You’ve built a SaaS product customers love, hit your early revenue milestones, and now you’re ready to raise Series A. But somewhere between your pitch deck and the term sheet sits a challenge that catches many founders off guard: getting your financials investor-ready—often with help from a Fractional CFO Services for SaaS Businesses.
Series A investors dig deeper than seed investors ever did. They’ll scrutinize your MRR schedules, question your revenue recognition, and stress-test every assumption in your forecast. This guide walks through the financial statements, SaaS metrics, and preparation steps that help you close your round faster—and avoid the mistakes that kill deals.
What is Series A funding for SaaS companies
Series A funding is the first significant round of venture capital financing after seed funding, typically ranging from $2 million to $15 million. To prepare SaaS financials for Series A, you’ll want clean, GAAP-compliant historical data, a robust financial model with realistic projections, and the ability to track and present key SaaS metrics. Investors at this stage are looking for proof that your business model works—not just a promising idea.
The difference between seed and Series A comes down to scrutiny. Seed investors often bet on founders and vision, while Series A investors dig into your numbers to validate product-market fit and scalability. Think of it this way: seed funding says “we believe in you,” while Series A funding says “prove it with data.”
Financial statements required for Series A due diligence
Due diligence is the formal process where investors verify your claims and assess risk before writing a check. During this phase, investors expect a complete financial documentation package that tells a clear, accurate story about your business.
| Document | What It Shows | Why Investors Request It |
|---|---|---|
| Income Statement | Revenue, expenses, profitability | Validates unit economics and growth trajectory |
| Balance Sheet | Assets, liabilities, equity | Confirms clean capitalization and financial health |
| Cash Flow Statement | Operating, investing, financing flows | Reveals burn rate and runway |
| MRR/ARR Schedules | Recurring revenue trends | Shows subscription business health |
| Cap Table | Ownership structure | Ensures clean equity and room for investment |
Income statement
Your income statement (also called a P&L) tells investors whether your business generates sustainable revenue and manages expenses effectively. For SaaS companies, breaking out recurring versus non-recurring revenue matters because investors want to see that your core subscription business drives growth, not one-time services or consulting fees.
Balance sheet
The balance sheet provides a snapshot of everything your company owns and owes at a specific moment in time. Investors pay close attention to deferred revenue—money collected for services not yet delivered—and your overall capitalization structure. Any hidden liabilities here can derail a deal quickly.
Cash flow statement
While profitability matters, cash is what keeps your company alive. The cash flow statement reveals your burn rate (how quickly you’re spending money) and your runway (how many months of operation you can fund before needing additional capital). Investors use this to gauge how long their investment will last.
MRR and ARR schedules
Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) schedules go beyond standard GAAP statements. These schedules break down new revenue, expansion revenue, and churned revenue month over month, giving investors visibility into growth dynamics that traditional financial statements simply don’t capture.
Cap table summary
Your capitalization table documents who owns what percentage of your company. A clean, accurate cap table builds investor confidence because it shows you’ve managed equity responsibly. Messy cap tables with unclear ownership or complicated convertible notes often slow down or kill deals.
How to clean up your SaaS accounting records
Messy books signal operational risk. If you can’t track your finances accurately, investors will wonder what else you’re missing. The good news is that most cleanup work is straightforward—it just takes time.
- Reconcile all bank and credit card accounts monthly: Unreconciled transactions create discrepancies that raise red flags during due diligence.
- Categorize expenses consistently: Use a standardized chart of accounts so investors can compare your financials to industry benchmarks.
- Clear outstanding items: Resolve any undeposited funds, uncategorized transactions, or suspense account balances before investor meetings.
- Separate personal and business transactions: Commingled finances suggest poor governance and create tax complications that investors don’t want to inherit.
Essential SaaS metrics that Series A investors evaluate
Standard financial statements tell only part of the story. Investors rely on SaaS-specific metrics to assess whether your business can scale efficiently and generate returns. Consistency in how you calculate these metrics matters enormously—changing methodologies between periods destroys credibility faster than almost anything else.
If you need a deeper refresher on the core unit economics metrics, this breakdown of SaaS North Star metrics (CAC, LTV, and churn) for SaaS companies is a useful companion when you’re standardizing definitions for diligence.
| Metric | Definition | What It Tells Investors |
|---|---|---|
| ARR/MRR | Annualized or monthly recurring revenue | Core business size and trajectory |
| YoY Growth | Year-over-year revenue increase | Market traction and momentum |
| Gross Margin | Revenue minus COGS | Scalability potential |
| CAC | Cost to acquire a customer | Sales efficiency |
| LTV | Lifetime revenue per customer | Customer value |
| LTV:CAC Ratio | Lifetime value divided by acquisition cost | Business model sustainability |
| NRR | Revenue retained including expansion | Product stickiness |
| Burn Multiple | Cash burned per dollar of new ARR | Capital efficiency |
Annual recurring revenue and monthly recurring revenue
ARR represents your annualized subscription revenue, while MRR shows the same figure on a monthly basis. When calculating these numbers, include only committed recurring revenue. Exclude one-time fees, professional services, and variable usage charges that aren’t guaranteed to repeat.
Year-over-year growth rate
YoY growth compares your current revenue to the same period last year, expressed as a percentage. Strong growth signals product-market fit, while decelerating growth prompts questions about market saturation or competitive pressure. Investors look at the trend as much as the absolute number.
Gross margin
Gross margin measures revenue minus the direct costs of delivering your service, including hosting, customer support, and implementation. SaaS investors typically look for margins trending toward 70% or higher, which indicates room for profitable scaling as you grow.
Customer acquisition cost
CAC captures the fully loaded cost of acquiring a new customer, including sales salaries, marketing spend, and related overhead. Understanding your true CAC by channel helps you identify which acquisition strategies deliver the best returns—and helps investors understand where their money will go.
Lifetime value and LTV to CAC ratio
Lifetime Value (LTV) projects the total revenue a customer will generate over their entire relationship with your company. The LTV:CAC ratio—ideally 3:1 or higher—reveals whether you’re building a sustainable business or burning cash to acquire customers who won’t generate sufficient returns.
Net revenue retention
Net Revenue Retention (NRR) measures how much revenue you keep from existing customers, including expansion revenue from upsells and cross-sells minus downgrades and churn. NRR above 100% means your existing customer base grows even without new sales—a powerful signal that customers find increasing value in your product.
Gross revenue retention
Gross Revenue Retention (GRR) strips out expansion to measure pure retention. While NRR can mask churn with expansion revenue, GRR shows how well you’re keeping customers at their original contract value. Both metrics matter, but they tell different stories.
Burn multiple
The burn multiple divides cash burned by net new ARR added during the same period. A burn multiple under 2x suggests efficient growth, while anything above 3x raises concerns about capital efficiency. This metric has become increasingly important as investors focus more on sustainable growth.
CAC payback period
CAC payback measures how many months it takes for a customer’s revenue to cover their acquisition cost. Shorter payback periods mean faster capital recycling and less risk. Most Series A investors look for payback periods under 18 months.
Sales efficiency and magic number
The magic number divides the change in quarterly recurring revenue by the previous quarter’s sales and marketing spend. A magic number above 0.75 indicates efficient sales operations, while below 0.5 suggests you’re spending too much to acquire each revenue dollar.
How to build investor-ready financial forecasts
Investors expect projections that are defensible, not aspirational. The difference lies in your assumptions—can you explain and justify every number in your model?
Bottom-up forecasting builds projections from specific, verifiable inputs like current pipeline, historical conversion rates, and planned hiring. Top-down approaches that start with market size and assume you’ll capture a percentage often lack credibility because they’re disconnected from operational reality. Most experienced investors can spot the difference immediately.
Your forecast typically covers three to five years and includes:
- Revenue model: Projected new customers, expansion, and churn by month
- Expense assumptions: Headcount plan, marketing spend, infrastructure costs
- Cash runway: How long your current cash plus the raise will last
- Use of funds: Specific milestones the investment will help you achieve
SaaS revenue recognition and ASC 606 compliance
ASC 606 is the accounting standard governing how companies recognize revenue from customer contracts. For SaaS businesses, this standard means you can’t recognize all the cash from an annual contract upfront—instead, you recognize it ratably over the service period as you deliver value.
If you want a more detailed walkthrough of common contract scenarios, performance obligations, and what changes for a software company under GAAP, see this guide to ASC 606 revenue recognition for SaaS companies.
Deferred revenue represents cash you’ve collected but haven’t yet earned. Proper handling prevents deal-killing surprises during due diligence when investors discover your reported revenue doesn’t match your bank deposits. Here’s how common scenarios work:
- Annual contracts paid upfront: Recognize 1/12 of the contract value each month as you deliver the service
- Monthly billing: Recognize revenue as each month’s service is delivered
- Implementation fees: May require separate recognition if they represent a distinct performance obligation under ASC 606
Preparing for Series A financial due diligence
Due diligence typically involves setting up a data room—a secure online repository where investors access your documents. Organization matters because a messy data room suggests a messy operation. First impressions count, and investors often review dozens of companies simultaneously.
Typical document requests include:
- Historical financial statements (past 24–36 months)
- Monthly MRR/ARR schedules with cohort breakdowns
- Customer contracts and revenue recognition schedules
- Cap table and all equity agreements
- Tax returns and any outstanding tax matters
- Bank statements and debt agreements
Series A financial preparation timeline
Starting early prevents last-minute scrambles that can delay or derail your raise. Most founders underestimate how long cleanup takes, especially when they’re also running the business day-to-day.
| Phase | Timeframe | Key Actions |
|---|---|---|
| Foundation | 6 months before | Audit systems, clean historical records, implement metric tracking |
| Build | 3 months before | Create forecasts, prepare narratives, organize documentation |
| Polish | 30 days before | Finalize data room, practice explanations, update with latest actuals |
6 months before your raise
Focus on foundational work during this phase. Audit your accounting system for accuracy, perform historical cleanup on any messy periods, and implement proper tracking for all the SaaS metrics investors will request. This is also the time to address any revenue recognition issues.
3 months before your raise
Shift to building your investor materials. Create your financial model with defensible assumptions, develop clear narratives explaining your numbers, and begin organizing your data room structure. Practice explaining any anomalies or unusual items in your financials.
30 days before your raise
Final polish happens here. Complete your data room with all requested documents, practice explaining your financials to people unfamiliar with your business, and update all projections with your most recent actual results. Fresh numbers matter.
Common financial mistakes that kill Series A deals
Even promising companies lose deals over preventable financial errors. Knowing what to avoid can save months of wasted effort.
- Inconsistent metric calculations: Changing how you calculate ARR or churn between periods destroys credibility instantly.
- Unexplainable variances: Large swings in revenue or expenses without clear explanations suggest you don’t understand your own business.
- Missing documentation: Gaps in contracts, agreements, or historical records slow due diligence and raise concerns about what else might be missing.
- Unrealistic projections: Hockey-stick forecasts without supporting assumptions signal inexperience to investors who’ve seen hundreds of pitch decks.
- Revenue recognition errors: Recognizing annual contracts upfront or mishandling deferred revenue creates restatement risk that can kill deals late in the process.
How strategic finance partners help you raise Series A faster
Experienced finance guidance accelerates preparation without the cost of a full-time CFO hire. A strategic finance partner serves as your navigator—charting the course to your funding goal, identifying obstacles before they become problems, and helping you present your financial story with confidence.
Think of the relationship this way: you’re the captain of the ship, deciding where to go. A strategic finance partner maps out what you can spend on people, how much you’ll have for provisions, and charts the course to get there. They also look out for icebergs and coral reefs along the way, measuring every month whether you’re on track and reporting back so you can make informed decisions.
At Bennett Financials, we work with growth-focused SaaS founders to build investor-ready financials, implement proper metric tracking, and prepare for the questions investors will ask through strategic fractional CFO support. Rather than just cleaning up the past, we help you build the financial infrastructure that supports your next stage of growth.
Talk to an expert at Bennett Financials
If you’re preparing for Series A and want your financials, metrics, and narrative to hold up in diligence, our team can provide outsourced CFO leadership to help you move faster and avoid deal-killing surprises.
