How to prepare your startup financials for a fundraise or audit

Raising capital or preparing for an audit tends to be a stress test for your finance function. It’s when everything behind the numbers comes into focus, including systems, reconciliations, controls, and documentation.

Whether you’re working toward a term sheet or navigating your first audit, investors and auditors are looking for more than clean reports. They want confidence in how your finance function operates.

At Furey, we’ve supported over 150 VC-backed startups through fundraises, financial audits, and exits. In this guide, we break down what financial due diligence really requires, and how early-stage teams can avoid the most common mistakes.

• What it means to be “fundraise-ready” or “audit-ready”
• Financial reports and reconciliations required during due diligence
• Common red flags that slow down deals
• A downloadable Startup Financial Readiness Checklist
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Common startup financial mistakes in due diligence

Financial due diligence often brings the first real scrutiny of your accounting processes. Even experienced startup teams can hit roadblocks if the basics aren’t covered. Here are some of the most common issues we see:

• Poorly categorized expenses
• Unreconciled or missing accounts
• Inconsistent revenue recognition
• Cash-basis reporting when accrual is needed
• Lack of documentation for key assumptions
  

These gaps can delay timelines, increase risk, and erode investor confidence. Addressing them early keeps your process on track.

What financial reports to prepare for a fundraise or audit

You’ll need more than a basic income statement to satisfy diligence requirements. Below are the core financial reports typically requested by investors and auditors: ‍

• Income Statement (P&L)
• Balance Sheet
• Cash Flow Statement
• General Ledger (GL)
• Budget vs. Actuals
• Revenue by Customer
• Key metrics (e.g., CAC, LTV, COGS, Gross Margin)
• Consolidated financials (if applicable)

Make sure reports are current, clearly formatted, and easy to follow. A clean package tells a strong story.

What investors and auditors look for beyond reports

Reports get you in the door and your workflows determine how far you get. What investors and auditors really assess is how your finance function operates behind the numbers. 

Expect questions like:

• How are you reconciling key accounts monthly like bank, credit card, revenue and payroll?
• What controls are in place for high-risk processes like bill approvals and payments?
• What systems are used and are they SOC compliant?
  

Other readiness signals include :

• Audit trails and documented processes
• SOPs for key workflows , such as approvals, and revenue reconciliation
• Proper access controls and segregation of duties
• Flowcharts or narratives to walk through processes

This is where manual workarounds and siloed spreadsheets often fall short, especially under scrutiny. Bringing in a partner like Furey can help strengthen your systems and controls before diligence begins.

Financial due diligence readiness ‍

Diligence is all about having the right data, documentation, and delegation in place. To stay ahead of investor or auditor requests, make sure you’ve got:

• Clean revenue data, clearly tied to customer contracts
• Customer metadata (location, contract terms, source) matched to invoice and revenue detail
• Documented journal entries, policies, and workpapers
• Supporting documentation for all material balances (e.g., deferred revenue, accruals, and pre-paids)
• Executed policies for revenue recognition, capitalization, amortization, etc.
• Reviewed and applied applicable Accounting Standard Updates
• Internal audit lead or point of contact coordinating stakeholders
• If you’re working with outsourced support, a clear scope on what your retainer includes vs. what’s out of scope
• A plan to engage tax, valuation, or legal specialists when needed
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Get the checklist

Download our Startup financial readiness checklist to benchmark your setup and avoid surprises in your next raise or audit.

Need a gut check? If you're preparing for a fundraise or startup audit, or just want to make sure your finance function is ready, we’re here to help. Reach out to schedule a quick diagnostic.