Fundraising: a Beginning, not an End – from Euphoria to Reality Check
Raising funds for a startup is often seen as a culmination. A fundraising announcement makes headlines, draws admiration, and creates a very understandable euphoria among the founder and their team.
However, once the celebration is over, the hardest part begins. Experienced entrepreneurs and investors agree that the post-fundraising period is not a smooth ride. In reality, fundraising marks the beginning of a demanding new phase in the company’s life, sometimes compared to a true “emotional rollercoaster”. There are many guides on how to raise funds, but few on what happens next. Yet, as one expert emphasizes, suddenly seeing hundreds of thousands or millions of euros arrive in the bank account – a true “lottery win effect” – should not make one forget that “everything remains to be done” afterwards.
How to transition from the fundraising honeymoon to the daily reality of execution? What are the main challenges awaiting startup founders once funds are raised, and what best practices should be adopted to turn this attempt into lasting success? An analysis of key lessons for startup leaders, investors, and innovation enablers.
The Honeymoon Effect: the Ephemeral Euphoria of Fundraising
As soon as funds are raised and the money is in the bank, the euphoria phase begins. During the very first months, most founders describe a real adrenaline rush and a sense of freedom, the exhilarating feeling of finally having the means to achieve their ambitions. This state corresponds to the “learning phase” identified by the TGS France/TMO study, where one learns to steer the company with unprecedented financial resources and an expanded leadership role.
It is, in a way, the honeymoon: one savors the success of the closing, projects put on hold due to lack of budget can be accelerated, and the team is reassured about the company’s sustainability. Every expense once scrutinized now seems easier to commit to. The founder often benefits from increased media attention, which reinforces the general enthusiasm.
However, this euphoria is ephemeral. Very quickly, operational reality takes over. As one executive summarizes, after fundraising, “you enter a kind of blind marriage with investors you barely know. You have to report, there’s pressure on KPIs, a loss of fundamentals.
Everything remains to be done.” In other words, the money raised is not an end in itself but a means to achieve ambitious goals – goals that are now more imperative than ever. It is at this point that the real groundwork begins to turn the attempt into success: the startup must prove it can deliver on its growth promises under the demanding scrutiny of its new partners.
The Reality Check: Major Post-Fundraising Challenges
After the initial euphoria comes the reality check. This post-fundraising period comes with multiple challenges that the leader must anticipate and master to avoid disillusionment. According to a recent national study, one year after their fundraising, a quarter of startups experience cash flow problems – often because they had raised an insufficient amount compared to their real needs (an undersized raise in 40% of cases). “You think you’re running a sprint, but it’s a marathon,” a founder reminds us.
This statement clearly illustrates the major post-fundraising challenge: understanding that the long-distance race has only just begun, with its obstacles and uncertain duration. Among the main post-fundraising challenges are:
Managing a Capital Influx without Losing Direction
Suddenly having comfortable liquidity can paradoxically be destabilizing. The startup, accustomed to surviving on little, must learn to allocate this capital efficiently. The risk is twofold: either spending too quickly and running out of cash long before reaching the expected milestones, or conversely, hesitating to invest and slowing down growth. Finding the right balance between burn rate (spending pace) and growth is crucial.
Several young startups realize post-fundraising that they underestimated their expenses for industrialization, recruitment, or business development, hence the frequent cash flow problems from the first fiscal year. The financial challenge is to establish a rigorous budget strategy from the outset, to last 18 to 24 months without returning for funding.
This implies reviewing one’s business plan with clarity, maintaining a safety margin, and avoiding the overconfidence that a well-filled bank account provides. Every euro invested must serve the long-term vision. Leaders must understand that after the honeymoon of abundant cash, financial discipline becomes a priority again – otherwise, they risk a brutal return to reality if the coffers empty.
Increased Pressure on Performance and Results
With the entry of investors, the startup changes dimension: it is no longer the sole master on board and must be accountable. The pressure on KPIs and performance intensifies immediately. New shareholders expect concrete results: revenue must grow in accordance with the announced business plan, market shares must increase, and the product roadmap must be executed flawlessly.
Often, what was tolerated before (delays, frequent pivots, approximate experimentation) is much less so afterwards. The leader may feel constantly monitored. Regular reports are required, often quarterly, detailing the use of funds and the progress of objectives. This situation can generate significant stress for the management team, which sometimes starts managing to please investors at the expense of the long-term vision.
The challenge is to meet expectations without losing autonomy in managing the company. One must learn to speak the same language as investors – that is, to translate one’s strategy into indicators and concrete plans understandable by financiers – while defending the choices that seem right for the startup. This balance requires maturity and composure, as it is easy to let a roadmap be dictated that is not in line with the reality on the ground. Furthermore, the post-fundraising context requires being agile and responsive: one must know how to quickly adjust the trajectory if an indicator turns red, without waiting for the next board meeting.
As the TGS study highlights, once fundraising is complete, it is essential to remain capable of correcting course in real time to achieve the set objectives, otherwise risking isolation in the “valley of death” where so many startups perish due to lack of adaptation. In other words, the pressure is strong, but it can be healthy if it pushes for more rigorous execution – provided one maintains enough flexibility to pivot or change approach when necessary.
Accelerated Growth Goes Hand in Hand with Internal Structuring
The funds raised are generally used to accelerate growth: hiring, producing faster, conquering new markets. This sudden acceleration puts the startup’s internal organization to the test. Processes that could remain informal on a small scale must now be formalized. Teams must be structured, often recruiting for key positions (sales, marketing, product, operations, finance…) within a short period.
This transition from a small, close-knit team to a more extensive organization can lead to a loss of bearings. Founders sometimes find that they must delegate tasks they managed themselves, establish internal KPIs, tracking meetings, etc. The company culture evolves with the arrival of new employees. Preserving the startup’s DNA while transforming is a delicate challenge.
Some young companies, once funded, make the mistake of recruiting en masse without a precise plan, then have to backtrack when they realize that not all these recruitments were judicious. “You can be growing and shrinking,” says Jean-Baptiste Pondevy… “We had to let go of 90 people to recruit 40, better aligned with our challenges. It’s tough…” confides this co-founder, proof that uncontrolled growth can lead to painful decisions.
This testimony illustrates the importance of hiring with discernment and maintaining a flexible structure. The key is to avoid rushing ahead: every team expansion or project launch must be guided by strategy and medium-term profitability, not just by the influx of available money. Structuring one’s company does not mean bureaucratizing it, but giving it solid foundations to sustain long-term growth. This involves, for example, implementing adapted processes (management tools, financial monitoring, HR management) without stifling the agility that is the strength of startups.
A New Relationship to Build with Investors
Finally, welcoming investors into the capital is a bit like marrying a new partner whose relationship you will have to learn to manage in the long term. During the fundraising phase, founders and investors were in a context of mutual seduction (pitches, due diligence, etc.). After closing, cohabitation begins – and as in any marriage, adjustments are necessary.
One of the critical challenges of the post-fundraising period therefore lies in governance and communication with shareholders. “Speaking the same language is essential,” reminds Véronique Hamel, an investment fund manager. Investors generally have their priorities: clear vision, adherence to the business plan, regular financial reporting. For their part, founders often expect more than just a check: they hope for strategic support, introductions within the ecosystem, and experience sharing.
However, in practice, these non-financial expectations are rarely met by investment funds, whose role often stops at providing capital. This discrepancy can create frustration if one is not careful. The key is to establish a relationship of trust and transparency from the outset. As one executive points out, one must know how to “anticipate problems nine months to a year in advance” to avoid unpleasant surprises.
Concretely, this means: communicating proactively on both progress and difficulties, not waiting for the investor to discover a problem in the figures themselves, and sharing strategic decisions upstream. Establishing an effective board is also crucial: defining a clear shareholder agreement, establishing operating rules, and a common language within the board of directors. When everyone understands their role and speaks the same reference language, exchanges are more productive.
Finally, one must not forget that choosing an investor means choosing a partner for years: it is better to ensure compatibility beforehand. “Do not hesitate to audit the funds before signing. Call the companies they have funded, understand who you are bringing into your capital. “It’s a real marriage!”” advises lawyer Aurore Huet. In summary, building a good investor-leader relationship requires time and effort, but it is a decisive factor for long-term success.
Best Practices for a Successful Post-Fundraising Period
Faced with these challenges, what are the best practices observed in startups that successfully transition from the honeymoon to reality? Here are some key recommendations for optimally navigating the post-fundraising period:
- Review your financial plan realistically: Adjust your forecasts taking into account the real effect of cash on your business. Plan for a runway (financial autonomy duration) longer than the minimum, because everything often takes longer than expected. For example, if you thought your raise would suffice for 12 months, aim for 18 months to account for unforeseen circumstances. Remember that a quarter of startups run out of cash after one year due to not having raised enough – do not let excessive optimism put you in this situation. Rigorous planning from the outset increases your chances of going the distance in the financial marathon.
- Keep a clear head and humility: The euphoria of fundraising must quickly give way to measured management. Consider the amount raised not as a jackpot to spend, but as working capital to invest intelligently. Remain cost-conscious when possible (e.g., do not triple marketing expenses overnight without a clear strategy). As experts express, this fresh capital is a lever, not a guarantee of success: maintain the same discipline as before, remembering that money is only a means to achieve your objectives and that every euro must demonstrate its relevance. This composed attitude will also reassure your investors about your ability to manage effectively.
- Structure yourself without delay, step by step: Take advantage of the fundraising momentum to lay the foundations of a solid organization. Define lean but clear processes for project tracking, financial management, reporting, etc. Prioritize essential recruitments that unlock growth (e.g., a business developer to accelerate sales, or a product expert to maintain the roadmap). However, there’s no need to hire 10 people at once if you’re not ready to integrate them: it’s better to proceed gradually, learn from each hiring wave, and continuously adapt your structure. The goal is to strengthen the company to support scaling up, while avoiding uncontrolled hypergrowth. In short, structure yourself in service of the strategy and not as a trend.
- Surrounding yourself with the right skills and advice: A leader cannot do everything alone, especially after a fundraising round where the stakes multiply. Do not hesitate to delegate certain areas to experts. For example, “hiring an outsourced CFO was the best choice we made” testifies a CEO who raised funds – having a financial director (part-time or full-time) can greatly help in managing cash flow, preparing reports, and anticipating needs. Similarly, calling on mentors or a strengthened board of directors can provide valuable strategic insight. Many founders would like to benefit from strategic support and useful networking, but investors do not always play this role: therefore, surround yourself with experienced entrepreneurs, sectoral experts, or coaches who will complement your team. According to the TGS study, 51% of leaders believe that post-fundraising strategic support would be beneficial, and 36% wish to be networked with experts. Do not remain isolated: integrate the networks of your ecosystem (incubators, associations, alumni, etc.) to exchange with your peers and avoid reinventing the wheel for every problem.
- Establishing transparent communication with investors: Implement regular and honest reporting for your shareholders very early on. Share good news, but also difficulties or delays as soon as they arise, explaining how you intend to resolve them. This transparency, a guarantee of trust, avoids misunderstandings and demonstrates your professionalism. Speaking the same language as investors also means explaining your successes and challenges in business terms: show the evolution of key KPIs, link them to value creation. Do not wait only for formal meetings to communicate: an informal discussion can sometimes defuse a nascent concern. In short, make your investors allies by keeping them involved in your adventure, instead of keeping them at a distance. This does not imply blindly accepting everything: if you disagree on a direction, provide concrete data and arguments for dialogue. Mutual respect and frankness will establish a healthy long-term relationship.
- Choosing your investors carefully (before and after fundraising): Ideally, the investor selection process is done upstream of the fundraising. Beyond the check amount, be interested in the fund’s philosophy, its investment horizon, and its reputation with previous entrepreneurs. Do not hesitate to contact other founders funded by this fund to gather their feedback: do they keep their promises of support? Are they rather intrusive or “hands-off”? This reverse due diligence will save you from unpleasant surprises. As Aurore Huet says, investing together is like a marriage: it’s better to know your partner’s character. After fundraising, if you notice divergences in vision with your investors, seek constructive dialogue. Sometimes, adding an independent director to the board can help balance perspectives. In any case, keep in mind that not all funds are equal and it is preferable to refuse money that would come with unmanageable counterparts (for example, excessive oversight, or a cultural misunderstanding). Prioritize business partners who share your values and your ambition for the company.
- Preserving agility and adaptability: Finally, do not abandon the startup spirit that led to your initial success. The post-fundraising trap would be to get bogged down in heavy processes or blindly follow the established plan without questioning what needs to be questioned. On the contrary, cultivate organizational agility: continue to test, listen to market feedback, and pivot if necessary. Many scale-ups testify that their survival involved major adjustments after fundraising, when they realized that a certain offer did not find its market or that a certain acquisition channel was no longer performing. Your competitive advantage remains your ability to learn quickly and evolve – do not lose it along the way. As the study reminds us, the post-fundraising period certainly requires solid planning, but above all the ability to react in real-time to avoid falling into the famous valley of death of failing startups. Therefore, remain alert: closely monitor your indicators, implement safeguards (for example, an alert threshold for cash flow levels or customer acquisition cost) that trigger strategic reflection as soon as they are crossed. This proactivity can make the difference between a scale-up that overcomes obstacles and one that is caught off guard by difficulties.
Key Lessons for Founders
In summary, what lessons can entrepreneurs draw from these observations on the post-fundraising period? Here are the essential points to keep in mind:
- Fundraising is not an end in itself, but the beginning of a new stage: Far from “sheltering the company,” capital injection places the startup before new responsibilities. Money guarantees nothing – it must be transformed into effective execution. Each fundraising round should be seen as a starting point towards more ambitious goals, not as the culmination of the journey.
- Initial euphoria gives way to a principle of reality: Expect to go through emotional ups and downs after fundraising. One day exhilarated by infinite possibilities, the next anxious about galloping expenses and sales not coming fast enough. This is normal – this emotional rollercoaster has been described by many founders. What is needed is to capitalize on enthusiasm while psychologically preparing for future challenges. Keep a clear head when reality takes over.
- “Everything remains to be done” – execution takes precedence over raised funds: This mantra emerges from all experiences. Obtaining funding does not accomplish the company’s mission; it only makes it possible. True success lies in post-fundraising execution: acquiring customers, developing the product, structuring the organization… Cash provides fuel, but it’s up to the driver to run the race. Even with several million euros raised, maintain the urgency and determination of a beginner. Do not ease up on your efforts, as your new shareholders will be the first to notice any slowdown.
- Anticipate needs and pitfalls well in advance: One of the key qualities of a post-fundraising leader is to be proactive. If the business plan predicted a difficult plateau at 12 months, start thinking about it from the 6th month. If a key recruit might be missing, have a replacement plan. This capacity for anticipation will prevent many crises. Experienced entrepreneurs thus advise always staying one step ahead of potential problems. In practice, adopt scenario planning: what do we do if growth is twice as slow as expected? What if an aggressive competitor enters the market? It’s better to ask these questions while there’s still time to answer them calmly.
- Surround yourself and continuously train: Do not face challenges alone. Surrounding yourself well is a critical success factor. An experienced CFO, even part-time, can save you from financial ruin. A benevolent mentor or board member can alert you to a strategic trap you hadn’t seen. In parallel, engage in continuous learning as a CEO: develop skills in areas where you feel least equipped (whether it’s finance, large-scale team management, or communication with investors). After fundraising, the founder’s role evolves towards more management and leadership: it is essential to grow with your company.
- The relationship with investors is built on trust: See your shareholders as long-term partners. You have every interest in fostering a healthy relationship with them. This involves transparency, reliability (keeping commitments or explaining why it’s not possible), and mutual respect for roles. A confident investor will support the company even in difficult times, whereas an investor kept at a distance risks getting scared at the first hitch. Build this trust day after day; it is an intangible investment as important as the financial one.
In conclusion,
financing innovation is a journey strewn with euphoric stages and self-questioning. For startup leaders, raised capital is a tremendous opportunity as well as a new responsibility. Moving from the honeymoon to reality requires adaptation, preparation, and a great deal of lucidity.
The post-fundraising challenges – financial management, structuring, pressure for results, governance – may seem daunting, but they are surmountable with the right reflexes. By keeping in mind that each fundraising round is the beginning of a new chapter of growth and not the end of the story, entrepreneurs will be able to approach this phase successfully. The ultimate goal: to transform capital into sustainable value, build a stronger and more enduring company, and thus justify the trust placed by investors during that famous honeymoon.
The post-fundraising journey is demanding, but for those who know how to navigate its turns, it constitutes the path to true entrepreneurial success.
