This Week in Startups How to ace diligence & avoid common mistakes with Scott Orn | Kruze Consulting Startup Finance Basics
Jan 22, 2021
Scott Orn, COO of Kruze Consulting, brings extensive expertise in startup finance, having advised companies like Calm.com. He dives into the vital importance of due diligence during fundraising, warning about common pitfalls such as procrastination and cap table inaccuracies. Scott shares practical insights on revenue recognition, especially for SaaS models, and emphasizes the essential role of financial honesty with investors. He also discusses the complexities of payroll tax obligations for remote workers, a crucial topic in today's workforce landscape.
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Early Preparation for Due Diligence
- Prioritize due diligence and don't procrastinate on financial and legal matters.
- Deals can emerge unexpectedly, so prepare everything in advance to avoid jeopardizing valuations.
The Purpose of Due Diligence
- VCs conduct due diligence after buying into your vision.
- They want to confirm your ability to execute and manage their investment effectively.
Key Areas in Financial Due Diligence
- Focus on historical financials, forward-looking financial models, and tax compliance.
- Ensure these areas are accurate and reflect your discussions with VCs.