Insight
What does a capital readiness review test before a raise?
Readiness is decided before investor engagement begins, not during it.
The short answer
A capital readiness review tests whether a company is ready to raise before it approaches investors. It examines whether capital is the right answer, whether the use of funds is credible, whether the financial model supports the narrative, and whether the round is sized and structured correctly. It surfaces the questions an investor will ask and the gaps that appear under scrutiny. The work is done before the company goes to market. The output is a clear view of what is ready, what is not, and what should be resolved first.
When this matters
- Preparing for a seed or Series A round.
- Runway is tightening and a raise is being considered.
- Taking on first institutional capital.
- Informal investor interest has appeared.
- Before a data room or pitch process opens.
What gets tested
- Whether capital is the right answer, or a way to defer a harder decision.
- The amount, timing and structure of the round.
- Use of funds against real milestones.
- The valuation expectation against the evidence for it.
- The assumptions the financial model depends on.
- The cap table and any prior terms that will affect the round.
- Founder alignment on dilution and control.
Common problems
- Raising to avoid a decision the company has not made.
- A use of funds that reads as a wish list.
- A valuation anchored to hope rather than evidence.
- A model that breaks under a single question.
- Founders not aligned on how much to sell.
What the review produces
A written view of where the company stands. It sets out the likely investor objections, the gaps to close, and the sequence of what to resolve before going to market. The objective is fewer surprises once external scrutiny begins.
Related review
Contact
Discuss a decision
PHCA works with a limited number of companies at any one time. Enquiries are most useful where there is a defined decision, a clear timing issue and a need for independent judgement before the company proceeds.