Companies raising venture capital require professional books and specialized financial advice. Because Kruze Consulting only works with funded startups, we know what numbers and advice you and your investors need.
Startups with VC funding need processes and systems to regularly report on the company’s financial position. Kruze produces Monthly Financials, Burn Rate Analysis, Cash Runway Analysis, Budget to Actuals and Variance Reports that are perfect for venture capital partners and board meetings. Startup founders who have raised venture capital must have the strategic financial skills to carefully manage burn, growth, headcount and more. And founders need to be ready to raise the next round of capital when the time comes.
Kruze Consulting’s clients have raised over half a billion dollars in venture capital funding in the past 12 months alone, so we know what it takes to be ready for the next round. From the first day of our White Glove Onboarding Experience, we work to deliver accurate financial statements and to begin creating a due diligence folder where, together, we can retain important information that you’ll need during the next venture capital round’s due diligence. Startups should have rock solid financials and their diligence materials prepped before a VC meeting ever occurs. Fundraising moves incredibly fast and if you appear unprepared to the VC partner, it will affect your valuation and total capital raised. Work with Kruze, be prepared. Read our downloadable VC due diligence checklist here!
Oftentimes, startup founders think of venture capital as the first way to finance their companies. VC funding is indeed a great way to finance your company; however, other financing options are available. Also, as your business grows, your financing needs will change. Let’s explore other ways to finance your startup besides venture capital.
Not every company follows these stages exactly - in fact, many skip the rounds before the Series A. But here are the most common stages of venture capital financed startup companies.
|Friends & Family / Angel||$100k - $1M||SAFE or Convertible Note|
|Pre-Seed||$100k - $1M||SAFE or Convertible Note|
|Seed||$1M - $10M||SAFE or Convertible Note, sometimes Preferred Stock|
|Seed Extension||$500k - $5M||SAFE or Convertible Note|
|Series A||$10M - $30M||Preferred Stock|
|Series B||$25M - $75M||Preferred Stock|
|Series C||$50M - $150M||Preferred Stock|
|Later Stage Private Rounds||$100M+||Preferred Stock|
The data is compiled from Crunchbase, and is based on actual rounds raised in the US from Jan 2021 to and including September 2021. Venture capital and seed round sizes have gotten bigger in 2021 driven by the hot venture funding market.
Again, not every company will need pre-seed funding or do a seed extension. But if you are on the VC-backed company progression, you will most likely have a Series A.
Convertible notes often referred to as “converts,” are one of the most important securities used to fund early-stage startups.
While their popularity has declined some since the introduction of SAFEs, they continue to be one of the most common types of investments raised by seed-stage companies and are often used during Series A, Series B, etc. extension rounds.
Learn more about convertible notes or convertible debt.
SAFE notes, or a simple agreement for future equity is really just a simplified version of convertible notes.
Preferred stock or preferred equity is a share class. Venture capitalists like to invest in preferred stock because it comes with many attractive rights and privileges vs. common stock. And those benefits make them willing to pay up and pay a higher valuation for the preferred stock.
Benefits of Preferred Stock:
Preferred Stock vs. Common Stock:
Common stock is typically the share class that the founders and employees have in a startup. When the company gets incorporated, the first share class that’s issued is common. Typically, the founders get a significant percentage and carve out a stock option pool which the employees get. They also determine the par value or the price it is worth on paper. This is usually like 1/100th of a share. Common stock is worthless at first because you haven’t built anything yet. However, that is the perfect time for founders to buy their shares and for early-stage employees to exercise their shares.Common stock goes on your balance sheet and in your equity session. Common stock is always cheaper than preferred stock. It’s what the founders get, it’s what the employees get, and it’s what stock options come in. So it is an excellent way for people to have ownership in the startup.
Common Stock Simplified:
Not every startup has a perfect, straight up and to the right growth curve. In fact, your startup may have some bumps along the way - and if those bumps align when it’s time to raise your next round, you may need to take on what is called a “bridge loan.”
This type of “loan” typically comes from a startups’ existing venture capital investors. So this sort of financing is only available to VC-backed companies that already have deep-pocketed VC investors.
Financing of this sort for a venture capital backed company will either be a convertible note or a SAFE note. Convertible notes and SAFE notes will have an equity conversion feature, so are not a “priced” round - instead, there will be some terms that favor the VCs who provide the bridge. Usually this will be in the form of a conversion cap. Remember, this is a financing for a company that is in trouble - so the terms are not going to be that great for the startup or the founders. Read more about bridge loans here.
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Check out Kruze's affordable monthly bookkeeping options.
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Monthly costs vary based on your needs and company expenses.
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Starting at $325 per month
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A CPA Firm Specialized in Startup Accounting & Finance
Startups are our niche, and our passion. Our clients have raised over $10 billion in venture capital financing. We are one of only a few outsourced accounting firms that specialize in funded early-stage companies - we only offer financial and tax services to fast growing startups in the Seed, Series A, Series B and Series C stages.
The Right Accounting Partner for Your Startup’s Next Round
We know how to de-risk your startup’s next venture capital round. Our team makes sure you are ready to fly through your next VC’s accounting, HR and tax due diligence. And when you use us as your bookkeeper, we set up and keep up-to-date a due diligence folder so you can get that next round of fundraising.
A Leader in Cloud Accounting Software
Our practice is built on best of breed cloud accounting software like QuickBooks, Xero, Netsuite, Gusto, Zenefits, Expensify, Avalara, Brex iand Bill.com. Technology makes us more efficient, saving our clients money and letting us offer higher value services like FP&A modeling, 409A valuation and venture debt consulting. Startups deserve to work with CPAs using modern software.
Trusted by Top Venture Investors
Top angel investors and VCs refer Kruze because they trust us to give the right advice. Our clients are portfolio companies of top technology and Silicon Valley investors, including Y-Combinator, Kleiner, Sequoia, Khsola, Launch, Techstars and more. With us, your books and taxes are in order when it’s time to raise another round of venture financing.
What types of startups does Kruze Consulting usually work with?
Kruze Consulting works with a variety of funded Delaware C-Corps, but the majority of our companies have secured Seed, Series A, Series B and Series C. We look to partner with our clients, going beyond the typical outsourced accounting relationship and seeking to provide a higher level advisory role. We feel honored to be a part of making the world a better place, even if it’s one debit and credit at a time.
Accounting, Finance, Taxes, & Payroll all in one solution
Startup CFO services, startup accounting and bookkeeping services, startup annual taxes, expense reports, payroll, benefits: we've got you covered. Our software provides custom tailored dashboards that can be provided weekly or monthly, depending on your preference and plan. Founders are often so busy building their company that they don’t have time to take care of their finances. Traditionally, these companies have had to work with a basket of people to get their work done, including bookkeepers, accountants, AP clerks, CFOs, consultants, and tax accountants. At Kruze Consulting, our founders have one point person, saving time and money.
We're huge fans of Vanessa and the folks at Kruze Consulting. They set up our books, finances, and other operations, and are constantly organized and on top of things. As a startup, you have to focus on your product and customers, and Kruze takes care of everything else (which is a massive sigh of relief). I highly highly highly recommend working with Vanessa and her team.
Co-Founder @ Superhuman
As a startup, moving quickly is a top priority for us and we just needed to get our tax return done. After we uploaded our docs, we got our tax return in 3 days! E-filing was confirmed by Day 4. Super responsive and helpful!
VP, Operations of Calm.com
Avochato has been growing rapidly in the past year – in fact, too quickly for us to keep up with books, taxes, and budgeting for growth. Partnering with Kruze Consulting has been fantastic to manage, track, and analyze our finances while we continue focusing on building our customer base. Kruze’s team knows what startups need.
Alex De Simone
CEO @ Avochato
Everybody, go to Kruze Consulting. They do a great job. I personally can tell you, they've done a great job for our companies, including Calm.com. I'm sure they’ll do a great job for you.
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|Senior Staff Accountant||$170|
|CFO / COO / VP||$400|
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