We work with climate tech founders across every stage of growth, and one of the most overlooked post-raise priorities is treasury management.
There’s always something more urgent competing for attention in the weeks after a close (we get it!). But moving your cash reserves into a high-yield account can have six figure implications, and avoiding a single point of failure can avert a catastrophe when the unexpected happens, so carve out time to get this done ASAP.
Key Takeaways:
- Move reserve cash into a high-yield account ASAP: Waiting even a few weeks leaves money on the table.
- Use a multi-account setup: For most startups, we recommend a digital bank for operating cash, a fintech for cards/AP/expenses, a high-yield cash or treasury product for reserves, and a legacy bank as backup.
- Keep only near-term cash in your operating account: We typically suggest holding 1–2 months of operating cash there, plus at least one pay cycle in a backup account. The rest should be earning higher yields.
- For early-stage climate tech startups, we find Mercury + Brex to be a solid combination to cover the majority of finance needs: Mercury is a strong operating bank, and Brex is a straightforward fintech for cards, AP, and expense management.
How should I think about my overall Treasury Management Strategy?
You want your cash to be safe, accessible, and earning the highest feasible yield. You also want the right capabilities in place to make day-to-day operations easy (bill payments, credit cards, expenses, etc.). The ideal setup depends on spend profile and company stage, but generally speaking:
Maintain at least two banking relationships for operating cash
Keep 1-2 months of operating cash in an FDIC-insured deposit account. Keep a minimum of 1x pay cycle at a separate institution as well, in case your primary account is inaccessible. Operating cash should be immediately available — this is not the place to worry about yield.
Move remaining cash reserves into a high yield account or fund
The rest of your cash should be working for you. In today’s market, we’re seeing yields in the 3.0-3.5% range across fintech platforms and mission-aligned community banks. Use cash reserves to top up operating cash monthly.
Putting it all together, teams should use:
- A startup-focused digital bank for operating cash and day-to-day banking
- A fintech platform for AP, cards, and expense mgt
- A high-yield cash or treasury product for reserves
- A legacy bank as a backup relationship
Which institutions and accounts should I consider?
It can be difficult to navigate the growing set of choices across fintech platforms, digital and legacy institutions, and climate-focused community banks. Based on our experience, here’s how the offerings stack up:
Startup-friendly digital banks:
For most cases Mercury is the simplest and most user-friendly banking experience. Some later stage companies use Rho (advanced features + more customization).
Full stack fintechs:
We find that Brex is the best full-stack option for early stage startups. It’s clean, intuitive and is best-in-class for corporate cards.
If you want to optimize for scalability, you could consider Ramp. Ramp is strong on spend controls and automation, making it a good fit for teams that expect increasing complexity.
Pick a HYSA from your bank or fintech:
Consider: Yield (3%+), liquidity (min. next day availability), and security (FDIC-insured or gov’t securities).
Maintain one legacy bank account for emergencies:
While it’s easy to over-optimize for the last crisis instead of the next one, the SVB failure in 2023 taught us that having access to at least one payroll’s worth of funds at a too-big-to-fail institution is important to guarantee continuity during a crisis.
In our experience, Chase is the most startup-friendly of the largest players. However, if your cash is already with a large national bank, there’s no urgent reason you need to move it. If it’s with a smaller regional bank, consider making the switch.
What should I do ASAP?
If nothing else, move your cash reserves into a high-yield account now. Every week you wait is money you’re leaving on the table. The full setup above (dual banking relationships, HYSA, expense management) can also be done in under two weeks with minimal lift, so move it up the priority list!
FAQ: Banking & Treasury 101
What’s the difference between a Money Market Account and a Money Market Fund? Money Market Accounts are effectively high-yield deposit accounts and can be FDIC insured. Money Market Funds behave more like brokerage products. They are generally low risk but not FDIC insured. We recommend MMFs that only invest in govt securities.
What’s the difference between an FDIC-insured deposit and an FDIC-insured sweep? FDIC-insured deposits are funds held directly at a single bank and insured up the standard limit ($250K) per depositor. FDIC-insured sweeps distribute cash across a network of partner banks to extend total FDIC coverage and manage larger balances (into the $Ms).
What are the main types of banking institutions startups typically consider? There are three common categories:
- Online or digital banks (Mercury, Rho): Not technically banks but provide online banking services, typically offering higher yields, simpler fee structures and much more user-friendly features than legacy banks .
- Startup-focused fintech platforms (Brex, Ramp): Designed for startups, often bundling cards, A/P, checking accounts and treasury tools into one platform.
- Large national banks, with or without startup programs (Chase, HSBC, BofA): Traditional institutions with broad services, often paired with relationship banking and lending products. Usually higher fees and less user-friendly than digital banks.
Are there any other relevant considerations we should take into account? Consult with your CPA and/or fractional CFO to decide what works best for your circumstances. If you have an Investor Rights Agreement, you should check what obligations you have and consult with your board before making major changes. Consider QSBS rules such as the active-business requirement before moving large cash balances into money market funds, mutual funds, corporate bonds, or other treasury products.
References & Further Reading
FDIC: Deposit Insurance FAQs — https://www.fdic.gov/deposit/deposits/faq.html
FDIC: Understanding Sweep Accounts & Extended Coverage — https://www.fdic.gov/consumers/banking/facts/
Mercury: Banking for Startups — https://mercury.com
Rho: Business Banking for Startups — https://www.rho.co
Brex: Financial Stack for Startups — https://www.brex.com
Ramp: Spend Management Platform — https://ramp.com
Disclaimers
This content is provided for informational and educational purposes only and does not constitute financial, legal, or investment advice. Information is current as of the date of publication and is subject to change.
The institutions and products referenced in this guide reflect the independent judgment of Planetary Scale Advisors, based solely on our direct experience working with climate tech founders. We do not receive referral fees, commissions, revenue sharing, or any other form of compensation for mentioning these providers here. No provider has paid to be included, and inclusion should not be construed as a formal endorsement or guarantee of suitability for your specific situation. We encourage you to conduct your own due diligence and, where appropriate, seek advice from a qualified financial professional before making banking or treasury decisions.