…key accounting and financial items [startups] should consider ahead of their first institutional fundraising round.
When the time comes for seed investment, it is important for entrepreneurs to understand the financing options available to them. The two types of initial seed funding that most young businesses choose are convertible notes or Simple Agreements for Future Equity (SAFE) notes. In this post we break down these financing structures in more detail for entrepreneurs and early-stage business owners.
According to a 2017 Report by The Startup Genome Project, there are between 6,300 and 7,800 currently active tech startups in NYC, making it the second largest startup ecosystem in the world. However, only 619 of those startups were backed by Venture Capital. This is just one example that highlights the small percentage (about 8.5% in this report) that ever see access to institutional seed funding.
“…your financial data is organized on a month-to-month basis, and can help answer the most pressing questions surrounding a new venture: cash burn, scenario analysis on sales projections, and strategic decisions such as office expansion, available product development spend, and new hire capabilities…In this month’s blog post we tackled the question: When does entrepreneurial financial planning become a necessity?”
Effective bookkeeping and accounting provides startup leadership with the most digestible understanding of their historic performance. Transparent reporting speeds up future business decisions as well, reducing the analysis paralysis that results from a lack of information. We have put together this checklist of key items to ensure your accounting process meets the minimum requirements necessary for any financial team or investor.