the fair market value of your company’s common stock — or in other words, it will establish the legal purchase price for options, so that your employees can safely and properly purchase their shares in the future. It’s essential that you get a 409A valuation done before issuing equity, as the penalties for failing to do so will fall on the individual shareholders (as opposed to the company itself).

Step 2: Capitalize on the good news

Strategically announcing your raise is an important way to signal on the market. It shows your current partners – and the larger investment community as a whole – that your company is financially secure, growing, and ready to take on new challenges. Moreover, announcing your financing round is a positive indicator to potential customers that you’re able to take on bigger projects, such as expanding into new product lines, establishing new markets, and opening new offices.

However, simply releasing a boilerplate raise announcement is rarely enough to make a difference. It’s important to be strategic about how you announce your financing round in order to maximize its impact. With new customers and future investors being your primary targets, work closely with your team to determine the ideal timing and venue to roll out your press release. If, for example, your customers are primarily scientists, it probably makes more sense to tailor your press strategy toward science-related publications (as opposed to simply announcing via Crunchbase or TechCrunch).

There are plenty of other benefits to a well-orchestrated raise announcement, as well; for instance, announcing your raise can do wonders for your upcoming recruiting efforts. If you’re planning to use your new funds to grow the team, leverage your raise announcement to advertise high-value positions and open the door publicly for talented job-seekers to find you.

Step 3: Plan for your first board meeting

If you’ve accepted VC money as part of your financing round, it’s likely that you’ll now be establishing a formal board of directors. The first board meeting is a critical milestone, as it sets the tone and relationship with your VC partners moving forward. That’s why after raising funds, it’s important to quickly establish a professional system of updating and communicating with your board.

Remember: Your board members are busy people. To put your best foot forward, make sure you design a process for sharing information with them clearly, concisely, and professionally. At least one week before your first board meeting, make sure you send the full board package to each director with the agenda, high-level financial snapshots, and an org chart to allow them to connect names and faces with key functions at the company. Immediately after the meeting is over, be prepared to send follow-up packages to each of your board members, including the minutes, important resolutions, and clear next steps.

Step 4: Prepare your internal team

If you’ve given options to any of your employees or advisors in the past, make sure you communicate clearly with them in the weeks leading up to and immediately following your fundraise. Option holders will likely be financially impacted by the raise (especially when it comes to taxes), so it’s wise to arrange employee education sessions to make sure your team understands any changes and new details about their ownership moving forward. When it comes to earning the loyalty of your employees, a little effort goes a long way.


By having proper systems in place early on, you’ll position your team for spectacular success in the aftermath of your fundraise. Here at Carta, we’ve raised a few rounds of financing ourselves, and have plenty of ready-to-use tools to help you issue equity, communicate with your board, keep your investors in the loop, and educate your employees about their ownership.

At Carta, we help startups with fundraising, compensation, valuations, equity management and much more. Talk to us to find out how we can help you grow.

DISCLOSURE: This communication is on behalf of eShares Inc., d/b/a Carta Inc. (“Carta”).  This communication is for informational purposes only, and contains general information only.  Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.  This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests.  Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor.  This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein. ©2020–21 eShares, Inc. d/b/a Carta, Inc. (“Carta”). All rights reserved. Reproduction prohibited.