Your pitch deck got you the meeting. The data room gets you the cheque. Most founders spend months on the deck and almost no time on the numbers behind it, and it shows the moment an investor asks for the management accounts.

I've sat on both sides of this. I run a firm that reviews the finance functions of fast-growing ecommerce brands, and a lot of that work happens because an investor, a broker or a buyer asked for the financials and the brand could not produce anything they could rely on. The pitch was fine. The story was fine. The numbers were not.

This post is about what investors actually check when they look at a £1m to £20m DTC or marketplace brand, and how to get your financials investor ready before you start the process, not after it stalls.

Here's the Short Version

  • Investors check management accounts, gross margin, cash and the balance sheet, not your revenue story
  • Every number gets traced: gross margin to the fee stack, cash to the bank, stock to a count, tax to the filings
  • The deal killers are structural: books on the bank feed, stock that doesn't reconcile, director loans, and tax that was never cleaned up
  • Your Companies House record and your tax filings are checked before the first term sheet is drafted
  • Fix the monthly close, the forecast and the compliance box before you raise, and the whole process gets faster and cheaper

What Investors Actually Ask For

Ask any investor what they want to see and you get a short list. The last two or three years of statutory accounts. The last 12 months of management accounts. A P&L, a balance sheet and a cash flow statement. A forecast for the next 12 to 18 months. Your cap table. Your VAT, payroll and tax position. That's the data room.

Here's what the list really means. The statutory accounts tell them you filed on time and your auditor or accountant signed off a set of numbers. The management accounts tell them whether you know your numbers month to month, or only at year end. The forecast tells them whether you think in terms of cash, or in terms of revenue. The cap table tells them whether a deal can actually be structured. And the tax position tells them whether there's a liability hiding in the cupboard that becomes their problem after they invest.

Every one of those documents gets read against the others. If the management accounts show a different gross margin to the statutory accounts, they notice. If the bank balance doesn't match the cash on the balance sheet, they notice. If the stock number on the sheet is bigger than anything a warehouse could hold, they notice. Investors are not checking whether your numbers are pretty. They are checking whether your numbers are true.

The Three Numbers That Decide It

Most of the diligence comes down to three numbers. Get these right and the rest is paperwork. Get them wrong and nothing else saves you.

Gross margin and contribution

Take a £100 order, shown in your P&L excluding VAT, which is how it should be shown. £30 goes on the product. £9 goes on marketplace commission. £10 goes to the affiliate who drove the sale. That's £49 gone before you've paid for shipping, ads, staff or returns. You're left with £51, a 51% gross margin.

Now run that at £2m of revenue. Every percentage point of margin you cannot explain is £20,000 a year. Investors know this arithmetic cold. They will ask why your margin moved between quarters, and they will not accept "we grew fast" as an answer. They want to see the fee stack broken out, the cost of goods verified, the returns line visible. A brand that books marketplace payouts net, with the fees hidden inside the sales line, cannot answer this question, and it is the first question.

EBITDA and the add-back argument

Investors buy earnings, and for most growing brands earnings means EBITDA, or a version of it. Here is where the games happen. The founder's salary above market rate. The marketing push that didn't work. The one-off legal bill. The "exceptional" items that make this year look better than last year.

Some add-backs are legitimate. A genuinely one-off cost is a genuinely one-off cost. But investors have seen every version of this. If your adjusted EBITDA is doing the heavy lifting in your pitch, and the adjustment is "we spent a lot on growth and it didn't work, please ignore it", the conversation gets short. The test is simple. Can you defend the add-back with evidence, or is it just hope dressed as accounting?

Cash and runway

Burn £50,000 a month and hold £150,000 in the bank, and you have three months of runway. Investors will draw that line themselves, so draw it first. They also check what your cash actually is. Customer cash held in settlement pipelines is working capital, not profit. Prepaid stock is not cash. A fat bank balance at month end with a thin forecast behind it is not a position, it's a coincidence.

If your cash flow forecast is a spreadsheet you opened once in January, that tells them more about your finance function than any slide in the deck. We've written the full approach in our guide to cash flow forecasting for hypergrowth brands, because this is where most fast-growing businesses are genuinely flying blind.

The Red Flags That End Due Diligence

Here is the list we see in real reviews. Any one of these is survivable. Two or three together, and a sensible investor walks.

Books built on the bank feed

If sales are booked as whatever landed in the bank, the P&L is fiction. There are no accruals, no prepayments, no proper cut-off, and the balance sheet has never been reconciled. The monthly close doesn't exist because nobody can see what it would even close. Investors test for this by asking one question: when was the last time the balance sheet tied out, line by line, to the underlying records? If the answer is a blank look, the process is over.

Stock that doesn't reconcile

Stock is the asset most likely to be wrong in an ecommerce business, and it is the one investors check hardest. The rule is simple: stock sits at the lower of cost and net realisable value. If you have £500,000 of stock on the balance sheet and £120,000 of it is slow-moving lines you'll have to discount to shift, the asset is overstated and the profit is overstated with it.

If your stock days are climbing while your margin is falling, that's not growth, that's a clearance sale you haven't admitted to yet. Investors will ask for the stock count, the aged stock report and the valuation method. Have all three, and have them agree.

Director loans

Borrowed £70,000 from the company and not repaid it within nine months and one day of the year end? That's a £25,025 tax charge at the current 35.75% rate for loans to participators, and it's sitting on your balance sheet as a line every investor will recognise. They read it as one thing: the founder treats the company bank account as their own.

It might be innocent. It might be a timing thing. It doesn't matter. It's the single most common founder tax issue we see in reviews, and it is a smell that sticks to a deal. Clear it, or document it properly, before anyone asks.

Management charges and intercompany paperwork

If you run a group, or you charge your own brands management fees, the paperwork has to exist. Agreements, invoices, evidence the charge is at a defensible level. HMRC scrutiny is one risk. Investor scrutiny is the other, because a management charge that appears or disappears at convenient moments is exactly how profits get moved around. The absence of paperwork reads as deliberate. That's how we described it in the case study below, and it's how investors see it too.

VAT and the platform reporting mismatch

If you sell on TikTok Shop or Amazon, those platforms report your seller data to HMRC every year, by 31 January for the previous calendar year. Your declared revenue needs to tie to that data through your books. A gap here is not a rounding issue, it's the kind of mismatch that gets a return looked at more closely, and investors now ask about platform reporting directly. We've covered the full mechanics in our guide to reconciling platform reporting at £1m+.

And if you found a VAT mistake in your records, the correction rules are strict. You can correct a non-deliberate net error on your next return if it's £10,000 or less, or above £10,000 and no more than £50,000, but only when it doesn't exceed 1% of your Box 6 sales. Larger errors, and all deliberate errors, have to be notified to HMRC separately. You cannot quietly fix a £200,000 error on the next return and hope nobody notices.

A messy Companies House record

Accounts are due nine months after your year end, and late filing penalties run up to £1,500 for a private company, doubled for a repeat offence. A filing history full of late marks and corrections is a small thing that reads badly. It says the company treats legal deadlines as optional, and if they treat Companies House like that, how do they treat their tax returns? Investors check. It takes them thirty seconds.

A Real Case: The £10m Brand That Wasn't Ready

We published the full write-up of a review we carried out for an investment adviser, and it's the best illustration of this post you'll find. A celebrity-backed consumer brand with more than £10 million a year in revenue. Huge following on TikTok and Instagram. From the outside, a success story.

Behind the scenes: no meaningful monthly balance sheet reconciliations. Stock not reconciled correctly. Reporting not on a proper accruals basis. Channel and gateway payouts that never tied up. Marketplace integrations producing records nobody could rely on. VAT treatment that needed a full review, including international sales. Management charges without the documentation to survive scrutiny. And a bookkeeping function run by an inexperienced individual with limited oversight.

Individually, each issue was manageable. Collectively, they meant the business could not present investment-grade financial information, and the investment process was delayed until the records could be rebuilt. The full story is in our case study, The £10m Brand That Wasn't Ready for Investment. Read it before you send your own data room, and ask yourself which of those findings would show up in a review of your business.

The Tax Compliance Box

Investors don't check every tax filing. They check that the box is in order, and they check it early. Here's what "in order" means for a UK limited company at your size.

  • Corporation tax returns filed on time. For most companies the tax is paid nine months and one day after the accounting period end, and by quarterly instalments if annual taxable profits are above £1.5 million. The rates are 19% on profits up to £50,000, 25% above £250,000, with marginal relief in between, and the thresholds reduce for short periods and associated companies. A company that owes a surprise six-figure tax bill it never planned for is a company with a cash problem it hasn't admitted
  • VAT up to date, filed digitally, with the return built from sales records rather than bank deposits
  • PAYE and payroll filings current, including any benefits in kind
  • No outstanding HMRC debt. Late payment interest runs at 7.75% a year and it compounds the signal that cash is tight
  • Dividend paperwork done properly. The rates for 2026/27 are 10.75% on ordinary dividends, 35.75% above, 39.35% at the additional rate, with a £500 allowance. A founder taking dividends without the paperwork is a tax risk in the making
  • An audit exemption that's actually valid. You're exempt as a small company only if you meet at least two of three tests: turnover of £15m or less, a balance sheet of £7.5m or less, and 50 employees or fewer. One breached limit does not trigger an audit, but many founders assume the wrong thing here

If any of that box is a guess, sort it before the raise. The share structure and dividend side is covered properly in our post on founder finance: paying yourself, share structure and R&D claims, because how you pay yourself is one of the first things an investor's tax adviser will model.

The 90-Day Fix List

If you're raising in the next six months, here's the list to work through. Ninety days is enough for most of it. It's not enough to do it twice, so start now.

  • Get a monthly close that actually closes. Balance sheet reconciliations, accruals, cut-off, every month, with a named owner. Our 12-step monthly accounting checklist is the practical version
  • Produce management accounts within ten working days of month end, and read them. If you can't explain the margin movement, your accountant should be able to
  • Build a 12 to 18 month cash flow forecast and update it monthly. Link it to your stock plan, your settlement cycles and your marketing spend
  • Count stock, age it, and value it at the lower of cost and net realisable value. Write down the slow movers now, not after the investor asks
  • Clear or document every director loan before anyone opens the data room
  • File everything: Companies House, CT, VAT, payroll, on time, going forward
  • Sort the cap table and the option scheme. If you want an EMI scheme, the limits from April 2026 are £120m of gross assets, fewer than 500 full-time equivalent employees and £6m of unexercised options, with £250,000 per person over a three year period, and they apply to most UK companies. Companies registered in Northern Ireland that trade in goods or electricity stay on the older limits of £30m, 250 employees and £3m. Get it done before the term sheet, not after
  • Put a finance owner in place. A bookkeeper records transactions. A financial controller runs the close, the forecast and the reporting. At £5m and above, the difference is the whole game, and we've written about when you need a controller rather than an accountant

FAQ

What do investors check first?

The last 12 months of management accounts, the gross margin trend and the cash position. The deck gets you the meeting. Those three things decide whether the meeting goes anywhere.

How far back do investors look?

Usually two to three years of statutory accounts and the recent management accounts. But they will trace any oddity further. A stock adjustment or a VAT correction from four years ago that was never explained will get pulled out and questioned.

My accounts show a loss. Can I still raise?

Yes, if the loss is a funded growth story with unit economics that are improving and a plan to reach profit. No, if the loss is structural and you can't explain the margin. The question is never "are you profitable". It's "do the numbers tell a story you can defend".

Do I need audited accounts to raise?

Only if you hit the audit tests, or if the investor's agreement requires it. What you need is accounts and management information an investor can rely on, which is a different thing and a lower bar. A clean set of reviewed accounts and a finance function that can answer questions beats a statutory audit on top of a mess.

I found errors in my books. Should I fix them before or after I start talking to investors?

Before. Every day of the process is priced on trust, and the data room is where deals die. Fix what you can within the VAT error correction limits, notify HMRC where the rules require it, and get the records rebuilt before anyone asks. We do exactly this kind of rebuild for brands ahead of a raise.

The Bottom Line

Investors don't invest in revenue. They invest in reliable financial information. The £10m brand in our case study had the revenue, the following and the story, and none of it mattered once the data room opened.

The good news is that the fix is known and boring. Close the month properly. Reconcile the balance sheet. Know your margin. Forecast your cash. Clear the loans. File on time. Put someone competent in charge of it. Do that for six months and you walk into the raise with the one thing most of your competitors can't produce: numbers an investor can actually rely on.

If you're planning a raise and you're not sure your financials would survive the data room, we can review the finance function first and tell you exactly what an investor would find. We're specialist social commerce accountants, we work with UK brands from £1m to £20m, and we've done this review for brands exactly like yours. Book a call and we'll take it from there.