Maximizing Startup Success in 2024: Key Verification and Validation Actions

Startup companies are often laser-focused on business value propositions, revenue growth, and customer alignment. However, the success of a startup in 2024 can be significantly enhanced by paying attention to a few crucial verification and validation actions. Here are essential steps that can make a substantial impact:

1. Financial Literacy Across the Team:

• Understanding Startup Financing: It's not just the CFO or accountants who need financial literacy. Every member of the senior leadership team, from technology leaders to customer success, should have a good understanding of equity holding positions, cap tables, business proforma, and financial statements.
• Knowledge for Follow-on Funding: The growth of a startup post-initial funding depends heavily on the financial literacy across the team. Verify and validate your team's financial literacy to ensure a solid foundation for future funding rounds.

2. Frequent Compliance Verification:

• Importance of Compliances: Many startups overlook compliance processes, assuming service providers will handle them. Regularly verify compliances, including sales tax, accounting, payroll, and more. Ignoring these can lead to significant challenges, especially during financial difficulties.
• Third-Party Verification: Request audited financials and verify the data of both your company and any third parties. Ignoring compliances can have serious consequences, and taking proactive steps can save a startup from future complications.

3. Debt Verification:?

• Understanding Debt Basics: Debt is inevitable in a startup's journey, but understanding the basics of reporting is crucial. Senior leadership must comprehend a company's debt, as they often sign documents that can make them liable.
• Business Credit Score Check: Start with a simple business credit score check. This can be a quick and effective way to understand a company's debt status and potential risks.

4. Team Verification at an Early Stage:

• Background Checks and Agreements: Before bringing in key team members, conduct thorough background checks. Building strong agreements and implementing vesting schedules are essential but not sufficient. Take the time to study the alignment of team members carefully.
• Legal Battles Prevention: Anticipate potential issues by considering what might happen if a team member is not aligned. This proactive approach can prevent lengthy legal battles that may arise from disagreements within the team.

About 3Lines:

3Lines is a visionary venture capital firm based in Denver, Colorado, with a mission to build generational wealth for its investors. With a focus on early-stage companies in the U.S. and India, 3Lines strategically invests in areas such as SaaS, CyberSecurity, Cloud, Enterprise Software and AI-powered innovations.?

Investment Philosophy:

• 3Lines has a track record of investing in companies at crucial stages, from $1M to those generating up to $12 million in revenue.
• The firm's investment philosophy goes beyond financial backing, providing strategic support to portfolio companies to foster long-term success.

Global Reach:

• With a presence in both the U.S. and India, 3Lines extends its reach to tap into diverse and dynamic markets, contributing to a global innovation ecosystem.

Community Impact:

• 3Lines is not just about investments; it's about making a positive impact on the communities it serves. The firm actively engages with startups that have the potential to drive positive change and societal progress.