Startup Funding Espresso -- Financial Analysis

Financial Analysis

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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