Uh, that's not "better".
If you have a huge chunk of change sitting around, you've raised too much or too early, and you've successfully diluted yourself for zero reason.
If you actually had a reason to raise a lot of money, you'd do with the money what you promised the investors (who gave you the money) you would.
I've raised before. I raised what I needed. Not a penny more because I didn't need the money.
Let’s see:
- 12 months runway - $100k/mo. burn rate - 4% APR
Gives you about $25k interest.
Seems worth it to me.
I too have raised before.
I'm not saying raising and then buying T-Bills is better than just raising less.
I'm saying if you find yourself with excess cash, you can't just un-raise. In that scenario, then short term T Bills are strictly better than cash.
The question is why you'd use money you raised for anything but the reason you raised it. You've probably raised a shit ton more than I have, but hear me out - when one raises, there's generally a timeline of fund deployment from the startup's UoF, right? That's how it was done in my case - we tell the investor what we need, why we need it, and when we need it, etc. And then if the investor agrees to invest, it's not just a lump sum sitting in the bank - a good amount of that money gets deployed to help the startup fulfill its mission.
I get that if you're running super lean and you've raised enough to run lean for a while and use cash when you need to, but at the same time why raise more than you have need for?
>if you find yourself with excess cash, you can't just un-raise
I always thought a startup can return cash to investors as long as the payments or dispersements are proportional to the amount of stock owned.
Depends on the funding vehicle. If you're on a SAFE, and still a going concern, then I think returning investor funds would trigger a priced round and you'd end up converting at a (hopefully) high valuation