Founders sometimes fail at fundraising because they don't speak the same financial language as their investors.
Consider the fundraising experience from the investor’s side of the table. The investor wants to see a return on investment before deploying capital in a new company. As a result, they need to see the financial past, present, and projected future of a company.
To cover the future, founders typically need to provide a financial model that reflects three years and monthly reporting. This stress-tests the business model on profitability and scalability and indicates the expected runway and future capital needs of the company. To cover the past, they need to demonstrate their performance and traction to date.
This step is more complicated than it sounds. Investors – and their accountants – expect the information presented in accordance with a specific reporting framework. If an investor receives the correct financial information but in the incorrect format, they won't be able to match the founders' story and plans to financial reality.