Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
In diligencing a startup, analyze the financial statements to understand the business better.
Here are key items to check:
- Where does the revenue come from?
- What could stop or halt the revenue?
- How far is the company from profitability?
- How much cash is on hand and, given the burn rate, how much runway is available?
- What costs can be variablized down in case of a drop in business?
- Check the accounts receivables to see how fast customers are paying their bills.
- How much debt is on the balance sheet and what does it cost or when will it come due?
- In each category, start with the big numbers and then work your way down.
- For items that look out of the norm, ask the founder or CEO.
- See how much the team knows about their numbers and if they have a strategy for improving them.
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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