In 2021, you could raise a Series A on a dream and a slide deck. The back-office mess, tangled web of spreadsheets and manual invoices were “tomorrow’s problem”.
In 2026, "tomorrow" has arrived.
As the era of growth-at-all-costs fades, a new standard is emerging in venture capital: operational discipline. Airwallex interviewed five leading investors from Accel, Octopus Ventures, Cherry Ventures, Firstminute capital and 13books Capital to understand exactly how they view a startup’s financial plumbing during due diligence.
The consensus? A messy stack won’t necessarily kill your seed round. But if you haven't fixed it by Series B, you are running straight into a wall.
The Series B wall
For early-stage founders, the pressure to professionalise can feel premature. Dinika Mahtani, partner at Cherry Ventures, is explicitly "founder-friendly" on this topic.
"For us at seed-stage, it's not important at all," she says. "It is quite arduous to ask about a finance stack at that stage. Founders should be thinking about customers first."
"As you get to Series B, if you can't produce good financial data, that is definitely a Red Flag."
Principal at Octopus Ventures Rich Bolton agrees, describing messy operations at the seed stage as not something that would raise eyebrows.
But both investors warn this grace period has a hard expiration date. "The bar increases as the size of the round increases," Bolton says. "We are pretty flexible at seed level, but as you get to Series B, if you can't produce good financial data, that is definitely a red flag."
By Series B, investors are no longer looking for a scrappy startup. They are looking for a company with control. Mahtani notes that while the specific software doesn't matter, "the quality of the data room" is a non-negotiable signal of competence.
The ‘fake ARR’ crisis
The most dangerous red flag isn't just disorganisation – it’s delusion. Christian Nentwich of 13books Capital, a technical founder turned investor, sees a "huge problem" in the industry regarding the quality of earnings.
We’ve qualified out of many opportunities as soon as we looked at the numbers on that basis.
"The sort of stuff people report as Annual Recurring Revenue (ARR) that, on scratching twice, turns out to be not ARR at all. It always falls to pieces," he says. "We’ve qualified out of many opportunities as soon as we looked at the numbers on that basis."
When a startup relies on manual spreadsheets to track complex revenue, “pilot revenue” often gets bucketed as “recurring revenue”. To a diligence team, this looks like an attempt to inflate valuation. "What is an absolute red flag is if numbers in spreadsheets don't track reality," Nentwich adds.
The bloated finance trap
For Matt Robinson, partner at Accel and co-founder of GoCardless, the red flag often isn't the lack of a finance function, but the wrong kind of function.
Many founders try to solve operational chaos by throwing bodies at the problem, hiring a chief financial officer too early, who then hires a financial controller and an accounts payable clerk. "Suddenly you've got 10 different people, and actually no one in the business who has the financial pulse," Robinson warns.
He describes the trap of organisational debt, where a bloated team is proud of a 10-day monthly close that a lean, automated setup could finish in two. "People just add in people but there's a difference between having more people and having better control."
The character test and the debt financing cliff
Perhaps the most subtle insight is that your back-office is a mirror of your front-office.
"The tools you use for your back office probably reflect the tools that you use to build out your front office," Robinson says. "It shows you the kind of team they are."
"It signals competence and sophistication, it shows you are setting stuff up for scale."
Michael Stothard, investor at Firstminute capital, agrees. While he acknowledges that pre-seed and seed startups often run on spreadsheets, he argues that clean data sends a powerful signal about the founder's DNA to Series A investors.
"Having the right systems in place shows that you're the kind of person who can create systems," Stothard says. "It signals competence and sophistication, it shows you are setting stuff up for scale."
A founder who tolerates a sluggish, manual back-office is likely tolerating inefficiencies in product and sales, too. Conversely, a clean stack suggests a founder who values speed and truth. Nentwich describes the gold standard not as a perfect board deck, but as "dashboard access" where an investor can log in and see the "Data Cube" of revenue, gross margin, and costs live, without a filter.
Finally, for founders considering debt financing, the stakes are existential. While VCs might forgive messy books if the growth is there, banks will not.
"If you need to raise debt, this problem becomes far more severe," Nentwich warns. "You have covenants that you have to follow. If you can't track your compliance, you could lose your entire company."
The verdict: Automation is the new default
Ultimately, the consensus is clear: while rigorous finance isn't strictly necessary to raise a seed round, modern tools have removed the excuse for ignoring it.
With platforms like Airwallex, there is no reason for startups not to have a single, unified view of their finances from day one. It’s not about satisfying investors – it’s about freeing up your time to focus on what actually matters: product, customers and talent. Automation isn't just cheap and efficient; it’s the default setting for a serious business.
"If I can get any zero-touch solutions that I can bring in early that don't cost much at all, I would definitely do it," Nentwich notes.
Ready to clean up your stack? Investors demand visibility. Airwallex provides the unified financial infrastructure you need to control spend, manage global treasury and signal operational maturity during due diligence. Learn more about Airwallex’s solution for AI & SaaS scale-ups here and read its guide on building a future-proof finance stack for AI scale-ups here.
