financial documents and services for funding

Top Financial Documents and Services Needed for Funding

The funding process requires patience, time, and accurate documentation and financial services to complete. There is a handful of general documents that any business will need for this process, but there also may be more specific documents needed depending on which stage of funding you are in, how much funding you are looking to acquire as a company and the goals you have as a company.

Which Financial Documents Will Be Needed?

As mentioned, the basic information you will need to provide to investors no matter which stage of the funding process you are in is:

Financial Projections

Financial Statements

Operational Expenses

Cashflow Projections

Pitch Deck

Due Diligence Docs

It will be easiest to have your financial plan updated at all times to show how your money will be allocated for the next 2 years. Your burn rate, one of the most important pieces of documentation, will describe the rate at which a new company is spending its funding to finance overhead before generating positive cash flow operations. It is a term for negative cash flow. The burn rate will show the investors the financial wellbeing of your company.

For example, if a company is said to have a burn rate of $2 million, it would mean that the company is spending $2 million per month.

Other financial documents investors will want to see are a balance sheet, income statement detailing projected revenue and expenses, current and previous year finance statements (audited), tax returns, insurance policies, cap tables, and list of liabilities and accounting methods, as well as:

Organization & Hiring

  • Org Chart
  • Team Bios
  • Hiring Roadmap (next 3 yrs)

Term Sheet

  • Investment Amount
  • Post-money Equity Allocation
  • Valuation
  • Liquidation Preference
  • Anti-dilution

financial documents and services for funding

What Changes from Stage to Stage?

As you get further down the line in funding stages and are potentially preparing for a M&A or IPO, or a much larger round of funding, the documents you need prepared will change. If you are further along in the stages of funding, you will need to provide a financial model just as you would for the other stages but provide insight for a longer period of time.

You will need projections, statements, and models for the next 5-10 years versus 2 years in the earlier stages. A financial model creates a summary of the company’s expenses and earnings in the form of a spreadsheet that can be used to calculate the impact of a future investment decision. This will allow investors to see how the business runs and appreciates change within the company.

Another piece of documentation that will change with the later stage of funding and transactions will be a longer pitch deck for investors and you will need a transaction proposal prepared. In the later stages post transaction and funding, you will need SEC reports, quarterly reports, investor reports, waterfall charts/analysis, and business and market valuations.

How We Can Help

It is extremely important to you and the future of the company to work with a financial professional to get these documents not only prepared but prepared correctly. Specifically, a CFO will help you to get a good handle on the three most important things- revenue, expenses, and cash flow. You will feel more confident when presenting this information to investors with a CFO walking you through this process and NOW CFO has a plethora of CFOs to help you be prepared financially for the funding process.

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