Overview

As a startup founder, you face a problem of needing money today, to be able to make money tomorrow. Startup finance is essentially the act of moving those future dollars forward in time, through fundraising and other financial mechanisms, and carefully managing your finances so you can build the company.

Even if you are not mathematically inclined, startup finance is a critical part of building a startup and as a founder you will be expected to know the concepts and numbers, and communicate them to your team and investors.

This course will start from zero, right when you incorporate the company, and go through some common startup finance terms and concepts, before ending with when to hire and scale a finance team.

It assumes you are a US-based founder with a Delaware C-Corp.

Basic finances

After incorporating your company, you should immediately set up a “business checking” bank account.

• Most well known banks that don’t charge you monthly fees are fine to start, but pick one that’s a fit for your needs (do you need checks, will you be depositing cash, etc.).
  • Some common examples: (Add links)
    • Mercury
    • Brex
    • Chase
  • Do your own research, we are not endorsing or responsible for any of these picks, just noting they are commonly used. As long as you are under the FDIC limit, your total risk is limited, but you obviously want a bank that will have good features and be around for a while.
• You can always add other bank accounts later, so don’t spend too much time here.
• You’ll need an EIN to apply for a bank account. If you didn’t get one when you were incorporated, you can get one for free directly from the IRS online. (Link)
• All money you spend or make for the company should come from or go into a business account - never mix personal and business funds.
• If you personally contribute funds to the business account, be sure it is documented (a share purchase agreement, loan note, etc. that you will commonly get from your lawyers).

Balance sheet

The balance sheet is the first important financial statement you’ll eventually need to have. It tells you how much money the company has, which is simple to know from the start but will grow increasingly complex over time.