Bo: The first red flag was when a company would hand over their tax accountant’s prepared financials, which were often on a cash basis. When you’re evaluating a business’s performance, it’s important to look at accrual-based financials, not cash basis. That was number one.

Another issue was outdated financials. We’d often ask for the most recent financials, and they’d be two or three months old. Timeliness is key in evaluating a company’s financial health.

Andy: Were there any other red flags, especially around how businesses were spending money?

Bo: Yes. Once we could get into the financials, we’d often see businesses being too frivolous with their spending—investing in areas that didn’t matter and neglecting the things that did. But more important than that was the strategy behind their spending. It’s crucial for businesses to have a disciplined budgeting process. They need to measure spending against the budget and be able to show and prove the return on investment (ROI) from their expenditures.

Andy: I can imagine marketing expenses being a tricky area. Sometimes it’s hard to prove ROI for things like branding or events. How did you see that?

Bo: Absolutely. Marketing is a tough area to track ROI for, especially when it comes to things like events or long-term brand-building efforts. People often focus on direct click tracking or conversion rates, but measuring the impact of branding or the value of a conference or trade show can be more challenging. There is a time and place for marketing spend in startups, and the key is having a clear understanding of where the money’s going and why. If you can show that you’re investing in the right places and getting measurable results, then that’s what matters. (05:23): Right, yeah. I’ve seen a lot of people waste money there too. Speaking of which, many companies think that the solution to their financial troubles is simply to raise money, believing that funding will fix everything. So, why do you think most companies struggle to raise capital?

Bo: There are a couple of reasons. First, they often don’t have a clear vision for how they’ll use the capital. You need an integrated, comprehensive financial plan. It doesn’t have to be complex—sometimes simple models are more effective than overly complicated ones. But your financial plan must be aligned with your company’s vision and strategy. Being able to clearly articulate that connection helps investors quickly understand your potential. If you can’t do that, it’s a major reason why some companies fail to raise capital.

Another reason is the lack of discipline in the fundraising process. We often advise our clients to treat fundraising like a sales process. Create a simple Kanban board or workflow to track each investor and where they are in the process. You might have a dozen or more investor conversations, so being able to track where you left off with each one is crucial.

The third point is responsiveness. A year ago, a VC firm did a study measuring the response time of founders and how it correlated with success in raising a Series A. What they found was that founders who responded twice as fast were more likely to successfully raise their Series A than those who didn’t. Being responsive shows that you have the organizational capacity and discipline to engage with investors and customers alike.

(06:30): That’s a great point. A lot of it comes down to being prepared before you even pitch, right? An investor might ask for specific documentation or financials, and if you can’t provide that on the spot, it’ll cost you valuable time. Even if you want to get that info to them, you might have to call someone like Till CFO to help you last minute, but that usually doesn’t work out well.

Bo: Exactly. As an entrepreneur, you have to build systems to manage all aspects of your business. It’s a challenging job because your time is split across many different areas. You’re focusing on sales, operations, and finance—those three strategic pillars. But when it comes to raising capital, you need a robust financial system in place. It doesn’t need to be complex, but there must be a process for managing your financial back office.

If you have that system in place, you’ll be ready to respond quickly and effectively to investors, which will improve your conversion rate when you pitch.

(07:11): Another aspect you touched on earlier is storytelling. A lot of founders want to focus on their product’s features, while investors are more interested in the business model—how will this product make money, and why should the larger market care about it? So, in your view, why is storytelling so important for startups, and what tips would you offer for communicating that effectively?

Bo: You’re right. People are naturally drawn to stories—we’re hardwired for it. The key to raising capital is combining the art of storytelling with the science of your financial model. Investors need to understand both the narrative and the ROI they can expect.

One key element is being able to tell the story of what you’ve accomplished so far, especially in earlier rounds like pre-seed or seed. Investors at this stage are largely looking at the team behind the startup—the founders and leadership—so being able to articulate the traction your team has achieved and the milestones you’ve hit is crucial.

For storytelling, we recommend a firm in Seattle called Best Foot, led by Shelby Berford. They specialize in helping startups craft compelling pitch decks and investor presentations. They distill your business’s key components and turn them into a concise, compelling story that you can present to investors. We’ve used Best Foot and recommended them to many of our clients, and we’ve seen great success with their approach.

(12:05): That’s great! I’m from Seattle, so I’ll definitely check them out. I come across a lot of founders who want to build their own decks but struggle with storytelling. Sometimes it’s worth bringing in professionals who can see the value in your business from an outside perspective.

Bo: Exactly. A third-party perspective can be invaluable. Founders, especially in SaaS, tend to have a technical or engineering mindset. While details matter in coding and programming—since small errors can cause big issues in your codebase—those same details aren’t always relevant when you’re trying to pitch to an investor. You only have a short time to convey key information, so you need to distill it down into the most essential points. (13:03): Absolutely. So, let’s say you successfully raise money. Once you have a venture partner or investor on board, you immediately need to think about the next step. How are you going to grow your business and continue gaining traction? At some point, your investor will want to cash out, so you’ll either be looking at an IPO or raising multiple follow-on rounds.

You need to think ahead from the moment you raise money because you’re now responsible for it. This is when communication with your investors becomes crucial—not only to keep them in the loop, but also to ensure they’re excited about your business and invested in its growth. So, what tips would you offer to help startups maintain effective communication with their investors and ensure they’re engaged when the time comes for further fundraising?

Bo: That’s a great question. The first assumption is that you’ve already overcome the major challenge of gaining their trust. Once you have that trust, the best way to build on it is through clear, direct, and frequent communication. Establish a regular communication pattern—tell your investors what you’re going to do, and then follow through on it.

We often recommend a minimum of a monthly update. This could be as simple as an email highlighting key updates in sales, engineering, operations, and finance. Then, on a quarterly basis, you should have a more detailed and interactive session—either a Zoom call or in-person roundtable if your investors are nearby. This gives you a chance to walk through the business, provide critical updates, and answer any questions.

That consistent, transparent interaction builds trust and helps your investors understand how they can assist you. Even if they’re just seed investors, they likely have valuable connections and want you to succeed in raising the next round. If you’ve maintained that trust, they’ll be more willing to connect you with the right people.

(15:37): That’s a great point. Consistent communication keeps you top of mind. Many investors manage dozens, if not hundreds, of companies, so staying in front of them increases your chances of getting help. These investors often make their business by being well-connected. If they’re thinking of you and your company, they may refer potential venture partners or clients your way.

Bo: Exactly. By staying top of mind, you tap into their network. When the time comes, they’ll be more inclined to recommend you to other potential investors or partners.

(16:29): Now, how do you handle the bad news? Startups inevitably go through tough times, and communicating those challenges to investors can be tricky. How can you keep their trust without scaring them off?

Bo: The first thing is to recognize that bad news is inevitable. It’s a normal part of the startup journey. We advise our clients to communicate early, directly, and honestly. As soon as you understand the situation, reach out to your investors. Always be truthful, but remember that not everyone needs to know every detail. Share the facts and your plan to address the issue.

Being proactive and offering a clear solution builds confidence and trust. In fact, handling bad news well can strengthen the relationship even more than good news. If you’ve had several quarterly updates with only positive news, a savvy investor will likely recognize that something isn’t right. The reality of startup life is that there are always challenges, and how you handle them matters.

(18:42): That’s exactly right. Bad news can be uncomfortable, but it’s also an opportunity to demonstrate your integrity and build trust. If you acknowledge the problem, outline the steps you’ll take to resolve it, and follow up to show that you’ve tackled the issue, it will strengthen the relationship. When the next challenge comes, your investors will have more confidence in your ability to handle it.

(19:42): I agree completely. Some founders might try to avoid bad news, hoping it’ll go away, but that only makes the problem worse. The best approach is to identify the issue, provide actionable steps for how you’ll overcome it, and then follow up with investors to show that you’ve addressed it. This builds long-term trust, as investors see that your team can tackle challenges head-on.

Bo: Exactly. That’s the right mindset. Any other fundraising tips you’d recommend for startups? Anything that really stands out to investors today, or something that might get them excited about participating in your company?

(20:07): Well, if you can always call yourself an AI company, that definitely helps! But, in all seriousness, having a strong narrative about your company’s potential, clearly defining your market, and showing a path to growth are all key factors that will attract investors. (20:32) It actually works, but I must admit, I’m not a fan of the "AI" label. That said, it does help raise money. If you're going to go that route, however, you better have a clear, native vision for embedding AI into your business. I say that somewhat tongue-in-cheek, because it seems like every company nowadays claims to be connected to AI in some way. But this does bring up an important point. When you position yourself as an AI company, you must be able to back that up. The phrase we often use is, "You have to be able to cash the checks you write." In other words, you must deliver on what you promise your investors during pitch meetings. If your technology and software aren’t truly AI-native, it’s best not to label yourself as an AI company. In some cases, it's just a "wrapper."

(21:13) That’s a good point. Many investors are drawn to new technology trends, and AI has unlocked incredible opportunities for disruptive new business models. If applied correctly, AI can create efficiencies and new business models that could lead to substantial returns for investors. But there’s a key distinction between being a true AI business and simply using AI as a feature. Does AI enable a new business model or way of doing things that wasn’t possible before? Or are you just wrapping your product in AI for marketing purposes?

(22:13) That’s exactly right. Many investors are on the lookout for companies that are leveraging new technologies to create something truly unique and necessary. As you build your company, it’s essential to think through how you’re using these technologies—whether you’re creating something new or just using a trendy feature.

(22:41) On the tech side, how do you see technology playing a role in investment and investor communication tools? Specifically, when it comes to finance?

(23:16) From a financial perspective, having a technology stack that allows easy access to your financial data is critical. Integrating your payroll software (such as Gusto, Rippling, etc.) with tools like QuickBooks, Xero, or Ramp for expense management can streamline your financial operations. The key is to have systems that allow you to pull and manipulate this data easily. We use a tool called LiveFlow, which pulls data from QuickBooks into Excel or Google Sheets, making it easy to generate financial reports and dashboards. This tool is helpful for providing quick access to financial data for investors. While it might be too expensive for some startups, we cover the cost for our clients, which allows them to take advantage of it. Being responsive and having your financials ready to go is essential—founders who are quick to provide this data have a much better chance of raising capital.

(24:27) For document storage and investor communication, there are some basic tools like Google Drive or HubSpot for newsletters. But are there any other recommendations?

(24:55) It depends on the stage of your company. For early-stage or pre-seed companies, quick and simple solutions work well. Google Drive is great, and we’ve seen some founders use Notion to organize their business plans. Notion allows for hyperlinking to different sections of the plan, letting investors easily explore various components of the business. As you progress, you might move to tools like Dropbox, which offers features like data room tracking to see when investors access documents. Interestingly, even though it's crucial to have a sharp, professional pitch deck, investors typically spend less than two minutes reviewing it. Tools like DocSend allow you to track how much time investors spend on your materials, providing valuable insights into investor interest.

(26:03) That’s right. You need to capture their attention quickly and communicate clearly in your deck. By the way, many of these tools are available on our Marketplace, and I believe we offer up to 90% off for some of them, so it’s a great deal for anyone looking for software tools to manage these tasks.

(26:29) So, what’s one thing you'd like potential customers to know about Till CFO, and why should they choose your service today?

(26:55) Many early-stage companies overlook finance, but it’s crucial to get your financials in order if you want to raise capital and grow. Business is a financially driven machine, and finance should be one of the core functions of your business from day one. It may not be the most glamorous part of the business, but it’s essential. If you’re not an expert in finance, it’s a good idea to bring in the experts. Our services can help fill that gap, ensuring your financials are in order as you scale.

(27:23) That's well said. At Till CFO, we try to help clients see how finance can empower growth and create value. Our team has experience across various aspects of startups, from investment to operations. We’ve been on both sides of the table—investors and founders—and understand the demands of building a business. We distill that experience into a service that provides the financial leadership you need without the overhead of hiring full-time executives. For many early-stage companies, a fractional CFO can provide the expertise they need at a cost-effective price.

(29:14) Exactly. And with your experience as both a founder and an investor, you have a comprehensive understanding of what companies need at the early stage to succeed. You’re well-positioned to guide them to the next level.

(29:41) Where can people learn more about Till CFO and sign up for your services?

(29:59) Visit our website at tillcfo.com. You can also connect with me on LinkedIn, and I’d be happy to chat further.

(30:10) It’s been great working with you. We had a fantastic event at SF and LA Tech Week, and I look forward to continuing our partnership. For anyone interested, you can also find Till CFO in the Nacho Nacho B2B SaaS and Services Marketplace, where we offer the best partners and the best deals. Thanks again for being on the show today.

(30:32) Thanks, Andy. It was a pleasure.