Reports and Records . . .

refer to the monthly balance sheets, income statements, and cash flow statements that most venture capitalists require of the companies in which they invest. Investors expect these reports to be provided promptly and regularly after a funding is completed. A typical venture capital investment term requires a company to provide reports on a monthly, quarterly and annual basis, with the annual statement being presented in an audited format. Often, the reporting requirements of the investment documents require the statements to contain comparative data from prior periods or comparisons to budget.

Well-kept records tell investors and management what the company has done and how it is proceeding toward accomplishing its goals. The types of records a company generates (beyond balance sheets and income statements) tell investors a lot about how much control management exercises over the company and how well informed management is about its company’s performance. In fact, an important role many active investor director nominees seek to play on a company’s board of directors is to help management identify key, measurable factors (sometimes referred to as "metrics") that can be monitored to help management better understand its business and anticipate future problems.

In short, a well-maintained set of books with appropriate and well-considered reporting mechanisms is important to attracting investors. Without these fundamental reports investors cannot properly evaluate the history of a company or the prospects for its success. See: Audits, CPAs (Certified Public Accountants).