SaaStr Annual 2024: Preparing for Financial Due Diligence - Don't Let that be the reason You're Not funded

SaaStr Annual 2024: Preparing for Financial Due Diligence - Don't Let that be the reason You're Not funded

1. Financial Due Diligence Monty Montgomery CEO & Founder SaaSenomics

2. What is Due Diligence? Reviewing, analysing and verifying information presented to investors to find issues. Covers a lot of subjects (Marketing, Sales, IT, Legal, HR, etc.) Financial DD Key Elements Financial Statements - are they complete and accurate? Metrics - are they calculated correctly and based on good data? Financial Projections - are the assumptions reasonable? There are multiple points to each category but it varies by stage - seed to exit.

3. Be Prepared It can slow or stop the funding process. Know any issues before they are found during diligence. This should be routine.

4. Getting Prepared by Stage (Seed to Late) Stage Financial Statements Metrics Projections Early Basic balance sheet, P&L Record all liabilities You could project but… No churn #’s No CAC Burn should be accurate Pricing, GTM, etc. - rough assumptions Seed To A Round Accrual basis FS Rev rec accurate Departmental P&L Basic metrics dashboard: Only early data MRR, Churn, CAC, NRR Historical results More predictable GTM Realistic ability to scale B Round + Almost auditable FS Outside firm involvement Memos on key policies Detailed metrics: Cohort analysis Demonstrate a path to exit

5. Due Diligence ex. Bookings to Cash Analysis Review sales agreements for key terms. Stage 1 Bookings Was invoicing done properly? Stage 2 Invoicing Was revenue properly recognized and allocated by type? Stage 3 Rev Rec Review bank statements. Were receivables collected? Stage 4 Cash

6. Key Takeaways Take it seriously - Don’t give them a reason to say no. Be ready, overly prepared if possible. Know any issues before someone else does. Don’t stress about something fixable, it probably won’t be a deal killer.

7. Q&A Feel free to ask questions!