This Week in Startups

The Best Financial Advice VCs Give Startups | Startup Finance Basics w/ Kruze's Scott Orn

Oct 17, 2024

Scott Orn, COO of Kruze Consulting, shares his expertise in startup finance. He delves into essential cash flow management tips and warns about the dangers of over-funding without product market fit. Scott discusses accounting methods that boost investor confidence, highlighting the importance of accrual accounting. He also stresses the need for transparency and regular communication with VCs. Plus, insights on navigating tough financial questions and regulatory challenges make this a must-listen for aspiring entrepreneurs.

21:12

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Episode guests

Scott Orn

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Episode notes

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Quick takeaways

Startups should maintain a cash runway of six to nine months to effectively manage funding challenges and support growth milestones.

Using accrual accounting enhances financial transparency, helping startups gain investor trust by accurately reflecting their financial health.

Deep dives

Maintaining Cash Runway

Startups should ensure they have a sufficient cash runway that aligns with their growth milestones. Having a cash buffer of six to nine months is advisable, allowing time to prepare for future funding rounds and manage unexpected challenges. For instance, founders are encouraged to have a contingency plan, reminiscent of packing extra provisions for a camping trip, to prepare for unforeseen circumstances that may affect their operations. By planning ahead and potentially adjusting their spending, startups can position themselves better for future growth and avoid cash flow crises.

Intro

2min

Navigating Startup Fundraising

4min

Mastering Financial Communication and Accounting for Startups

3min

Founders' Financial Responsibility

11min

Navigating Tough Questions and Regulatory Challenges in Startups

2min

Todays show: Kruze’s Scott Orn joins Jason on the latest edition of Startup Finance Basics! In this episode, they break down the best financial advice that VCs give founders including, managing cash flow (0:21), accounting methods (5:19), building an effective financial plan (15:22), and more!

Timestamps:

(00:00) Kruze COO, Scott Orn, joins Jason

(0:21) The best financial advice VCs give startups, managing cash flow, and the risks of over-fundraising

(5:19) Growth strategies for early-stage startups and accounting methods

(8:28) Legal aspects of financial representation and maintaining credibility with VCs

(15:00) Building an effective financial plan for your startup

(17:47) Historical perspectives on funding and the importance of regulatory considerations

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