When you’re raising capital, your pitch might get the first meeting, but your financials will close the deal. Investors need to see more than just excitement and energy—they want clarity, credibility, and control. Strong financials aren’t just compliance documents, they're a window into how well you understand your own business and how prepared you are to grow it.

What do investors look for in startup financials?

1. Profit and Loss (P&L): Growth, margins, and discipline

The P&L is often the first document investors review. It offers a snapshot of your financial performance over time, including revenue, costs, and net profit or loss. What they’re really looking for is evidence of traction, efficiency, and a pathway to profitability.

They’ll dig into:

• How reliable and steady your revenue growth has been over recent quarters—are you building momentum, or riding peaks and troughs?

• Gross margin (are you building a scalable business or burning too much per sale?)

• Operating expenses (are you overspending or investing wisely?)

Even if you’re pre-profit, a disciplined, well-structured P&L that shows improving margins and cost awareness will go a long way toward building investor confidence.

2. Cash Flow: Can you stay afloat?

Just because your P&L looks strong doesn’t mean you’re in a good cash position. Investors care about whether your business can stay afloat day to day, not just on paper at year-end.

They’ll want to see:

• Your current burn rate

• How long your cash runway lasts at current spending levels

• Whether you generate cash from operations or rely on repeated funding

Ultimately, cash flow tells investors how resilient your business is and whether it can survive sales fluctuations, unexpected costs, or slower funding rounds.

3. Balance Sheet: Stability and leverage

The balance sheet gives a snapshot of your company’s health today. It’s the go-to document for assessing how well you’re managing assets, liabilities, and overall equity. A balance sheet loaded with short-term liabilities and minimal cash will raise concern. On the flip side, growing assets, manageable debt, and increasing retained earnings signal strength.

Founders should be ready to explain:

• Any large debts or liabilities

• Asset composition (especially IP or receivables)

• Shareholder equity and how it’s changed over time

4. Revenue projections: grounded ambition

Future growth is what investors are buying into, but they don’t want to see a fictional report. Your revenue projections should be ambitious, yet grounded in logic and backed by evidence. It's not just about presenting impressive top-line numbers. It's also about showing how growth will be achieved, what assumptions underpin the projections, and how those tie into areas like hiring, marketing, or product development.

Projections should show:

• Milestone-driven revenue (e.g. post-MVP, after marketing ramp-up)

• Clear timeframes for key growth events

• Assumptions tied to channel performance, customer acquisition, or market size

5. Break-even analysis: the tipping point

This report is often overlooked, but should be included as it helps investors understand when your business will begin generating more than it spends. It shows how many units you need to sell or how much recurring revenue you need to reach in order to become self-sustaining.

A break-even analysis also provides insight into your cost structure. High fixed costs may require greater scale to achieve profitability, while a lower break-even point can make the business more appealing in the short term. Investors pay close attention to how realistic your timeline to profitability is and how additional funding will help you get there faster.

6. The forecast as a funding story

Investors will want to know exactly why you are asking for a specific amount of capital. Your financial forecast must tell that story by covering three key elements:

• The current state of the business, including cash on hand, revenue, and cost structure

• The projected trajectory over the next twelve to twenty-four months

• The specific outcomes that each round of funding will unlock, such as product development, customer acquisition, and team expansion

Here’s an illustrative example:

• £500k to launch an MVP and onboard first testers

• £750k to acquire the first 1,000 customers through paid channels and partnerships

• £1.2m to build out a sales team and support nationwide rollout

By linking each ask to a measurable milestone, you move from “needing cash” to showing how investment fuels deliberate, investor-aligned growth.

7. Bonus: Cap Table Transparency

Though technically not a financial statement, your cap table is a critical part of investment conversations. Investors will look closely at how equity is distributed among founders, team members, and previous investors.

A clean and straightforward cap table, supported by a well-sized option pool, is usually seen as a positive signal. On the other hand, signs of heavy dilution or uncertainty around future fundraising can raise concerns about long-term alignment and flexibility.

Investor-Ready Financials: A Final Checklist

• Is your P&L showing consistent growth and healthy margins?

• Have you clearly outlined your burn rate and cash runway?

• Are your projections evidence-based and tied to real milestones?

• Have you included a break-even analysis?

• Does your cap table make sense for future funding?

Investors don’t expect perfection, but they do expect precision. Your financials tell the story of how you think, how you plan, and how well you’re positioned to scale.