A startup financial health check is a structured review of your closed books, cash burn rate, runway, and budget vs. actuals, done mid-year so you can catch problems before fall fundraising and board season. For most VC-backed startups, the best time to run one is after you close the first half of the year (H1).

Six months into the year, most founders are heads-down on product and growth. Totally normal. But this mid-year financial review matters for two concrete reasons. First, half your fiscal year is now closed, so you’re working with real, reconciled data instead of projections. Second, fall is when the bulk of annual VC deal flow and board meetings happen. If your startup runway, burn rate, or startup budget assumptions are off, you want to catch it in August, with time to fix it, not in October during a partner meeting or board deck review.

Step 1: Reconcile and Close H1 – Properly

Before you can trust any number, your books need to be closed. That means:

  • Every bank and credit card account reconciled through June 30
  • Revenue recognized correctly (especially for SaaS companies with multi-year contracts or usage-based pricing)
  • Accrued expenses booked, not just cash paid out
  • Payroll, contractor payments, and benefits categorized consistently
  • Prior months reviewed for accuracy, not just June

A lot of early-stage startups run on cash-basis, back-of-envelope bookkeeping for the first few quarters. That’s fine early on, but if you’re planning a fall raise, investors will expect financial statements for startups that look like accrual-based, GAAP-aligned books: A clean balance sheet, an income statement, and a cash flow statement that actually tie out to each other.

This is mid-year financial review step one: Burn and runway numbers are only as good as the books beneath them, so build them on closed, reconciled data.

Step 2: Recalculate Burn and Runway

Once H1 is closed, recalculate your cash burn rate and startup runway from scratch, using actuals, not the model you built in January.

A few things founders often get wrong here:

  • Using gross burn instead of net burn (net burn = cash out minus cash in, including any revenue)
  • Averaging burn over too long a period, which hides recent acceleration or deceleration
  • Forgetting one-time expenses (a big legal bill, a conference sponsorship) that skew a single month
  • Not adjusting for known upcoming changes, like a new hire cohort starting in September

A good rule of thumb: Calculate your average net burn over the trailing three months, then divide your current cash balance by that number to get startup runway in months. If runway is under six months and you’re not already deep into a raise, that’s a flag, not a footnote.

Step 3: Review Budget vs. Actuals

Pull up the budget you set back in January and compare it, line by line, to what actually happened.

Focus on:

  • Headcount and payroll. Did you hire faster or slower than planned? In our experience across venture-backed clients, payroll typically runs 60-80% of burn for early-stage startups, so this line drives everything else.
  • Revenue. Are you ahead of, on, or behind plan? Investors care less about hitting the exact number and more about whether you understand why you missed or beat it.
  • Vendor and software spend. This is where budgets quietly bloat. A startup budget review in Q3 is a great time to audit your SaaS stack and cancel what nobody’s using.
  • Marketing and sales spend vs. pipeline generated. Is spend actually producing the results you budgeted for?

If actuals are meaningfully off from plan, find the driver before you update the model, and decide whether H2 plans need to change.

Step 4: Spot Cash Issues Early

This is really the point of the whole exercise. A mid-year check isn’t just an accounting formality, it’s an early warning system. Look for:

  • A widening gap between burn and plan that compounds over the next two quarters
  • Customer concentration risk, where a large chunk of revenue sits with one or two accounts
  • Accounts receivable aging, if you have enterprise customers who pay slowly
  • Upcoming large payments, like annual insurance renewals or year-end bonuses, that will hit cash in a single month

Founders who catch a cash problem mid-year have options: Cut spend, accelerate a raise, renegotiate terms, or pursue a bridge. Founders who catch it in November often have fewer options and worse terms.

Step 5: Prep for a Fall Raise or Board Meeting

Fall is when a large share of annual VC deal flow happens, and it’s also when many boards want a formal H2 check-in. Use your mid-year numbers to build the package you’ll need:

  • Updated financial statements (P&L, balance sheet, cash flow)
  • A cap table that reflects any option grants, exercises, or convertible note activity from H1
  • A current burn and runway summary, with a clear scenario for 12-18 months forward
  • A KPI dashboard tailored to your stage (ARR and net revenue retention for SaaS, GMV and contribution margin for marketplaces, burn multiple for most VC-backed companies)

What do investors want to see mid-year? Mostly, they want evidence that you know your own numbers cold, and that your plan for the second half is grounded in what actually happened in the first half, not just optimism carried over from your last pitch deck. Clean, closed books and a believable runway number do more to build investor confidence than almost anything else in the room.

Check the Numbers

A mid-year financial review isn’t glamorous, but it’s one of the highest-leverage two-day projects a founder can run all year. Close H1, recalculate burn and runway on real data, check budget vs. actuals, and use what you find to walk into fall fundraising or your board meeting with numbers you can defend.

If you’d rather have a team of startup-specialized accountants run this financial health check for you, that’s exactly what we do at Kruze Consulting. Talk to Kruze and we’ll help you close your books, check your runway, and get a clean set of financials ready for your next raise or board meeting.

Kruze logo

FAQs - Mid-Year Financial Health Check for Startups

What should I review mid-year as a startup founder?

At minimum, review your closed H1 financial statements, recalculated cash burn and runway, budget vs. actuals by department, and any upcoming large cash outflows. Together these give you an honest read on where the company stands going into H2.

Is my runway still accurate?

Only if you recalculate it using actual trailing-three-month net burn against your current cash balance, rather than reusing the projection from your last fundraise or annual plan. Runway estimates get stale fast, especially after a hiring wave or a big one-time expense.

Am I on budget?

Compare actuals to your original budget line by line, especially payroll, vendor/software spend, and revenue. Being off-budget isn’t necessarily a problem; not knowing why you’re off-budget is.

What do investors want to see mid-year?

Clean, closed financial statements, a defensible burn and runway number, and evidence that your H2 plan reflects what actually happened in H1, not just your original projections.

How often should startups do a financial health check?

Monthly bookkeeping and reconciliation should be continuous, but a deeper financial health check, covering burn, runway, and budget vs. actuals, is worth doing at least twice a year: Mid-year and at year-end, plus any time before a fundraise or board meeting.