Startup Funding Espresso -- Diligencing the Financials

Diligencing the Financials

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In diligencing the startup’s financials, ask the following questions:

What is the key assumption behind the financials?

Does it assume a product will reach the market at a specific time?

Does it assume we’ll have hired new team members by a certain date?

What funding does the plan assume?

What price and unit volume were used to set the sales forecast?

How do the margins compare to similar companies? Are they in the same ballpark?

What salaries are forecasted, and are they reasonable for this stage of business?

How will the funds be used?

How detailed are the numbers? Is everything rounded up to the nearest thousand dollars, or does it demonstrate specific knowledge of costs?

Big round numbers signal a swag.

What is the cash runway shown by the financials?  

What does the debt, credit card debt, and unpaid expenses add up to?

The financials tell you, the investor, what the startup knows and is thinking. 


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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