SaaS Finance: Due Diligence Checklist

If you determine your SaaS business could benefit from venture debt finance, it is an excellent practice to be prepared for a due diligence process.

Different lenders will request different items. Some lenders offer a technology platform that allows you to connect to and share financials to help streamline the process.

For those that don’t, we’ve gathered a checklist to help you prepare for funding applications and ensure you’ve included information investors may need to make the decision to fund your growth.

This list is not exhaustive but includes the core items for founders and management teams to gather to ensure a smooth process.

1. Financials

1.1. Two Years of Historical financials (P&L, Balance Sheet, Cashflow)

1.2. Forecast Financial Model (12-24 months: P&L, Balance Sheet, Cashflow)

1.3. Investor Pitch Deck

1.4. Most recent Board Report

1.5. Detailed monthly Revenue and SaaS metrics (in Excel if possible) by customer/product/internally defined customer cohorts. Example(s): retention, churn, ARR/MRR, LTV.  

1.6. Growth plans (including the intended use of the Element proceeds), sales pipeline for 2022 and onwards, and confidence levels.

1.7. Statutory financial statements if available for the prior two fiscal years

1.8. Aged Receivables/Payables as at the most recent date available.

1.9. Details on all loans/debt/quasi debt including outstanding venture debt, Grants/PPP/Covid supports, and any other indebtedness in the Company and summary of the terms attaching to same. For any Covid related loans, please provide details and confirmation of forgiveness, etc.

1.10. Fx & Banking Payments & Daily Banking – summary of bank accounts and any potential Fx exposures or hedging in-place.  

2. Corporate & Capital Structure

2.1. Group Chart showing all subsidiaries, associates, investments, their jurisdiction, etc.

2.2. Details of warrants, options, convertibles, and other "debt-like" instruments.

2.3. Cap table.

3. People

3.1. High-level organizational chart showing headcount and FTE and leadership by division, entity, or location.

3.2. Any material/notable agreements between the Company and its shareholders, directors/employees, or related parties.

4. Product & Technology

4.1. Product Demo or overview on platform/product roadmap with CAPEX required in the near future, disputes relating to IP or software (in or outside of court), and any data protection or cyber incidents, etc.  

4.2. Pricing - Understanding typical contracts T&Cs, duration, sales cycles, GM, committed periods, etc.

4.3. Patent documentation for any that is registered.

5. Material Agreements

Summary and copies of any agreements material to the Company's business or incurred outside the ordinary course of business or deemed potentially onerous in nature.

6. Sundry

6.1. Missed deadlines and disputes with tax authorities and tax payments outstanding.

6.2. Details of ongoing or threatened legal disputes and administrative or regulatory proceedings.

6.3. Overview of known events or developments which could have a material adverse impact on the business.

If you have questions, our team of SaaS operators and finance analysts are happy to provide a free consultation to determine if venture debt is right for your business.  Talk to Us.