Tips for managing your startup's cash

(I’m experimenting with some shorter-form, more frequent posts, after a fair bit of a hiatus here—let me know if you like the new format more or less.)

I regularly talk to founders who have just raised money and ask: Ok, now what? Here are five simple steps for “managing your treasury” that will scale with you through unicorn status.

First, a reminder of your goals: capital preservation (don’t lose money), liquidity (be able to access all of your money relatively quickly), and income (also known as yield)—in that order.

1️⃣ Open a startup-friendly primary account. (Mercury and Brex cash are our most popular ones.)

2️⃣ Store 1–3 months of operating expenses in your primary account. Keep it fully within the FDIC insurance limit. Some banks offer “cash sweep” products to help with this.

3️⃣ Have a secondary operating account elsewhere, just in case. It's fine to pick a stodgier institution here. Keep enough cash to cover two payroll runs, but again, avoid having uninsured deposits in excess of the FDIC limit.

4️⃣ Invest the rest in a money-market fund that invests in Treasury bills (which are backed by the full faith and credit of the US government).

5️⃣ Don't chase yield. Stick with the safety of government securities. Any bond fund or non-FDIC-insured investment product that has greater yield than a Treasury money market fund is also riskier than a Treasury money market fund. There’s no free lunch here.

This simple strategy will scale with you all the way through to hundreds of millions of dollars of cash.