Make Your Investors Money Count

Money Raised Must Be Used to Create Value

Before investors commit capital, they want to know exactly how their money will be used—and whether that use will meaningfully increase the value of the business.

In any fundraising effort, this appears in the Use of Proceeds section of the offering or pitch materials. For early-stage companies, this section is critical. Every dollar raised should be directed toward achieving milestones that increase the company’s valuation ahead of the next funding round.

Raise Only What You Need to Hit Key Milestones

The most effective strategy is to raise just enough to accomplish one or two value-driving objectives—such as:

• Completing a working prototype.

• Launching a product into the market.

• Expanding into a strategically important geography.

Each milestone achieved should directly improve the company’s position, reduce investor risk, and justify a higher valuation in the next round.

Avoid Value-Neutral Spending

Too often, companies use investor capital for purposes that don’t increase value—such as new office furniture, leasing a larger office, or paying down debt. These may improve comfort or stability, but they don’t create measurable shareholder value.

When funding is spent this way, the company risks facing a down round—a lower valuation in the next raise—which can dilute ownership, erode investor confidence, and make future fundraising harder.

What a Successful Use of Proceeds Looks Like

A strong Use of Proceeds statement clearly ties funding to measurable, value-driving outcomes. For example:

“Complete development of the new prototype and deploy it to 10 alpha customers for real-world feedback.”

This type of milestone enhances management credibility, validates the product in the market, and gives investors confidence to assign a higher valuation in the next round.

Bottom line:Investor money should be treated as fuel for measurable growth—not as general-purpose cash. The clearer the connection between funds raised and value created, the stronger your fundraising position will be—now and in the future.