Finance and accounting for startups post investment.

1. You Have the Money - Now
What?
Finance & Accounting for Startups Post Investment

2. Fundraising is hard. You don’t have to do it alone.
Designed for entrepreneurs, by investors,
The Capital Network (TCN) is a non-profit that
provides workshops, events, mentorship, office
hours and a network to support
you, the founder.
Let TCN guide you through the fundraising
process.
Your future investors will thank you.
TheCapitalNetwork.org
@TCNupdat

3. Your Guides
Jason Pulsifer
Global Financial Controller,
MassChallenge
18 years experience in startup
finance/accounting
@jasonpulsifer13
jason@masschallenge.org
Cecilia Frerotte
Principal, Wolf & Company,
P.C.
14 years experience in
accounting/auditing
@bostoncpafirm
cfrerotte@wolfandco.com

4. Agenda
1. To help you understand your new
responsibilities
1. To outline some
finance/accounting best practices
1. To help you communicate with
your investors
Objective
Introductions
Processes, Systems and People Exercise
Investor Questions
Budget Overview
Q&A

5. You’ve raised your Seed
• Putting your pitch into action
• New responsibilities
• Board interactions
Systems
People
Process

6. Uses of Cash How does it happen? Who is responsible System/Technology
Employees/Rent/Equipment Payroll/Check/Credit Card You/Partner/Employee/Contractor ADP/Expensify/Online Bill Pay
Outgoing Cash

7. Sources of Cash How does it happen? Who is responsible System/Technology
SaaS company sells software
subscriptions
Customers order directly from
website using credit card
You/Partner/Employee/Contractor Paypal/Stripe/Etc
Incoming Cash

8. Process
Best Practice: Automate process workflow, Document Internal Controls
Order to
Cash
Accounts
Payable
Payroll
Employee
Expenses
Reporting

9. Questions Every Investor Wants to
Know:
1. What are you doing with the money?
2. When are you going to run out of money?
3. How is the business performing?

10. 1. What are you doing with the money?
Financial Reporting
• Income Statement, Balance Sheet, Statement of Cash
flow
Standard Financial
Reporting
• Period Income Statement compared to budget with
variancesComparison to Budget

11. Financial Results - Income Statement

12. Financial Results - Cash Flow

13. Financial Results - Balance Sheet

14. 2. When are you going to run out of money?
Cash Forecast
Impact of actual results on future consideration
Update Burn Rate Monthly
Project “fume date”
Better to raise money when you don’t need it

15. Cash Forecast

16. 3. How is the business performing?
Key Performance Indicators & Growth Metrics
Agreed upon between Investor and Exec Team prior to funding
SaaS Metrics
• Lifetime Value
• Customer Acquisition Cost
• Monthly Recurring Revenue
• Net MRR Churn
• New Bookings
• New Users by Channel
Other KPIs
• Monthly Active User Growth
• Net Promoter Score
• Average Order Size
• Unique vs Returning Visitors
• Cost per Lead
• Conversion Rate

17. Taxes
Compliance
Choice of
Entity
• C Corp vs
Pass-thru
• Fit for future
plans?
Federal Filing
Requirements
• Don’t buy
into the
myth!
State Tax
Issues
• Nexus
• Implications?
Operating
Losses
• What are
they?
Contractors
• Contractor vs
Employee
• Form 1099

18. Audits
Compliance
Investor
Requirement
• Audit history validates
results
• Required in an exit,
additional financing
round
• Facilitates due diligence
Internal
Controls
• Segregation of duties
• Custody
• Authorization
• Recordkeeping
• Document Retention
Common
Issues
• GAAP ≠ logic
• Revenue recognition
• Equity & debt
transactions
• Non-cash transactions

19. RESOURCES

20. Important Terms & Definitions
Income Statement/Profit & Loss/P&L: Revenue – Expenses =
Net Profit/(Loss)
Balance Sheet: Assets = Liabilities + Equity
Statement of Cash Flow: Sources/Uses of Cash – Operating,
Financing, Investing
GAAP: Generally Accepted Accounting Principles, rules &
standards for financial reporting
Audit: Independent verification of a company’s financial records
Internal Controls: Set of policies, procedures, activities designed
to maintain integrity & reduce risk
Compliance: Ability to acct in accordance with GAAP, Federal,
State, Etc Regulations
Fiduciary: Obligation to act in the best interest of another
Finance: management of money; plan-forecast-budget (what’s
going to happen)
Accounting: process of summarizing & reporting financial
transactions (what’s happened)
Key Performance Indicators (KPI): Financial/non-financial
metrics used to measure progress
Garbage In – Garbage Out: Sloppy accounting means sloppy
results
Due Diligence: Analysis & confirmation of facts, data, etc. prior
to investment or sale
Budget/Forecast/Projection: Forward looking financial plans –
almost always excel
Bookkeeping: process of recording transactions in accounting
(what’s happening now)

21. People
Infrastructure Requirements
Best Practice: Part-time or Full-time?
Depends on size, complexity and stage of the business
Title Role Part-time rate Full-time rate
CFO Overall Company Financial Strategy > $200/hour >$200k/year
Controller Accounting Oversight & Reporting ~ $150/hour $120k-
$180k/year
VP Finance Finance Oversight & Treasury ~ $150/hour $120k-
$180k/year
Finance Director Business Performance Analysis ~ $150/hour $120k-
$180k/year
Accounting
Manager
Month End Close ~ $100/hour $90k-$120k/year
Accounting Staff Transaction Processing (ie. Payables &
Receivables)
$50-$75/hour $50k - $80k/year
Bookkeeper Data Entry $25-$50/hour $40k-$60k/year

22. Systems
Infrastructure Requirements
Best Practice: Integrate systems to automate process
General
Ledger
AP/AR Payroll CRM Cap Table Payment Employee
Expenses
Reporting/
Dashboard
s
QuickBook
s
Bill.com ADP Salesforce eShares Stripe Concur Domo
Xero Freshbooks Connect
Pay
Hubspot Capshare Square Expensify Grow
Netsuite Mineral
Tree
Gusto Zoho Shoobx Paypal Nexonia Visible.vc
Intacct Paysimple Paychex Pipedrive Captable
.io
Braintree Tallie Tableau
Botkeeper