How to Use This Framework
This framework is a frank, structured assessment of whether your numbers, narrative and processes are ready for institutional investor scrutiny. It covers the five areas that investors and their advisers probe hardest during financial due diligence: model quality, historical financials, metrics credibility, data room readiness, and the team's ability to hold up under pressure.
Score each question: 2 = fully in place, 1 = partially in place, 0 = not in place. Total your score across all 20 questions (maximum 40 points). Areas where you score 0 are your immediate remediation priorities — investors will find these gaps, and it is far better to address them before the process starts than during it.
Assessment Areas
Area 1: Financial Model Quality
Q1. Financial model is integrated: P&L, balance sheet and cash flow all linked and balance
Q2. Revenue model is bottom-up: shows customer cohorts, not just top-down growth rates
Q3. Unit economics (CAC, LTV, payback, NRR) are embedded and traceable in the model
Q4. Scenario analysis clearly shows the path to profitability and cash generation
Area 2: Historical Financial Quality
Q5. Audited or reviewed accounts available for the last two years minimum
Q6. Monthly management accounts are clean, consistently formatted and produced on time
Q7. Revenue recognition is appropriate for the business model and consistently applied
Q8. R&D costs are correctly accounted for: capitalised or expensed with clear policy
Area 3: Metrics & KPI Credibility
Q9. ARR/MRR defined consistently and the calculation is transparent and supportable
Q10. Churn is calculated on both a logo and revenue basis and reported honestly
Q11. Gross margin is calculated correctly: COGS includes hosting, support, and payment processing
Q12. NRR is above 100% or a clear plan exists to get there within 12 months
Area 4: Data Room Readiness
Q13. Data room exists, is organised and has been reviewed by a third party for completeness
Q14. Cap table is clean, fully diluted, and reflects all instruments including convertibles
Q15. Customer contracts, IP assignments and key legal documents are filed and accessible
Q16. The last 12 months of board packs demonstrate strategic coherence with the fundraising narrative
Area 5: Founder & CFO Readiness
Q17. The finance story is consistent across deck, model, and data room — no number conflicts
Q18. The team can answer detailed financial questions in a 90-minute diligence call without preparation
Q19. A dedicated data room coordinator is identified to manage the DD process
Q20. Legal counsel is engaged and ready to move quickly once a term sheet is received
