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Startup cash management: What to do when fundraising money hits your account

June 1, 2025

As startups grow from series A to B to C, burn rate and runway calculations continue to take centre stage, and for good reason. Founders need to know how long they can operate before running out of cash and plan accordingly.  

However, as our co-founder and CEO, Giles Hutson, highlights on the Fintech Insider podcast, another important consideration deserves a share of top billing: startup cash management

In other words, how should founders safely hold fundraising cash to minimise risk and simplify operations? 

To help you get to grips with managing startup cash, this short guide covers:

Disclaimer: We’re here to help, but the contents of this guide are for informational purposes only. They do not constitute financial advice. For that, you should consult a qualified independent financial adviser.

Why is startup cash management so important? Three words: Silicon Valley Bank

In the not-so-distant past, it wasn’t uncommon for startups to have only one bank account. According to a survey in 2023, one-third of UK startups used Silicon Valley Bank (SVB) as their sole banking facility, and everything was business as usual — until it very quickly wasn’t. 

SVB collapsed due to structural vulnerabilities in its business model, which were exposed when rising interest rates and concentrated withdrawals from its tech-focused client base triggered a run on the bank. 

In the end, depositors withdrew more than $42 billion in a single day, SVB failed in less than a week, and its UK subsidiary (SVB UK) also collapsed. 

Fortunately for UK investors, the Financial Services Compensation Scheme (FSCS) kicked in, protecting deposits at SVB UK up to £85,000 per eligible depositor in the UK. However, if you had held more than the £85k limit in accounts at SVB UK at the time of its collapse and had been unable to withdraw it before the bank's failure, you could have faced significant losses even as an eligible depositor.

The SVB bank run and subsequent failure are stark reminders that market volatility can affect cash with little warning and that putting all your eggs in one basket remains a risky strategy. 

So, what should founders do after a successful startup fundraising campaign in a post-SVB world?

Before SVB, it was fairly common practice for startups to have a single business bank account in which someone deposited funding and from which expenses were paid.

Operationally, this made sense. Opening and maintaining multiple bank accounts can be an administrative headache. Having only one account is, on the face of it, easier to manage, monitor, and report on. 

However, keeping a large sum of money in a single account exposes it to several risks:

Cash diversification: How to spread risk with multiple accounts

Spreading your cash across several accounts can help shield you from both counterparty and fraud risk. Moreover, if you maintain a minimum cash balance covenant, that amount could be deposited in a separate account and left untouched as an emergency fund.

However, before you start diversifying funds between several accounts, it’s important to note that FSCS protection applies per authorised firm, not per account. Banks and building societies that are part of the same group are considered a single institution under FSCS rules. 

For example, if you have a business account with Bank A and another with Bank B, and both are part of Banking Group C, FSCS will only cover up to £85,000 in total — even if Banks A and B are separate brands. This limit also applies to cash held both directly with an institution and indirectly via a cash platform."

So, how could startup cash management look in practice? Well, it can depend on the funding stage and the money you’ve raised.

In summary: Streamline startup operations with Insignis 

The collapse of SVB thrust cash management and diversification into the startup spotlight. Founders must heed the warning and spread the risk.

Insignis makes this seamless, but using a cash management system isn’t only about optimising FSCS coverage — it can also help you simplify day-to-day operations and maximise returns.

With our award-winning platform, you can eliminate manual tasks like tracking multiple accounts and generating reports.  

With access to competitive and exclusive interest rates from over 45 banks and building societies, you can potentially increase your cash reserves over the long term by reinvesting interest earned back into your company.

See how much interest your startup could be earning. Request an illustration here.

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