Skip to main content
All CollectionsFinance Help
Guide to Treasury Management
Guide to Treasury Management
R
Written by Rajeev Behera
Updated over a year ago

Board expectations

Your board will expect you to manage your money according to the following criteria:

  1. Capital Preservation: Invested in safe assets with little or no risk of losing money, like safe Money Market funds and/or US Treasuries.

  2. 100% of your funds should be insured by the US Government. This means every dollar must be FDIC/SIPC insured or in US Treasuries

How should I allocate funds?

This article by a16z is a great reference on how you should allocate your funds. The typical options are as follows in order to optimize for capital preservation as described above:

  1. Checking accounts - an operating account

  2. Money Market Funds - liquid within 5-7 days, but usually only insured up to $500K via SIPC insurance

  3. US Treasuries - fixed for 1-3 months, fully backed by the government to an unlimited amount

Here is how you can calculate our recommended allocation:

  • Checking account funds

    • Calculate your current burn, multiply by 12 months to get the amount you should store in your checking account

  • Money Market

    • We recommend an additional 3-6 months of burn allocated here

  • US Treasuries

    • The remainder should go here

Here is an example of these calculations:

  • Company A has $2,000,000 in funds and a burn of $50K a month

  • Allocations should be as follows

    • Checking account = $50,000 x 12 = $600,000

    • Money market = $50,000 x 3 = $150,000

    • US Treasuries = $2,000,000 - $600,000 - $150,000 = $1,250,000

Did this answer your question?