Securing venture capital is a big milestone for startups – but founders who aren’t prepared can miss critical opportunities. Kruze Consulting’s years in startup accounting have revealed key ways to stand out during the diligence process and earn investor confidence. Here are three essential tips to help your next VC round go smoothly.
Be Prepared at All Times
Venture capital interest can materialize unexpectedly, and those who wait to assemble due diligence materials risk missing out.
- Keep updated financial, tax, and HR records ready for review.
- Use a due diligence checklist to ensure nothing falls through the cracks.
- Don’t procrastinate – VCs may come knocking even when you’re not actively fundraising, and catching up quickly is difficult and stressful.
Know What VCs Are Looking For
Understanding diligence from a VC’s perspective is crucial:
- Historical Financials: Make sure these are accurate and up to date, reflecting what has been discussed with investors.
- Financial Model: This should capture your startup’s plan – customer projections, team hiring, and key drivers and assumptions. VCs aren’t seeking a “perfect” model, just one that shows a credible vision and sound assumptions.
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Tax Compliance: Overlooked deadlines or errors here can result in costly penalties and erode investor trust. Use deadlines and calendar reminders specific to your company’s needs. Kruze publishes tax calendars for C-corporations for both federal and local taxes in 15 major cities/states.
Missing in these areas leads to delays, added costs, or failed funding opportunities.
Always Be Transparent – Don’t Exaggerate
VCs value honesty and clear, conservative reporting. Don’t embellish your numbers or processes. Our pitch deck course offers detailed information about preparing your presentation materials.
- Imperfection is fine – VCs expect transparency and a reasonable system, not unattainable accuracy.
- Hiding errors or exaggerating claims can sink deals and damage your reputation.
- Build trust by showing good judgment in assembling your diligence team and in the accuracy of your materials.
Kruze Has the Accounting Expertise You Need
Kruze Consulting specializes in VC-ready accounting, tailored for early-stage startups.
- Our clients have secured over $10 billion in funding from the world’s top investors.
- We help you maintain a “due diligence folder” to keep you ready for any VC approach – planned or spontaneous.
With Kruze, your financials, models, and tax records will always stand up to investor scrutiny – giving you the best shot at a game-changing VC raise. Ready to get started or strengthen your next round? Connect with us today.
