Series B Due Diligence Checklist

Financial Model & Projections

• Fully integrated three-statement model (P&L, balance sheet, cash flow) for 5 yearsAll three statements must link and reconcile to one another — any model where cash flow is not derived from the P&L and balance sheet movements will be challenged immediately.
• Monthly granularity for years 1–2, quarterly thereafterInvestors want to see seasonality, hiring cadence and cash timing at monthly resolution for the near-term horizon.
• Bottom-up revenue model: customer-level cohort build showing new, retained and churnedTop-down revenue assumptions (e.g. "we grow 80% YoY") are not credible at Series B. The model must be built from cohort-level assumptions.
• Unit economics embedded and clearly traceable: CAC, LTV, payback, NRR per segmentThe unit economics must be derivable from the model — not presented as separate slides disconnected from the financial projections.
• Fully loaded headcount plan: HC drives cost model, not the reverseHeadcount is the primary cost driver. The model must show a named or role-level headcount plan that then generates the salary and employer cost lines.
• Sensitivity analysis: revenue growth rate and gross margin are the two key togglesBuild a sensitivity table with ±10%, ±20% and ±30% changes to ARR growth and gross margin — show the impact on runway and profitability milestones.
• Bridge from last round to profitability: show the path to cash flow positiveInvestors need to see the logical narrative: how does this Series B funding get the company to a point where it no longer needs external capital?

Revenue Quality & Cohort Analysis

• Monthly cohort revenue table: each customer cohort's revenue for every month since acquisitionThis is the most important single document in the Series B data room. It shows whether the business has genuine retention and expansion — or paper NRR driven by a few large upsells.
• Net revenue retention by cohort: show that NRR improves or holds as cohorts matureNRR above 120% across maturing cohorts is a strong signal. NRR that declines as cohorts age is a red flag investors will probe intensively.
• Gross revenue churn by cohort: logo churn and revenue churn separately calculatedLogo churn and revenue churn tell different stories. Calculate both — a business can have 20% logo churn but 5% revenue churn if small customers churn and large customers stay.
• Revenue concentration: top 10 customers as % of ARR with contract term and renewal datesConcentration risk is a due diligence focus at Series B. Provide a redacted summary showing top customer tiers, contract terms, and renewal dates.
• Revenue by product and geography: breakdown for last 24 monthsSegment the revenue — investors want to understand which products are growing, which are mature, and what the geographic mix reveals about TAM.
• Contracted vs usage-based vs one-time revenue clearly separatedRevenue quality varies significantly by type. Recurring contracted revenue commands a higher multiple than usage-based, which commands more than one-time. Show the split clearly.

Unit Economics Deep-Dive

• CAC by channel: paid, organic, outbound, partner — blended and separatedBlended CAC obscures channel efficiency. Show each channel separately — investors want to see whether growth is genuinely scalable or dependent on expensive paid acquisition.
• LTV/CAC by segment: enterprise, mid-market, SMB — investors will challenge the blended numberA blended LTV/CAC of 5x can hide an enterprise LTV/CAC of 10x and an SMB LTV/CAC of 1.5x. Segment the analysis — it demonstrates financial maturity.
• Gross margin by product line: show investors where the high-margin revenue isIf professional services or one-time implementation fees are inflating overall gross margin, investors will find this. Present the breakdown proactively and transparently.
• Burn multiple calculated for last 12 months: net burn ÷ net new ARRThe burn multiple is the leading capital efficiency metric used by investors in 2024-2025. Under 1.5x is excellent; 1.5–2x is acceptable; above 2x will require explanation.
• Rule of 40 calculation: revenue growth rate + EBITDA marginAt Series B the Rule of 40 is the benchmark for balancing growth and profitability. A score above 40 positions the business well for premium valuation discussions.

Historical Financials & Audit

• Three years of audited accounts (or as many as available) uploaded to data roomAudited accounts are mandatory at Series B. If the company is not yet three years old, provide all available years. Unaudited accounts at Series B are a significant diligence concern.
• Audit opinions clean — any qualifications or emphasis of matter explained and resolvedA qualified audit opinion will stop a Series B in its tracks. If there are qualifications from prior years, prepare a clear written explanation of what they were, why they arose, and that they are resolved.
• Management accounts for the last 24 months: monthly format, unmodifiedMonthly management accounts in consistent format for the last 24 months. Do not reformat prior-period accounts — investors want to see the actual reports that management used.
• R&D tax credits claimed: methodology, amounts, timing confirmedR&D tax credits can represent 5–15% of annual cost base for tech companies. Document the methodology, amounts claimed, and whether credits have been received or are outstanding.
• Deferred revenue balance: reconciliation from opening to closing for each periodDeferred revenue is a quality signal — it shows customers have paid in advance. Provide a schedule reconciling deferred revenue movements for each reporting period.

Cap Table & Legal

• Fully diluted cap table: all ordinary shares, preference shares, options, warrants, convertiblesThe cap table must be complete and accurate on a fully diluted basis. Any discrepancy between the cap table and the Companies House register will cause delays and reduce investor confidence.
• Waterfall analysis at different exit multiples — show investor returnsProvide a waterfall model showing proceeds to each share class at 1x, 2x, 3x, 5x, and 10x the current round valuation. This demonstrates financial transparency and builds trust.
• All previous round documents: term sheets, investment agreements, side lettersEvery investment document from Seed, Pre-A, and Series A must be in the data room. Side letters are particularly important — investors will search for undisclosed rights.
• Anti-dilution provisions: identify any ratchets, full ratchet or broad-based weighted averageAnti-dilution provisions vary significantly in their impact. Identify every investor with anti-dilution protection, the type of protection, and the adjustment formula applicable.
• Option pool: granted, vested, unvested, ungranted — clean scheduleProvide a complete option pool schedule showing total pool size, granted options (vested and unvested by employee), and ungranted pool available for future grants. Ensure it reconciles to the cap table.