Local VC DeGroot To Startups: ‘Cashflow Management Rules Everything’



By Seth DeGroot, BrightStone Venture Capital

“The most important activity facing any startup company is cash-flow management. Successfully managing cash-flow allows the company to reliably forecast operating budgets, and invest excess cash to fuel growth.

Cash flow is very simple; it’s the amount of cash a company either produces or consumes in a given period. In a cash-strapped situation, cash should be monitored weekly or daily basis; this period can be lengthened as the company’s cash position improves.”

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  • http://thebigidea.com/ LittleDuke

    I use the phrase “Break-even is the bench-mark” — if you cannot cite what your monthly burn rate is (plus/minus) then you either have too much money or too much free time on your hands.

    For example, Silicon Prairie recently completed it’s SEC approval hurdles to become a Federal Funding Portal so that we can handle inter-state crowdfunding — that translated to a minimum $1,200/yr filing fee with FINRA, which in my mind equals another $100/month in “rent”

  • http://tech.mn Jeff Pesek

    There’s some great learnings in here for entrepreneurs and their startups that comes from a qualified source.

    Before cash can be managed, however, it must be generated, right?

    Taking a step back, perhaps the most important activity generally facing any startup is sales…aka customer acquisition. And before that even you have product-market fit. Hmm…

    • http://thebigidea.com/ LittleDuke


      Agreed. I found that when I started thinking about my business as a “supply chain” and the concepts around lean manufacturing, it dramatically changed how I prioritized the “when” — the “just in time” approach meant not overbuilding.

      Combine it with agile software development and you have what could be called “agile business development” — the boot-strappers know this well; focus on solving problems by creating solutions that deliver “bundles of satisfaction.” Far too many would be entrepreneurs obsess about “features” instead of figuring out what the “benefits” are. A critical understanding when selling your widget or service.

      It’s a tension between “value-add” and “cost-reduce” — the disruptors do both.

      Case Study: Wal-Mart

      I’m increasingly of the opinion that being an entrepreneur can be taught like a “trade craft” — its not good enough to point to best practices or have mentors — you have to gradually transfer knowledge “from the right seat to the left seat” — just as we do in pilot training.

      My sense is that there is potentially a mashup of “academy”, “cohort”, “incubator” and “coco” — and I think the time is right to put it to the test :-)