What Can I Spend Investor Money On?

If you raise money from investors, what can you spend it on? Can you lease a new McLaren and fly private to Mykonos? Are you allowed to give yourself a raise? If you have a great concept and raise capital from investors, you'll have a lot of cash that may be tempting to spend on "fun necessities." Shouldn't a founder be comfortable when they travel and need a decent ride? Or should they?! Here’s a breakdown of dos and don'ts for spending your funding to keep you out of trouble. Firstly, all expenses for explicitly running the company are fine. Examples include software, laptops, office space (WeWork), staff, contractors, and company-related transport. On the personal side, your cell phone, home internet, and transport are OK. But when I say transport, I mean taking a Lyft to the office, not to the club. Another acceptable expense is personal development. Classes, coaches, and productivity software—anything to help you do the job better and make the company more successful—is OK. Where we start to blur the line is with personal expenses. The company should not be paying for your housing expenses, home office, gas, food when you're working from home, or buying you a new car, except if you have a driving-related profession. The company should pay your health insurance, but not personal medical expenses beyond that—like an operation or botox. Keep in mind, at some point, someone in the company will review these expenses—like your accountant or controller. People talk, and your entire team will know if you're using company funds for personal expenses. This is not a good way to create a cohesive culture. Lastly, and critically, unless you're profitable, every dollar you spend is another dollar you need to raise from investors. If you have to raise more money, you're diluting yourself. Throwing expensive parties and paying for other non-essentials impacts your personal economics and every other shareholder's. https://shorturl.at/qA148 #founder #founderadvice #startupadvice #venturecapital #venturecapitalists #venturecapitalist Post in the comments if you have questions about expenses, and if you need an intro to a great accounting service, DM me and lmk.