The short answer: Startup treasury after a raise works best in three tiers: an operating account holding about two months of net burn, an insured reserve for the next 10 months, and a strategic tier in Treasury bills or a government money market fund. FDIC insurance covers $250,000 per depositor, per bank, per ownership category, so a round held in one account is mostly uninsured.
- A $5,850,000 seed round in a single corporate account leaves $5,600,000, or 95.7%, above the FDIC limit.
- A sweep program spreads deposits across several insured banks in amounts under $250,000 each.
- Treasury bills mature in 4, 6, 8, 13, 17, 26, or 52 weeks and carry no FDIC coverage.
- Every bank, sweep, and brokerage account should reconcile to the general ledger each month.
Last updated November 2026.
Startup treasury is a short list of decisions made once and reviewed each quarter. Which accounts hold the cash, how much sits in each, who can move it, and how often the balances are checked. A seed company with 27 months of runway rarely needs yield. It needs the round to be there when payroll runs.
This guide covers the account structure, the instruments available for each tier, the software layer, and the controls around it. For the broader post-close checklist, including Form D and the first board packet, see the first 90 days after a raise.
What is the best way to hold a raise across bank accounts?
Split the round by when the money will be spent. Cash needed this quarter stays liquid at the operating bank; cash needed later moves to insured or government-backed holdings.
Three tiers cover most seed and Series A companies. The operating tier funds payroll, vendor payments, and card balances. The reserve tier covers the next 10 months of planned net burn. The strategic tier holds everything beyond the first year, the cash that only matters if the plan runs long.
The tiers follow the burn plan, not a fixed percentage. A company burning $212,000 a month holds roughly $424,000 in operating cash. A company burning $95,000 a month holds $190,000. Each figure is reset when the forecast changes.
How do FDIC limits affect where you park the round?
The FDIC insures $250,000 per depositor, per insured bank, per ownership category. A corporation’s accounts at one bank count as one category, so opening more accounts at that bank adds no coverage.
The FDIC insured deposits guide lists corporation, partnership, and unincorporated association accounts as a single ownership category. Deposits in that category at the same bank are added together. The same guide notes that Treasury bills, stocks, bonds, and mutual funds are not covered by deposit insurance.
The arithmetic is blunt. A company that deposits a $5,850,000 round into one operating account holds $250,000 insured and $5,600,000 uninsured. That is 95.7% of its runway resting on the health of one bank. Silicon Valley Bank’s failure in March 2023 showed how fast that exposure can freeze a payroll account.
What is a sweep account and does a seed-stage startup need one?
A sweep account moves balances above a set level into another holding, usually overnight. For a seed company, the useful version is an insured cash sweep that places deposits at several banks.
Two kinds of sweep matter here. A deposit sweep, sometimes called a reciprocal deposit program, splits a balance into pieces under $250,000 and places each piece at a different FDIC-insured bank. A money market sweep moves excess cash into a money market fund, which is a security, not a deposit.
A deposit sweep becomes practical once the reserve tier holds several multiples of $250,000. Below that level, a second bank relationship often covers the gap with less paperwork. Ask any provider how many program banks it uses, how fast a withdrawal settles, and whether the company can exclude a bank where it already holds deposits.
Which holdings fit each tier of startup treasury?
Each tier trades access against protection. The table compares the five holdings most seed companies consider.
| Holding | Protection | Access | Typical tier |
|---|---|---|---|
| Operating checking account | FDIC, $250,000 per bank per ownership category | Same day | Operating |
| Second bank operating account | A separate $250,000 FDIC limit at the second bank | Same day | Operating backup |
| Insured cash sweep | FDIC at each program bank, in pieces under $250,000 | Short notice, per program terms | Reserve |
| Government money market fund | Not FDIC insured; SIPC covers custody at a failed broker, not market value | Short notice, per fund terms | Reserve or strategic |
| Treasury bills | Not FDIC insured; direct obligations of the U.S. Treasury | At maturity, or sold early at market price | Strategic |
Are Treasury bills and money market funds protected like deposits?
Neither carries FDIC insurance. Each has a different protection, and the strategic tier depends on understanding both.
TreasuryDirect lists bill terms of 4, 6, 8, 13, 17, 26, and 52 weeks. Bills are sold at a discount or at face value, and the holder receives face value at maturity. A bill can also be sold before it matures, at whatever price the market sets that day.
Money market funds invest in short-term debt, cash, and cash equivalents, according to Investor.gov. Held at a brokerage, they fall under SIPC, whose limit is $500,000, including $250,000 for cash. SIPC replaces missing assets when a broker fails. It does not protect against a decline in value.
Worked example: how should a $5,850,000 seed round be placed?
Take a company that closes a $5,850,000 seed round with planned net burn of $212,000 a month. Runway is $5,850,000 ÷ $212,000 = 27.6 months.
| Tier | Rule | Amount | Uninsured or non-deposit exposure |
|---|---|---|---|
| Operating account | 2 months of net burn | $424,000 | $174,000 above the FDIC limit |
| Insured cash sweep | Months 3–12 of net burn | $2,120,000 | $0, spread across at least 9 banks |
| Treasury bill ladder | Remainder, in 13-, 26-, and 52-week rungs | $3,306,000 | Held as federal obligations, not deposits |
| Total | $5,850,000 | $174,000 uninsured, or 3.0% of the round |
Run the reserve math. $2,120,000 ÷ $250,000 = 8.48, so the sweep needs at least 9 program banks to stay fully insured. The ladder splits $3,306,000 into three rungs of $1,102,000 each. As each rung matures, the cash either rolls into a new bill or moves to the sweep if the forecast shows it will be needed.
Yield is the smaller lever. The non-operating balance is $5,426,000. Each 1 percentage point of annual yield on that balance earns $54,260 a year, about 7.8 days of net burn. Moving from one account to three tiers cuts uninsured exposure from 95.7% to 3.0% of the round.
What cash-management software exists for startups?
Startup cash-management software falls into four groups. Each answers a different question, so most companies use two or three together.
- Bank-native dashboards. The operating bank’s own portal shows balances, approves payments, and often runs the insured sweep.
- Treasury platforms. These move idle cash into money market funds or Treasury bills through a partner broker-dealer. Confirm which firm holds custody and how SIPC applies.
- Accounting systems. QuickBooks Online, Xero, or NetSuite bank feeds pull every account into one ledger. Bill.com handles approvals and payables.
- Forecasting tools. These project cash forward from the ledger. Our review of cash flow forecasting tools for startups covers that group.
Software supplies the data. Puzzle, for example, gives a company clean, categorized ledger data; a finance team turns that data into a reconciled close and a forecast the board can trust.
How often should cash positions be reconciled?
Check balances weekly and reconcile every account to the general ledger monthly. Sweep and brokerage accounts need the same monthly reconciliation as the operating account.
Sweeps complicate the books. The sponsor bank often reports one balance, while the program statement lists each bank holding a share. The ledger should tie to that program statement. Treasury bills need their own handling, since a bill bought at a discount accretes toward face value over its term.
A weekly cash report shows opening cash, receipts, disbursements, closing cash, and the variance from forecast. It feeds a 13-week cash flow forecast, which decides when a Treasury rung rolls or moves to the sweep. Our guide to how often to reconcile bank accounts sets out the full cadence.
Who should own treasury at a seed-stage company?
The CEO owns the policy, the board approves it, and a finance lead runs it day to day. No single person should be able to both initiate and approve a large transfer.
A one-page written policy covers the tier rules, approved holdings, maximum maturity, and the banks in use. It also sets dual approval, such as two signers on any wire above $25,000. Review the policy each quarter against the forecast.
At seed stage the finance lead is often a fractional CFO or an outsourced controller. Debit & Co. reconciles every bank, sweep, and brokerage account as part of the Continuous Close Method™, and Aaron Ressel reviews the monthly cash reconciliation before the close package goes to a client. For how cash runway is calculated from that close, see burn rate and runway.
Frequently asked questions
How do FDIC limits apply to a startup’s bank accounts?
The FDIC insures $250,000 per depositor, per insured bank, per ownership category. A corporation’s accounts at one bank share one category, so a company with $5,850,000 at a single bank has $5,600,000 uninsured.
What is an insured cash sweep?
An insured cash sweep splits a large balance into pieces under $250,000 and places each piece at a different FDIC-insured bank. A $2,120,000 reserve needs at least 9 program banks to stay fully insured.
Are Treasury bills or money market funds FDIC insured?
No. Treasury bills are direct obligations of the U.S. Treasury, and money market funds are securities. SIPC protects custody at a failed brokerage up to $500,000, including $250,000 for cash, but not market value.
How much cash should a startup keep in its operating account?
A common rule is about two months of planned net burn. A company burning $212,000 a month would hold roughly $424,000 in operating cash and move the rest into reserve and strategic tiers.
Sources: FDIC, Understanding Deposit Insurance and the Insured Deposits guide; SIPC, What SIPC Protects; U.S. Treasury, TreasuryDirect Treasury Bills; SEC Investor.gov, mutual funds and money market funds. The seed round, burn rate, tiers, and $25,000 approval threshold are illustrative.
