5 data sets CFOs need to give a Venture Capitalist
Partnering with a venture capitalist (VC) may be the best way for your business to get the funding and expertise it needs to grow. Such partnerships are a crucial step for many founders looking to turn an innovative idea into a sustainable business. In fact, according to research from the CBI, running out of cash or failing to raise new capital is the #1 reason start-ups fail to become successful scale-ups.
What financial data are VCs looking for?
We discussed this topic in more detail in our recent Business Growth webinar with BDO. Broadly, potential investors will ask for:
1. Evidence of your abilities to analyse management information
Finch Capital are series A/B investors in high-growth fintech companies – including AccountsIQ. Here’s what they have to say about financial due diligence and reporting:
The financial due diligence process aims to provide a thorough understanding of all the company’s financials, including analysis of major customer accounts, fixed and variable cost analysis, analysis of profit margins and examination of internal control procedures.” Mike Brennan, Principal at Finch Capital.
You need to bring all that data together seamlessly in a single reporting system. You don’t want to be messing around trying to reconcile different Excel spreadsheets or data from multiple accounting systems. The clearer and more accurate your reports, the better your decision making.
2. Accurate and consistent KPI tracking and reporting
You’ll need the flexibility to slice and dice your financial data so you can report on key metrics. These will likely include recurring revenue or subscription income by customer or industry segment, churn rate and performance of each department/function/location versus spend.
These sorts of data sets will also enable you to spot and rectify problems early.
3. Historic and forecast revenue growth
Financial forecasting can be difficult and time consuming. However, forecast and scenario planning tools can help you to estimate future growth and market potential, or to model multiple scenarios, such as different pricing structures.
Mapping a number of probable scenarios will also alert you to deviations from your plans.
4. Detailed understanding of how and why your business is investing its money
Having this data will enable you to make a more compelling case to potential VCs and facilitate a beneficial on-going working relationship.
This is a time-consuming and intensive process for a company’s management. It is hugely important that they have the right tools and software capability in place to generate an extensive range of reports and dashboards. This will help streamline the process as much as possible and avoid delays. Companies also need to provide investors with near real-time reporting and a consolidated view of the business as the company scales rapidly post-investment.” Mike Brennan, Principal at Finch Capital
5. Other key company information
VCs will want to quick and easy access to detailed company information. This could include customer contracts, partner agreements, the background and expertise of your management team, and your product USPs. Demonstrating that you are on top of such detail will help build VC confidence in your team’s ability to grow your business.
Watch this AccountsIQ/BDO Business Growth Webinar recording to find out more.
Find out more about how AccountsIQ enables you to get sophisticated analysis and business intelligence.
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