Use of Funds - Capital Allocation Plan

A detailed breakdown of how a company plans to allocate raised capital across different business areas and initiatives.

Use of Funds is a critical section in pitch decks and investor presentations that shows exactly how the investment money will be spent. It demonstrates strategic thinking, planning, and accountability to investors about their capital deployment.

Common Fund Allocation Areas

Growth Activities:

• Product development
• Marketing and customer acquisition
• Sales team expansion
• Technology infrastructure

Operations:

• Hiring key talent
• Working capital
• Legal and compliance
• Office space and equipment

Example

$2M Series A Use of Funds: SaaS startup allocation plan

• Engineering (40% - $800k): 4 developers, product features

• Sales & Marketing (35% - $700k): 2 sales reps, digital marketing

• Operations (15% - $300k): Office, legal, admin staff

• Working Capital (10% - $200k): Buffer for unexpected needs

This allocation shows focus on product development and customer acquisition, with reasonable operational overhead and financial prudence.

Best Practices

Be Specific: Provide detailed categories and dollar amounts

Time-Based: Show 12-18 month allocation plan

Growth-Focused: Emphasize revenue-generating activities

Conservative Buffer: Include 10-15% for unexpected needs

Milestone-Linked: Connect spending to business objectives

Related Terms

Runway

How long funds will last

Burn Rate

Monthly cash consumption

Milestones

Key business objectives

Capital Efficiency

Maximizing returns on investment