What was broken
A consumer-electronics company planned to raise institutional capital within the year but had never been through a formal fundraise. Its financials, compliance, governance, and cap table were not organised to the standard investors expect, and the founders wanted to be ready well before going to market.
What we did
CapEasy ran a comprehensive investor-readiness programme — organising financial and tax records, closing compliance gaps, formalising governance and statutory documentation, cleaning up the cap table, and assembling a diligence-ready data room. We prepared the founders for the questions investors would ask.
Where it landed
The company reached the market organised and diligence-ready, able to move quickly once investor conversations began. The preparation improved investor confidence and strengthened the founders’ position.
A readiness pack, not a pitch pack
A pitch deck is built for one raise. A readiness pack is the standing file that raise draws on — and the next one after it, because a US institutional investor’s diligence checklist does not change much between a seed extension and a Series A. It asks for three-plus years of financials, the cap table with every instrument reconciled to it, board consents behind every issuance, material contracts, and IP assignments. Building that file once, and keeping it current, is what lets a founder move on an investor’s timeline instead of scrambling to match it.
For a hardware company the pack carries two sections a SaaS company’s does not: an inventory schedule that ties to the balance sheet, and a per-unit economics build-up that a software diligence team never has reason to ask for.
Inventory: the line item diligence lingers on
IRS Publication 538 sets out how a business accounts for inventory: value it at cost, or at the lower of cost or market — and if using lower of cost or market, "you must value each item in the inventory separately," not blend the whole inventory at cost against the whole inventory at market and take the lower total. For a consumer-electronics company carrying components, work-in-process and finished units at different price points, that item-by-item rule is exactly where a rebuilt-in-a-hurry schedule breaks down under review.
Publication 538 also flags the size line that determines which rules apply: a small business taxpayer with average annual gross receipts of $26 million or less can treat inventory as non-incidental materials and supplies, rather than applying the full uniform capitalization rules under Section 263A that require producers to capitalize direct and indirect production costs into inventory. Knowing which bucket a company sits in — and being able to show the reasoning — is a data-room answer, not a scramble the week diligence opens.
Underneath the inventory schedule sits the unit economics: landed cost per unit (component cost, freight, duty, contract-manufacturer fees), the capitalized versus expensed treatment of tooling, and a gross margin that reconciles back to the general ledger rather than living in a founder’s spreadsheet with its own numbers.
Governance and the cap table, formalised before someone asks
Delaware corporations are required to maintain a stock ledger as the record of who holds what, and diligence counsel reads gaps between that ledger and the signed instruments — SAFEs, notes, option grants — as risk to be resolved before closing. The readiness-pack version of this work is the same reconciliation CapEasy ran for this engagement: every issuance and conversion tied to a board consent, the option pool formalised on paper rather than promised verbally, and statutory registers corrected to match what was actually issued — done as standing maintenance, not as a pre-round fire drill.
If the round closes as a private placement, the clock starts at first sale
Most US institutional rounds for a private company close under Regulation D, and the SEC requires the issuer to file Form D on EDGAR within 15 days of the first sale — the date the first investor becomes irrevocably contractually committed to invest. Form D is a notice, not an application: it discloses the issuer, its executive officers and directors, the exemption relied on, and details of the offering, and it becomes a public record on EDGAR once filed. A readiness pack that already has the executive and director data organised means the 15-day window is a formality; one that does not means it becomes one more thing assembled under time pressure right after the round the founders spent a year preparing for.
What to take from it
- A readiness pack is standing infrastructure, not a document you assemble for one raise — build it before a term sheet forces the timeline.
- Hardware diligence carries two files a SaaS diligence file does not: an inventory schedule and a per-unit economics build-up, both tied to the general ledger.
- Inventory valued at lower of cost or market must be priced item by item, not blended across the whole schedule — IRS Pub 538 states this explicitly.
- Know whether the company sits under or over the small-business gross-receipts threshold for inventory treatment before an investor’s accountant asks.
- Formalise governance — board consents, the option pool, the stock ledger — as ongoing discipline, and a Reg D closing’s 15-day Form D filing becomes routine instead of a scramble.