Grace Taylor Advisory memo Decision Call · USD 240
You are not ready to raise, and the gap is eight weeks wide
60 minute call, 3 February. Reviewed and signed off by Grace Taylor on 5 February.
You asked whether to open the round in three weeks. On what you have, three weeks means going out with a data room that will produce a second diligence request, and a second request on a seed round is how a round stalls. Eight weeks is achievable and materially better.
Orrery is a raisable business with an unraisable data room. Revenue recognition is inconsistent across two of your four largest customers, two contracts are unsigned, and your cohort data cannot currently be reproduced from source. None of that is hard to fix and all of it is fatal to momentum if an investor finds it first.
The question
What was asked, and what was reviewed
As you put it: "Two funds have asked when we are raising. Can we be out in three weeks?"
| Reviewed | Source |
|---|---|
| Draft deck, 18 slides | Supplied 1 February |
| Management accounts, 24 months | Supplied |
| Revenue by customer and contract | Supplied |
| Four largest customer contracts | Supplied |
| Cohort retention model | Supplied, spreadsheet |
| Cap table | Supplied |
| Your answer to "how do you recognise revenue" | The call. This is where the problem surfaced |
The gap
Five things an investor will find
| # | Issue | Why it matters in diligence | To fix |
|---|---|---|---|
| 1 | Revenue recognised differently on two of the four largest customers | One annual contract recognised up front, one spread. Your ARR is not one number | 2 to 3 weeks with your accountant |
| 2 | Two of the four largest contracts are unsigned | Both live, both invoiced, both with no executed document | 1 to 4 weeks, depends on them |
| 3 | Cohort data cannot be reproduced from source | The spreadsheet is right and nobody can rebuild it. A diligence analyst will ask | 1 week |
| 4 | Cap table has two unexercised advisor grants with no paperwork | Small, and exactly the sort of thing that delays a close | 2 weeks with your lawyer |
| 5 | No written customer references lined up | Not a blocker, but it is asked for and it takes a fortnight | 2 weeks |
Items 1 and 2 are the ones that change the answer. The others are ordinary preparation that happens to take time.
The business
What is genuinely strong, and worth not undermining
| Strength | Evidence |
|---|---|
| Net revenue retention above 120 percent | Visible in the cohort model and it is real |
| Concentration is improving, not worsening | Largest customer 31 percent last year, 19 percent now |
| 14 staff on USD 2.4m revenue | Efficient by any standard for this stage |
| Two funds already asking | Inbound interest is the hardest part and you have it |
This is the reason to spend eight weeks rather than three. A business with these numbers does not need to go out unprepared, and inbound interest from two funds does not evaporate in five weeks.
Uncertain
What I do not know
| Unresolved | Why it matters |
|---|---|
| Whether either fund has a timing constraint | If one is closing its own fund, five weeks could genuinely matter. Ask them, plainly |
| How the two unsigned customers will react to being asked to sign | Usually fine. Occasionally it reopens a negotiation |
| Your runway | You said 'comfortable' and did not give a number, and it is the thing that decides whether eight weeks is affordable |
Next
Eight weeks, in order
-
Tell both funds you are raising in about two months
Specific enough to hold interest, honest, and it buys the time. Do not go quiet.
-
Revenue recognition, with your accountant
One basis, applied consistently, restated across 24 months.
-
Get the two contracts signed
Start now because it is the item you control least.
-
Cohort model rebuilt from source
Same numbers, reproducible, with the query saved.
-
Cap table cleaned, advisor grants papered
Your lawyer, two weeks, small money.
-
Three customer references briefed and willing
Ask early. People say yes and then take three weeks to reply.
-
Data room assembled, then open the round
With one ARR number that survives being checked.