When an investor is about to write you a cheque, they will ask to see your bank statements. This is part of due diligence and it is standard practice. Being prepared makes the process faster and inspires more confidence.
What investors verify
Investors cross-check your stated revenue against actual bank credits. If your pitch deck says you earned Rs 50 lakh last year, they will look at your bank statement to confirm that much money actually came in. Discrepancies between stated revenue and bank credits raise serious concerns.
Runway calculation
Investors want to know how long your current cash lasts at your current burn rate. Your bank statement is the primary input for this calculation. They look at your average monthly debits over the last 6 months to calculate burn rate, then divide your current balance by that number.
Related party transactions
Large transfers to founders or related entities that are not clearly labeled as salary or expense reimbursements look suspicious in due diligence. Keep personal and business accounts fully separate. Every founder salary and expense should have a clear narration.
Organizing statements for due diligence
Prepare statements from all company accounts for the last 24 months. Compile them into a shared folder organized by bank and year. Add a one-page summary showing monthly opening balance, total inflows, total outflows, and closing balance. This saves hours during the due diligence process.
Related reading: Bank Statement for Personal Loan Applications, GST and Bank Statements for Businesses, How to Reconcile Your Bank Statement.