By Shawn Elliott, CFO at High Rock Accounting
All right. If you have raised a Series Seed or Series A round in healthcare, biotech, pharma, or pharmacy, you already know the quarterly board meeting is no longer a friendly catch-up. It is a checkpoint. Your investors put real money on the table, and they want to see, on one page, whether their bet is still trending in the right direction or whether something has quietly gone sideways since the last meeting.
I have been on both sides of that table. I helped scale a Specialty Pharmacy from about $50 million to $500 million in roughly four years before our private equity exit, then went and built Fertility Pharmacy from a concept to a $50 million operation that also exited to PE. I have also sat in IPO readiness work for a life sciences group running animal studies and clinical trials with milestone-based allocation spreadsheets. So when I tell you what board members and VCs actually look at first, I am telling you what I have watched them flip to before they even open the appendix.
Here is the truth most founders learn the hard way: your investors are not reading every slide. They are scanning for five specific numbers, and they want those numbers presented the same way every quarter so they can spot the trend in about ten seconds. Get those five right, and the rest of the deck is conversation. Get them wrong, miss them, or change the formula between quarters, and you will spend the next forty-five minutes defending your books instead of talking about the science, the trial, the launch, or the deal in front of you.
Let’s walk through the five.
1. Cash Position and Net Burn Rate
This is always slide one of the financial section. Always. Cash is the single number that determines whether you live to see the next milestone, and your investors know it.
Two numbers belong here, side by side. Cash on hand at quarter-end, and net monthly burn for the trailing three months. Net burn, not gross burn. The difference matters in healthcare and biotech because some of you have early commercial revenue, grant income, milestone payments from a partner, or reimbursement coming in, and that revenue is a real offset against your spend. Gross burn is what is going out the door. Net burn is gross burn minus cash collected. Investors care about net because that is what is actually shrinking the bank balance.
For context, healthcare and biotech companies in the pre-revenue and early-commercial stage typically run monthly burn anywhere from $250,000 to over $2,000,000, with regulatory, R&D, and clinical work driving costs much higher than the average tech startup of the same headcount.*1
A few things I see go wrong here all the time. First, founders pull cash burn straight out of a tool like Puzzle or a default dashboard view and never sanity check it. I had a client where the tool was using a 3-month average and missing journal entries for international contractor payroll because those payments did not flow through their payroll software provider. The runway display swung from September to November overnight, and nothing had actually changed. The number was wrong. If you are going to put burn in front of your board, somebody on the accounting side needs to gut check it against the actual general ledger every single month. Otherwise you are going to walk in confidently telling your board you have eight months of runway when you actually have five.
Second, do not show burn on a cash basis if your books are accrual. And do not show it on accrual if you have not properly accrued your clinical trial costs, your CRO invoices, or your milestone-based study payments. Investors will catch the inconsistency, and once they catch it, they start questioning every other number on the page.
2. Cash Runway in Months
Runway is just cash on hand divided by net monthly burn. Simple math, but the number it produces is the most important single figure in your entire deck. It tells your investors how long you have before you need either more money or more revenue.
Investors in 2025 and into 2026 expect 18 to 24 months of runway out of a seed round and 24 to 30 months coming out of a Series A in capital intensive sectors like biotech and life sciences.*2 Healthcare investors specifically expect at least 18 to 24 months of runway from a seed round so the company can reach the next value inflection point.*3 That standard is higher than what you might see for a pure software company because your milestones are longer. You cannot raise a seed, miss your IND filing by twelve months, and expect to survive on fumes. The capital just is not as forgiving in this realm.
Where founders trip up: they show runway as a single static number when their burn rate is changing. If you just hired three principal scientists, signed a CRO contract for a Phase 1 study, or moved into a wet lab, your forward burn is going to be meaningfully higher than your trailing burn. Show both. Show your trailing 3-month average and your forward 6-month projected burn based on commitments you have already signed. Your investors are smart enough to know the difference, and they want to see that you know the difference.
Best practice I tell every founder I work with: start preparing for your next raise when you hit 8 to 10 months of runway, not 4 months. Industry data is consistent on this point. By the time you are at 6 months of runway with no plan, your negotiating leverage is gone, and the term sheet you get is going to look very different than the one you would have gotten with cash on the books and time on your side.*4
3. R&D Spend Against Milestones
This is the metric that separates healthcare and biotech from every other vertical. Your investors are not just funding a company. They are funding specific milestones. Lead optimization. IND filing. Phase 1 readout. FDA approval. State pharmacy permits. CLIA certification. A commercial launch. Each of those milestones is what unlocks the next tranche of capital, the next valuation step, or the strategic acquirer’s interest.
Your board wants to see, every quarter, R&D spend broken out against the milestones you committed to in your last raise. Not just one bucket called R&D. The breakdown should look something like this:
- Preclinical and lead optimization spend
- Clinical trial spend, accrued properly under ASC 730 by milestone or pro-rata over the trial period depending on the contract
- CMC and manufacturing scale-up spend
- Regulatory and IP spend
When I worked with the IPO ready company doing animal studies, we ran a milestone allocation spreadsheet that tied every dollar of trial spend back to a specific study deliverable. That spreadsheet became the single most referenced document in every board meeting and every investor diligence call. Why? Because it answered the question every investor really wants to ask: are you on track and on budget for the milestones you promised?
Pharmacy and specialty pharma founders, this applies to you too, just in a different shape. Your milestone is usually state licensing, payer contracting, or a new specialty therapeutic onboarding. At the Fertility Pharmacy I navigated 40 state pharmacy permit applications and renewals while we were scaling. Every one of those permits had real dollars behind it: legal fees, application fees, surety bonds, compliance build-out. Your board wants to know which states are live, which are pending, what each one cost you to get there, and what each one is generating in net revenue today.
4. Gross Margin and Operating Expenses by Function
Even pre-revenue, your investors want to see your operating expenses broken out by function: R&D, G&A, and Sales and Marketing. These three buckets tell them how you are deploying capital and whether your spending mix matches your stage.
I see this go sideways constantly. Founders let their bookkeeper lump everything into one big payroll line and one big professional services line, and then in the board meeting they cannot answer basic questions like, how much are we spending on R&D versus G&A. I had a medical device founder recently whose investor meetings and marketing were getting coded together. That immediately throws off your customer acquisition cost number, makes G&A look artificially low, and makes marketing look bloated. We had to break that out properly the first month we engaged. It is not hard to fix, but it has to actually get fixed in the chart of accounts, not patched in a spreadsheet later.
If you are commercial, gross margin matters too. For specialty pharmacy, what your investors really want to see is gross margin by therapeutic class or payer mix. Specialty drugs carry very different margin profiles depending on whether you are dispensing through commercial insurance, Medicare Part B, Part D, or 340B. Lump them all together and you have hidden the part of your business that is actually profitable from the part that is bleeding. For medical device and diagnostics companies that have launched, gross margin tells your investors whether your unit economics work at scale or whether you have a cost-of-goods problem you are not yet acknowledging.
And one more practical point: do not show your investors operating expenses on a cash basis. They want accrual. They want to see the bonus you owe but have not paid, the legal invoice that came in last week, the CRO milestone you triggered but have not been billed for. If your books are still cash basis, you are underreporting your true expense run rate, and as soon as your investors realize it, they assume the same thing about every other number you put in front of them. This is one of the biggest reasons we push pharma, biotech, and pharmacy clients onto GAAP-based accrual accounting before they raise their next round. Lenders, PE groups, and serious institutional investors will all ask for GAAP financials before they write a check, and if you have to scramble to convert at the last minute, you will limp along through diligence instead of running through it.
5. Forecast vs. Actuals With a Reforecast
This is the one founders hate building and investors love seeing. Every quarter, your board wants to see how the actuals came in against the forecast you presented at the last meeting, and they want to see your updated reforecast for the rest of the year.
Three columns, side by side: forecast (what you said), actuals (what happened), and variance with explanation. Then a separate view that shows your updated forward forecast based on what you have learned this quarter. That is it. No magic to the format, but the discipline of doing it every single quarter is what builds investor trust over time.
Why this matters so much: investors are not really evaluating whether you hit the forecast exactly. Nobody hits the forecast exactly. They are evaluating whether you understand why you missed and whether your reforecast reflects that learning. A founder who comes in and says, we missed Q2 revenue by 30% because the FDA pre-submission meeting got pushed by six weeks, here is the updated timeline and the cash impact, builds far more confidence than the founder who hands over a clean variance report with no commentary.
On the flip side, if you have beaten your forecast, do not just celebrate it. Explain why. Was it a one-time grant or milestone payment that pulled in early? Was it a partnership that closed faster than expected? Investors want to know if the upside is repeatable or just timing.
One thing I have been through enough times to flag for you: I have been through private equity exits more than once, and what I have watched happen is that PE groups will say one thing very rosy in the early conversations, and then push across an agreement that contradicts everything they verbally promised. The cleaner your historical forecast vs. actuals track record is, the harder it becomes for them to renegotiate your valuation in diligence. Sloppy reforecasting becomes ammunition. Tight, honest, quarter-over-quarter reforecasting builds a defense.
What Goes In Front of the Numbers
One quick note before we wrap. The five metrics above are the financial spine of your board deck, but they should not be the first thing your investors see. The first slide is always your scientific or clinical progress: trial enrollment, IND status, FDA interactions, regulatory wins, key publications. Then your operational milestones: hires, partnerships, manufacturing readiness. Then the financials.
The financials are how you prove you can execute responsibly. The science and the milestones are why your investors are in the deal at all. Lead with the why, support it with the how, and the meeting will go in a very different direction than the one where you bury everyone in spreadsheets up front.
Where We Come In
At High Rock Accounting, this is the type of work we do every day with healthcare, biotech, pharma, and specialty pharmacy founders. We build the chart of accounts so your R&D, G&A, and Sales and Marketing actually break out cleanly. We get you on accrual, GAAP-compliant books so your investors are not questioning your numbers in diligence. We build the runway model that holds up to a sanity check. We help you put together the board deck financials so you walk into the meeting with the five numbers your investors actually want, presented the same way every quarter.
We are not the cheapest shop in town, and I will be upfront about that. But if you are venture-backed and getting ready for your next raise, an audit, or a strategic conversation, having squeaky clean books and a CFO who has been through PE exits and IPO readiness multiple times is the difference between getting the valuation you deserve and getting re-traded at the eleventh hour.
If you want to talk through what your board deck financials should look like at your stage, I run an open Hawaiian Shirt Friday Ask an Accountant Hour every Friday at 10 AM PT. Drop in here:
https://us02web.zoom.us/j/88992505122?pwd=LdbL4NYxN2NNk5RanaHRVtrHgT43O9.1
Or if you want a focused 30 minutes one-on-one to walk through where your books and reporting are today, grab a slot directly:
https://meetings-na2.hubspot.com/shawn-elliott/30-minute-meeting
Either way, we are just a Slack message away when you are ready.
Sources
*1 Phoenix Strategy Group, “Burn Rate Trends: What Investors Expect in 2025,” 2025. https://www.phoenixstrategy.group/blog/burn-rate-trends-investors-expect-2025
*2 DealPotential, “Startup Runway in 2025: Burn Rate & Buying Time,” October 2025. https://dealpotential.com/startup-runway-2025-burn-rate/
*3 Qubit Capital, “Biotech Startup Financial Modeling: Building Seed Funding Projections,” January 2026. https://qubit.capital/blog/financial-modelling-biotech-seed-round
*4 DealPotential, “Startup Runway in 2025: Burn Rate & Buying Time,” October 2025. https://dealpotential.com/startup-runway-2025-burn-rate/
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