This Week in Startups Budgets, models & what investors are looking for with Scott Orn | Kruze Consulting Startup Finance Basics
Feb 12, 2021
Scott Orn, a consultant at Kruze Consulting, specializes in startup finance and accounting. He shares insights on the essential role of budgeting in business success and uses aviation analogies to explain cash flow management. Scott emphasizes creating a clear financial model to attract investors and discusses the importance of understanding customer acquisition costs. He also provides strategies for effectively communicating with venture capitalists and highlights the need for timely hiring to align with growth opportunities.
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Know Your Numbers
- Know your cash balance precisely; not doing so can get CFOs fired.
- Build a basic financial model to track income, spending, losses, and runway.
Cash Mismanagement Example
- A high-profile company’s founder mismanaged cash due to lack of diligence.
- She thought she had three months of runway, but only had three days.
Transparent Communication
- Avoid surprising your board with bad financial news, especially about cash burn.
- Send monthly updates to VCs within the first 10 days of the month, highlighting cash, burn rate, and runway.