Use of funds: how to show investors where the money goes

In July 2026 Talentware, which builds AI software for HR teams, closed a €3.3 million seed round (the first sizeable round from professional investors) led by CDP Venture Capital. The money, said the announcement, would fund ‘team growth, product development and geographical expansion’. Three phrases, no numbers. For a press release, that’s normal.

In a pitch deck it won’t do. The use of funds slide is where an investor decides whether your round size is a plan or a guess. This guide shows you how to build it backwards from a milestone, price the hires at Italian employer costs, lay it out as a table and show Smart&Start money honestly. Never raised before? Read our map from zero to a first round first.

What is a use of funds slide, and what must it answer?

It’s the slide that turns the amount you’re raising into a plan, and in our pitch deck structure with the 13 slides investors expect it sits with the ask, at the end. Four questions need an answer. How much? For what? For how long? To reach which milestone?

Most decks answer the first two. The last two matter more: they tell an investor when you’ll be back for money, and what you’ll have to show for it.

Applied to Smart&Start Italia? Then you’ve filled in a version of this already. Invitalia’s form opens its financial section with a ‘Prospetto Fonti/Impieghi’, sources and uses across the plan’s 24 months: your own funds, bank loans and the Smart&Start loan on one side; equipment, services, marketing, staff and working capital on the other. Investors want the same thing, by month.

How long should the money last? Start from the milestone

Founders often pick a number that sounds right, €500,000 or a round million, and split it afterwards. Turn it around. Decide what the company must prove before the next round (a revenue level, a number of paying customers, a certification) and cost the road to it.

Geoff Ralston’s seed guide on Y Combinator’s blog starts from an ideal: raise enough to reach profitability. If you’ll need another round, the target becomes the next ‘fundable’ milestone, usually 12 to 18 months away, and the amount ‘must be tied to a believable plan’. That was 2016. Across 9,843 rounds raised by US startups on Carta, the median gap between seed and Series A was 1.9 years at the end of 2025. Carta’s own line: ‘planning to raise VC money every 18 months is planning to fail.’

So work backwards. Milestone in 15 months, five months to raise: the money has to last 20 months, plus a buffer. That’s your runway, the months the cash lasts at the spending you plan, and our companion piece shows how to work out burn rate and runway month by month.

How to allocate seed funding: five lines, people first

You rarely need more than five lines. People means salaries plus whatever the company pays on top. Product: cloud, licences, outside design or testing. Go-to-market is the money that finds and signs customers, whether that’s ads, a fair or the CRM. Operations is the dull part: somebody has to pay the accountant, the payroll consultant and the rent. Then a buffer, assigned to nothing.

People is nearly always the biggest. Take Talentware: 30 employees when the round was announced, almost two in three (65%) on product and AI, with more hires planned in sales, product and customer success. Kruze Consulting, a US accounting firm that works with startups, went through more than $900 million of their spending. Payroll-related costs? 76% of operating costs at the venture-backed ones.

So your use of funds is mostly a hiring plan. The go-to-market line must still agree with what your CAC, LTV and payback numbers say a customer costs to win.

What a hire really costs in Italy

Don’t stop at the gross annual salary (RAL). The company pays more. How much more? In the OECD’s Taxing Wages 2026, employer contributions were 24.0% of what an average Italian worker cost in 2025. So €100 of gross pay costs the company about €132 (our arithmetic). Add the TFR, the severance pay the Civil Code makes you accrue each year: the year’s pay divided by 13.5, roughly 7.4%.

Together that’s close to 1.4 times gross pay. We’ll use 1.4 below: a round number for teaching, nothing more. Ask your consulente del lavoro (payroll consultant) to price each role under your national contract (CCNL).

Dates count too. A hire who starts in month 7 is paid for 14 months of a 20-month plan, not 20. The hiring sheet lives in your model: see our guide to a startup financial model you can defend.

A worked example: €800,000, month by month

The company here is invented, and so are the salaries.

Say you run a B2B software startup in Bologna: two founders, one developer, 12 paying customers. You’re raising €800,000. The milestone is 60 paying customers and €45,000 of monthly recurring revenue (MRR, subscription income that repeats each month) by month 15, which in your judgement opens Series A talks. Five months to raise makes a 20-month plan. Employees cost 1.4 times gross salary; the founders take €3,500 a month each, all-in.

Who	Starts	Gross salary (RAL)	Cost per month	Months	Total
Two founders	Month 1	Fixed pay	€7,000	20	€140,000
Developer, already on board	Month 1	€42,000	€4,900	20	€98,000
Second developer	Month 3	€42,000	€4,900	18	€88,200
Account executive	Month 4	€36,000	€4,200	17	€71,400
Customer success	Month 7	€30,000	€3,500	14	€49,000
People, total			€24,500 from month 7		€446,600

Now the slide. Product, go-to-market and operations are spread evenly over the 20 months; the buffer stays unassigned.

Line	Amount	Share	What it pays for
People	€446,600	56%	Two founders, the current developer and three hires by month 7
Product	€64,000	8%	Cloud hosting, software licences, outside design, a security test
Go-to-market	€120,000	15%	Campaigns, two trade fairs, travel, CRM and sales tools
Operations	€72,000	9%	Accountant and payroll consultant, legal, insurance, coworking
Buffer	€97,400	12%	Unassigned: about 2.5 months of full-team spending
Total	€800,000	100%	20 months of plan; milestone due in month 15

Read it like an investor. Once everyone’s on board in month 7, your burn rate (the net cash going out each month) peaks at €37,300. Twenty months of plan cost €702,600; what’s left would last another two and a half months at that pace, give or take. Milestone late by a quarter? The buffer is what stops you raising in a hurry.

Rather not build the hiring sheet from scratch? Our startup financial model template runs five years month by month, with hiring at Italian employer costs, runway, scenarios and a round simulator (Excel, €129).

How to show it on the slide, and what to leave off

The pie chart is the default, and it hides what an investor is checking: time. A pie can’t show that the account executive starts in month 4 or that the milestone lands in month 15. A table like the one above can, and so can a simple timeline. Ralston suggests ‘a summary product roadmap (6 quarters max) indicating what an investment buys’.

On the slide, keep what reads in a few seconds:

• Amount and months in one line: ‘€800,000 for 20 months, plus a buffer’.
• Five lines, euros and percentages adding up to exactly 100.
• Three or four dated steps: hires, releases, customer counts.
• The milestone that opens the next round, with its month.

The rest lives in the model, and the two must match to the euro. Put €446,600 on the slide and €430,000 in the spreadsheet, and the meeting is about that gap instead of your product.

Mistakes that make investors doubt the plan

• Percentages adding up to 110, or 95.
• ‘General corporate purposes’ as a line. It says you haven’t decided.
• Salaries at gross pay. In our example that leaves €87,600 out, almost the whole buffer.
• Everyone hired on day one.
• A grant or loan counted as cash before anyone approves it.
• A milestone with no month.

Still earlier than this? Start from how much money it really takes to start a startup.

Equity plus Smart&Start: how to show public money honestly

If you’re an innovative startup in Italy, you might pair the round with Smart&Start Italia, Invitalia’s zero-interest loan. Used well, it stretches the equity. Shown badly, it inflates the round.

Here’s what MIMIT and Invitalia say. Smart&Start lends 80% of eligible costs, 90% if every team member is a woman or under 36, or if there’s a PhD holder working abroad. Plans go from €100,000 to €1.5 million. You repay over ten years, from 12 months after the last tranche. What can you put in? Machines and software, sure. You can also put in technical consultants, marketing and salaries, and working capital up to a fifth of eligible costs. Southern startups pay back less. Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sicily, Sardinia: base the company there and you repay €70 for every €100, with the other €30 as a grant.

Timing matters more. Only costs incurred after you apply count, and you have 24 months from signing the contract to spend. Money follows reported costs: each progress report may include unpaid invoices for at most 30% of it, or within four months of signing you can ask for an advance of up to 40% of the aid, backed by a bank or insurance guarantee. And staff: Invitalia’s FAQ speaks of employees ‘con mansioni tecniche’ and excludes administrative, accounting and sales staff.

So keep it apart from the round. Back in Bologna, say €300,000 of the plan qualifies: the two developers, the product line, some web marketing. At 80%, that’s €240,000 of loan. The other €60,000? It comes out of your round. Show the loan as its own line with its status (‘Smart&Start, €240,000, applied for, decision pending’), show the plan working without it, and show what it adds: about six more months at full speed, in our arithmetic, once the money arrives.

One rule ties the two together. When third-party investors put in equity, you can ask to turn part of the loan into a grant: up to 50% of what they invested, capped at 50% of the aid. Here that’s €120,000 at most, half of €240,000. A decree of 13 July 2026 rewrites parts of the scheme once its implementing circular is out, so check the rules in force first. Our Smart&Start Italia guide covers eligibility and the application.

Checklist: your use of funds slide, step by step

1. Write down the milestone that opens your next round, and its month.
2. Add the months to raise. With a 1.9-year median from seed to Series A, don’t cut it fine.
3. Build the hiring plan month by month, at full cost to the company.
4. Price product, go-to-market and operations, and check go-to-market against your CAC.
5. Leave a buffer, unassigned.
6. Put five lines on the slide, with euros, percentages that add up to 100 and dates.
7. Give any grant or public loan its own line and status.
8. Check every number against the model.

This article is general information, not legal, tax or investment advice. Smart&Start rules and employer costs change: check the current rules on Invitalia’s site and have a payroll consultant price your hires before you show numbers to investors.