{"id":17550,"date":"2026-03-12T07:10:17","date_gmt":"2026-03-12T07:10:17","guid":{"rendered":"https:\/\/www.hashmicro.com\/my\/blog\/?p=17550"},"modified":"2026-04-24T07:03:00","modified_gmt":"2026-04-24T07:03:00","slug":"venture-capital","status":"publish","type":"post","link":"https:\/\/www.hashmicro.com\/my\/blog\/venture-capital\/","title":{"rendered":"Venture Capital Accounting: What It Is and Who Actually Qualifies"},"content":{"rendered":"<p class=\"font-claude-response-body break-words whitespace-normal leading-[1.7]\">Venture capital is one of the most powerful yet most misunderstood funding mechanisms in modern business. In Malaysia, the industry is growing fast. Most founders and finance professionals overlook: not every business fits the investment profile that VCs are actually looking for.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal leading-[1.7]\">According to the <a class=\"underline underline underline-offset-2 decoration-1 decoration-current\/40 hover:decoration-current focus:decoration-current\" href=\"https:\/\/www.sc.com.my\/annual-report-2024\">Securities Commission Malaysia Annual Report 2024<\/a>, total committed funds in the Malaysian VC industry reached RM6.7 billion by end of 2024 a clear signal that institutional capital is actively looking for the right startups to back. Of all VC investments recorded, the majority go toward growth-stage companies meaning businesses that are already scaling, not just starting out.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal leading-[1.7]\">Behind every funding round is complex financial management that goes beyond bookkeeping, covering fund structures, valuations, and returns. For finance leaders in the VC space, understanding this is essential.<\/p>\n<table style=\"border-collapse: collapse; background-color: #fffacd; box-shadow: 0 4px 8px rgba(0, 0, 0, 0.1); border-radius: 25px 25px 25px 25px;\" width=\"100%\">\n<tbody>\n<tr>\n<td style=\"padding: 15px; border: none;\">\n<h3 style=\"margin-bottom: 10px;\"><span style=\"background-color: #990000; color: #ffffff; padding: 5px;\"><b>Key Takeaways<\/b><\/span><\/h3>\n<ul>\n<li><a href=\"#1\">Venture capital accounting<\/a> differs fundamentally from corporate accounting it focuses on fund performance, not business operations.<\/li>\n<li><a href=\"#2\">Valuing early-stage startups<\/a> is the biggest challenge in VC accounting. Most assets fall under Level 3 meaning no observable market price exists.<\/li>\n<li>VCs look for <a href=\"#3\">six core criteria<\/a>: large market, scalable model, strong team, competitive moat, proven traction, and a viable exit <span id=\"1\"><\/span>path.<\/li>\n<\/ul>\n<p><!-- <div id=\"toc_group_article\" style=''>\r\n\t<p style='font-size:25px;font-weight:bold; margin-bottom:0px'>\r\n\t\tTable of Content\r\n\t<\/p>\r\n\t<ul id=\"list_toc\" class='list_toc'><\/ul>\r\n<\/div>\r\n\r\n<div class=\"dropdown-fixed-top\" id=\"dropdown-fixed-top\">\r\n\t<div class=\"row\">\r\n\t\t<p id=\"pilihDaftarIsi\">Content Lists<\/p>\r\n\t\t<p><i class=\"td-icon-menu-down\"><\/i><\/p>\r\n\t<\/div>\r\n\t\r\n\t<div>\r\n\t\t<ul id=\"list_toc_top\" class='list_toc'><\/ul>\r\n\t<\/div>\r\n<\/div> -->\r\n\r\n<!-- TOC mobile -->\r\n<div id=\"placeholder-toc\"><\/div>\r\n<div id=\"toc\">\r\n    <div class=\"header\">\r\n\t<span class=\"toc-title\" id=\"toc-title\">Table of Content<\/span>\t\r\n\t <i class=\"toc-icon\">\r\n        <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"30\" height=\"30\" viewBox=\"0 0 24 24\" fill=\"none\" stroke=\"#000\" stroke-width=\"2\" stroke-linecap=\"round\" stroke-linejoin=\"round\" class=\"header-icon\">\r\n          <path d=\"m6 9 6 6 6-6\" \/>\r\n        <\/svg>\r\n      <\/i>\r\n\t<\/div>\r\n    <div class=\"list\">\r\n      <ul id=\"toc-list\"><\/ul>\r\n    <\/div>\r\n <\/div>\r\n<!-- TOC mobile -->\r\n\r\n<style>\r\n\t@media (max-width: 992px) {\r\n\t\t#toc_group_article {\r\n\t\t\tpadding-top: 24px;\r\n\t\t}\r\n\t}\r\n\t\r\n\t#list_toc_float {\r\n\t\tmax-height: calc(100vh - 250px);\r\n\t\toverflow-y: auto;\r\n\t}\r\n\t\r\n\t#list_toc_top {\r\n\t\tdisplay: none;\r\n\t\tbackground: #fff;\r\n\t\tmargin-bottom: 4px;\r\n\t}\r\n\t\r\n\t#list_toc_top li {\r\n\t\tdisplay: block;\r\n\t\tmargin-left: 0;\r\n\t\tlist-style: none;\r\n\t}\r\n\t\r\n\t#list_toc_top a {\r\n\t\tpadding: 5px;\r\n\t\tdisplay: block;\r\n\t}\r\n\t\r\n\t#list_toc_top.show {\r\n\t\tdisplay: block;\r\n\t}\r\n\r\n\t#list_toc_top a {\r\n\t\tcolor: #434343;\r\n\t\tborder-bottom: 1px solid #bbb;\r\n\t}\r\n\t\r\n\t.dropdown-fixed-top {\r\n\t\tposition: fixed;\r\n\t\ttop: 59px;\r\n\t\twidth: 100%;\r\n\t\tz-index: 99;\r\n\t\tborder-bottom: 2px solid #9c171e;\r\n\t\tpadding: 12px;\r\n\t\tbackground: #fff;\r\n\t\twidth: 100%;\r\n\t\tcursor: pointer;\r\n\t\tdisplay: none;\r\n\t\tleft: 0;\r\n\t\tbox-shadow: 0 -2px 7px 6px rgba(0, 0, 0, 0.17);\r\n\t}\r\n\t\r\n\t#dropdown-fixed-top.show {\r\n\t\tanimation: showAnim 0.5s ease;\r\n\t\tdisplay: block;\r\n\t\topacity: 1;\r\n\t}\r\n\t\r\n\t@keyframes showAnim {\r\n\t\tfrom {\r\n\t\t\tdisplay: none;\r\n\t\t\topacity: 0;\r\n\t\t}\r\n\t\tto {\r\n\t\t\tdisplay: block;\r\n\t\t\topacity: 1;\r\n\t\t}\r\n\t}\r\n\t\r\n\t.dropdown-fixed-top #list_toc_top {\r\n\t\tmax-height: calc(50vh - 110px);\r\n\t\toverflow-y: scroll;\r\n\t}\r\n\t\r\n\t.dropdown-fixed-top .row {\r\n\t\tdisplay: flex;\r\n\t\tjustify-content: space-between\r\n\t}\r\n\t\r\n\t.dropdown-fixed-top .row p {\r\n\t\tmargin-bottom: 0;\r\n\t}\r\n\t\r\n\t#pilihDaftarIsi {\r\n\t\tmax-width: 100%;\r\n\t\toverflow: hidden;\r\n\t\twhite-space: nowrap;\r\n\t}\r\n\t\r\n\t@media (min-width: 1018px) {\r\n\t\t.dropdown-fixed-top {\r\n\t\t\tdisplay: none;\r\n\t\t}\r\n\t}\r\n\t\r\n\t#list_toc li {margin-bottom: 0;margin-top: 5px;}\r\n\t#list_toc > li > ul {padding-left: 20px;margin-bottom: 0;}\r\n\t#list_toc{height:max-content;transition:ease-in-out}\r\n\t#list_toc li {margin-bottom: 0;margin-top: 5px;}\r\n\t#list_toc_float li.active > a {color:#b1252d;background: #ffe1e3;}\r\n\t#list_toc_top li.active > a {color:#b1252d;background: #ffe1e3;}\r\n\t#list_toc_float li a {padding:3px 7px}\r\n\t#list_toc_float li a {\r\n\t\tdisplay: block;\r\n\t\tcolor: #000;\r\n\t\tmargin-bottom: 6px;\r\n\t\tpadding-top: 2px;\r\n\t\tpadding-bottom: 2px;\r\n\t\ttransition: all 0.2s ease-in-out;\r\n\t\tfont-size: 15px;\r\n\t\tline-height: 18px;\r\n\t}\r\n\t#list_toc_float li{list-style:none;list-style-position:inside; margin-left:0;}\r\n\t#list_toc_float a:hover{color:#b1252d;}\r\n\t\r\n\t#toc_group_float{\r\n\t\tline-height: 24px;\r\n\t\tmax-height: calc(100vh - 100px);\r\n\t\toverflow: auto;\r\n\t\tz-index: 99;\r\n\t\tdisplay:none!important;\r\n\t\tbackground:#fff;\r\n\t\ttransition:all 0.5s linear\r\n\t}\r\n\t\r\n\t@media (min-width:1019px){\r\n\t\t#toc_group_float {\r\n\t\t\tdisplay:block!important;\r\n\t\t}\r\n\t\t#toc_group_article {\r\n\t\t\tdisplay:none;\r\n\t\t}\t\t\t\t\r\n\t}\r\n\r\n<\/style>\r\n\r\n<style>\r\n\t@media (max-width: 992px) {\r\n\t\t#toc_group_article {\r\n\t\t\tpadding-top: 24px;\r\n\t\t}\r\n\t}\r\n\t\r\n\t#list_toc_float {\r\n\t\tmax-height: calc(100vh - 250px);\r\n\t\toverflow-y: auto;\r\n\t}\r\n\t\r\n\t#list_toc_top {\r\n\t\tdisplay: none;\r\n\t\tbackground: #fff;\r\n\t\tmargin-bottom: 4px;\r\n\t}\r\n\t\r\n\t#list_toc_top li {\r\n\t\tdisplay: block;\r\n\t\tmargin-left: 0;\r\n\t\tlist-style: none;\r\n\t}\r\n\t\r\n\t#list_toc_top a {\r\n\t\tpadding: 5px;\r\n\t\tdisplay: block;\r\n\t}\r\n\t\r\n\t#list_toc_top.show {\r\n\t\tdisplay: block;\r\n\t}\r\n\r\n\t#list_toc_top a {\r\n\t\tcolor: #434343;\r\n\t\tborder-bottom: 1px solid #bbb;\r\n\t}\r\n\t\r\n\t.dropdown-fixed-top {\r\n\t\tposition: fixed;\r\n\t\ttop: 59px;\r\n\t\twidth: 100%;\r\n\t\tz-index: 99;\r\n\t\tborder-bottom: 2px solid #9c171e;\r\n\t\tpadding: 12px;\r\n\t\tbackground: #fff;\r\n\t\twidth: 100%;\r\n\t\tcursor: pointer;\r\n\t\tdisplay: none;\r\n\t\tleft: 0;\r\n\t\tbox-shadow: 0 -2px 7px 6px rgba(0, 0, 0, 0.17);\r\n\t}\r\n\t\r\n\t#dropdown-fixed-top.show {\r\n\t\tanimation: showAnim 0.5s ease;\r\n\t\tdisplay: block;\r\n\t\topacity: 1;\r\n\t}\r\n\t\r\n\t@keyframes showAnim {\r\n\t\tfrom {\r\n\t\t\tdisplay: none;\r\n\t\t\topacity: 0;\r\n\t\t}\r\n\t\tto {\r\n\t\t\tdisplay: block;\r\n\t\t\topacity: 1;\r\n\t\t}\r\n\t}\r\n\t\r\n\t.dropdown-fixed-top #list_toc_top {\r\n\t\tmax-height: calc(50vh - 110px);\r\n\t\toverflow-y: scroll;\r\n\t}\r\n\t\r\n\t.dropdown-fixed-top .row {\r\n\t\tdisplay: flex;\r\n\t\tjustify-content: space-between\r\n\t}\r\n\t\r\n\t.dropdown-fixed-top .row p {\r\n\t\tmargin-bottom: 0;\r\n\t}\r\n\t\r\n\t#pilihDaftarIsi {\r\n\t\tmax-width: 100%;\r\n\t\toverflow: hidden;\r\n\t\twhite-space: nowrap;\r\n\t}\r\n\t\r\n\t@media (min-width: 1018px) {\r\n\t\t.dropdown-fixed-top {\r\n\t\t\tdisplay: none;\r\n\t\t}\r\n\t}\r\n\t\r\n\t#list_toc li {margin-bottom: 0;margin-top: 5px;}\r\n\t#list_toc > li > ul {padding-left: 20px;margin-bottom: 0;}\r\n\t#list_toc{height:max-content;transition:ease-in-out}\r\n\t#list_toc li {margin-bottom: 0;margin-top: 5px;}\r\n\t#list_toc_float li.active > a {color:#b1252d;background: #ffe1e3;}\r\n\t#list_toc_top li.active > a {color:#b1252d;background: #ffe1e3;}\r\n\t#list_toc_float li a {padding:3px 7px}\r\n\t#list_toc_float li a {\r\n\t\tdisplay: block;\r\n\t\tcolor: #000;\r\n\t\tmargin-bottom: 6px;\r\n\t\tpadding-top: 2px;\r\n\t\tpadding-bottom: 2px;\r\n\t\ttransition: all 0.2s ease-in-out;\r\n\t\tfont-size: 15px;\r\n\t\tline-height: 18px;\r\n\t}\r\n\t#list_toc_float li{list-style:none;list-style-position:inside; margin-left:0;}\r\n\t#list_toc_float a:hover{color:#b1252d;}\r\n\t\r\n\t#toc_group_float{\r\n\t\tline-height: 24px;\r\n\t\tmax-height: calc(100vh - 100px);\r\n\t\toverflow: auto;\r\n\t\tz-index: 99;\r\n\t\tdisplay:none!important;\r\n\t\tbackground:#fff;\r\n\t\ttransition:all 0.5s linear\r\n\t}\r\n\t\r\n\t@media (min-width:1019px){\r\n\t\t#toc_group_float {\r\n\t\t\tdisplay:block!important;\r\n\t\t\t}\r\n\t\t\t\t#toc_group_article {\r\n\t\t\tdisplay:none;\r\n\t\t}\r\n\t}\r\n\r\n<\/style>\r\n\r\n<!-- START ToC styling  -->\r\n<style>\r\n\t\/* Simple styling for the TOC *\/\r\n\t\r\n\t#toc ul li:last-child {\r\n    padding-bottom: 16px; \/* Adjust the value as needed *\/\r\n}\r\n\r\n.td-fix-index {\r\n\t transform: unset !important;\r\n     -webkit-transform: unset !important; \r\n}\r\n.footer-contact .td-fix-index {\r\n\t transform: translateZ(0) !important;\r\n     -webkit-transform: translateZ(0) !important; \r\n}\r\n\t.tdb_single_content .tdb-block-inner.td-fix-index{\r\n\t\tposition: static;\r\n\t}\r\n\t\r\n\r\n\t\r\n#toc {\r\n  background-color: #FFF;\r\n\tpadding: 17px 24px 0px 24px !important;\r\n  margin-bottom: 20px;\r\n\/*   border: 1px solid #9C171E; *\/\r\n  border-radius: 6px;\r\n\tdisplay: none;\r\n  max-width: 100%;\r\n  transition: .4s ease height;\r\n\tmargin-left: 0;\r\n\toverflow: hidden;\r\n}\r\n\r\n#toc .header{\r\n  display: flex;\r\n  align-items: center;\r\n  justify-content: space-between;\r\n\tbackground-color: transparent;\r\n}\r\n\t\r\n\t#toc.sticky .header{\r\n\t\tpadding: 4px 0;\r\n\t}\r\n\t\r\n.header p{\r\n  font-size: 18px !important;\r\n  font-weight: 600 !important;\r\n  color: #393939;\r\n   margin-bottom: 0;\r\n  \/* margin-top: 20px; *\/\r\n}\r\n\r\n.toc-icon{\r\n  float: right;\r\n\/*   visibility: hidden; *\/\r\n}\r\n\r\n\t.toc-title{\r\n\t\tmargin-right: auto;\r\n\/* \t\tpadding-left: 20px; *\/\r\n\t\tfont-weight: 600;\r\n\t\talign-self: center;\t}\t\r\n\r\n#toc ul {\r\n  list-style-type: none;\r\n  padding-left: 0;\r\n}\r\n\t\r\n#toc.sticky ul{\r\n\toverflow-y: auto;\r\n\tmax-height: 250px;\r\n\tmargin-top: 0px;\r\n\tpadding-top: 20px;\r\n\/* \tborder-top: 1px solid #d3d3d3; *\/\r\n}\r\n\t\r\n#toc ul li {\r\n\/*   margin-bottom: 10px; *\/\r\n  margin-bottom: 10px;\r\n\tmargin-left: 0;\r\n\ttransition: .2s ease;\r\n\tcursor: pointer;\r\n}\r\n\t\r\n\t#toc.sticky ul li {\r\n\t  margin-right: 10px;\r\n\t}\r\n\t\r\n.td-post-content #toc-list li a:hover, .td-post-content #toc-list a.active{\r\n\tbackground-color: #FFF;\r\n\/* \tpadding: 8px 16px 8px 16px; *\/\r\n\tpadding: 4px 16px 4px 16px;\r\n\tborder-radius: 6px;\r\n\tcolor: #9c171e !important;\r\n\tfont-weight: 600 !important;\r\n}\r\n\t\r\n\t.td-post-content #toc-list li:hover a, .td-post-content #toc-list a.active{\r\n\t\tcolor: #9C171E !important;\r\n\t\tfont-weight: 600 !important;\r\n\t}\r\n\t\r\n.td-post-content #toc-list a.active{\r\n\tfont-weight: bold !important;\r\n\tcolor: #9C171E !important;\r\n}\r\n\t\r\n#toc a, .td-post-content #toc-list a {\r\n  text-decoration: none;\r\n  color: #ea1717 !important;\r\n  transition: .2s ease;\r\n\tfont-weight: 400 !important;\r\n\tdisplay: block;\r\n\t\r\n\tpadding: 4px 16px 4px 0;\r\n}\r\n\r\n#toc.sticky {\r\n  position: fixed;\r\n\/*   top: 73px; *\/\r\n\tbottom: 0;\r\n  z-index: 100; \r\n  box-shadow: 0 2px 5px rgba(0,0,0,0.1); \r\n\twidth: 100%; \r\n\tbackground-color: #FFF;\r\n\/* \tbackground-color: #FFF1F1; *\/\r\n\tborder-bottom: 1px solid #ea1717;\r\n\/*   border: 1px solid #393939; *\/\r\n  box-shadow: 0px 0px 14px 0px #00000040;\r\n  cursor: pointer;\r\n\tanimation: fadein .3s ease;\r\n\tpadding: 12px 16px !important;\r\n}\r\n\t\r\n\t.fadein{\r\n\t\tanimation: fadein .3s ease;\r\n\t}\r\n\t\r\n\t.fadeout{\r\n\t\tanimation: fadeout .3s ease;\r\n\t}\r\n\t\r\n\t\r\n\t@keyframes fadein{\r\n\t\t0% {\r\n\t\t\topacity: 0;\r\n\t\t}\r\n\t\t100%{\r\n\t\t\topacity: 1;\r\n\t\t}\r\n\t}\r\n\t\r\n\t@keyframes fadeout{\r\n\t\t0% {\r\n\t\t\topacity: 1;\r\n\t\t}\r\n\t\t100%{\r\n\t\t\topacity: 0;\r\n\t\t}\r\n\t}\r\n\r\n\t\r\n#toc.sticky .header p{\r\n\tmargin-bottom: 10px;\r\n\tmargin-top: 10px;\r\n}\r\n\r\n#toc.sticky .toc-icon{\r\n  visibility: visible;\r\n\/* \ttransition: 0.4s ease; *\/\r\n}\r\n\t\r\n\t.toc-icon{\r\n\t\talign-items: center;\r\n    \tdisplay: flex;\r\n\t}\r\n\t\r\n\tsvg.header-icon{\r\n\/* \t\tbackground-color: #9c171e; *\/\r\n\t\tbackground-color: #FFF;\r\n\t\tborder-radius: 30px;\r\n\t\tpadding: 5px;\r\n\t}\r\n\r\n#toc.sticky .list{\r\n\/*   max-height: 0; *\/\r\n  transition: height 0.4s ease;\r\n}\r\n\t\r\n\t#toc .list{\r\n\/*   max-height: 0; *\/\r\n  transition: height 0.4s ease;\r\n}\r\n\r\n#toc .header.active .toc-icon{\r\n\ttransform: rotate(0deg); \r\n\topacity: 1;\r\n}\r\n\r\n\t#toc .header.active + .list {\r\n\t  max-height: 200px; \/* Adjust this value as needed *\/\r\n\t  opacity: 1;\r\n\t}\r\n\t\r\n\t#placeholder-toc{\r\n\/* \t\tdisplay: none; *\/\r\n\t}\r\n\t\r\n\t@media (min-width: 768px) and (max-width: 991px){\r\n\t\t#toc.sticky{\r\n\/* \t\t\ttop: 104px; *\/\r\n\t\t\tbottom: 0px;\r\n\t\t}\r\n\t\t\r\n\t\t#toc{\r\n\t\t\twidth: unset !important;\r\n\t\t}\r\n\t}\r\n\t\r\n\t@media (max-width: 767px){\r\n\t\t#toc{\r\n\t\t\twidth: 100% !important;\r\n\t\t\tdisplay: inline-block;\r\n\t\t}\r\n\t\t\r\n\t\t#toc.sticky{\r\n\t\t\twidth: 90% !important;\r\n\/* \t\t\ttop: 81px; *\/\r\n\t\t\tbottom: 60px;\r\n\t\t\tmargin-left: auto;\r\n\t\t\tmargin-right: auto;\r\n\t\t\tpadding: 0 16px;\r\n\t\t\tright: 5%;\r\n\t\t}\r\n\t}\r\n\t\r\n\t<\/style>\r\n<!-- END ToC styling  -->\r\n\r\n<!-- ToC List for mobile -->\r\n<script>\r\n \/\/ Generate TOC based on headings\r\ndocument.addEventListener(\"DOMContentLoaded\", function() {\r\n  \/\/ Get the element that will contain the TOC\r\n  const tocList = document.getElementById('toc-list');\r\n\r\n  \/\/ Get the element with the ID 'article-left'\r\n  const article = document.querySelector('.td-post-content');\r\n\r\n  \/\/ Find all h2 elements within 'myarticle'\r\n  const headers = article.getElementsByTagName('h2');\r\n\r\n  \/\/ Loop through the h2 elements and create a list item for each one\r\n  for (let i = 0; i < headers.length; i++) {\r\n    const header = headers[i];\r\n    const headerText = header.textContent;\r\n\/\/     const headerId = 'header-' + i;\r\n    const headerId = headerText\r\n    .toLowerCase()\r\n    .trim()\r\n    .replace(\/[^\\w\\s-]\/g, '')  \/\/ hapus tanda baca\r\n    .replace(\/\\s+\/g, '-'); \/\/ ganti spasi jadi \"-\"\r\n\r\n    \/\/ Set an ID for the header if it doesn't have one\r\n    header.setAttribute('id', headerId);\r\n\r\n    \/\/ Create a list item for the TOC\r\n    const listItem = document.createElement('li');\r\n\r\n    \/\/ Create a link for the list item\r\n    const link = document.createElement('a');\r\n    link.setAttribute('href', '#' + headerId);\r\n    link.textContent = headerText;\r\n\r\n    \/\/ Append the link to the list item\r\n    listItem.appendChild(link);\r\n\r\n    \/\/ Append the list item to the TOC list\r\n    tocList.appendChild(listItem);\r\n  }\r\n});\r\n\r\n\/\/ Keep height and placement of content using placeholder in place of TOC\r\ndocument.addEventListener(\"DOMContentLoaded\", function() {\r\n  const toc = document.querySelector('#toc');\r\n  const placeholderToc = document.querySelector('#placeholder-toc');\r\n\r\n  function setPlaceholderHeight() {\r\n    placeholderToc.style.height = `${toc.offsetHeight}px`;\r\n  }\r\n\r\n  \/\/ Set the initial height of the placeholder\r\n  setPlaceholderHeight();\r\n\r\n  \/\/ Update the height on window resize\r\n  window.addEventListener('resize', setPlaceholderHeight);\r\n});\r\n  const tocTitle = document.querySelector('#toc-title'); \/\/ Assuming header-faq is the element for TOC title\r\n\r\n\/\/ Sticky TOC and update heading\r\ndocument.addEventListener(\"DOMContentLoaded\", function() {\r\n  const toc = document.querySelector('#toc');\r\n  const footer = document.querySelector('.td-footer-template-wrap');\r\n  const tocParent = toc.parentElement;\r\n  const divTop = tocParent.getBoundingClientRect().top + window.pageYOffset;\r\n  const tocHeight = toc.offsetHeight;\r\n  const triggerPoint = divTop + tocHeight + 700;\r\n  const footerHeight = footer.offsetHeight;\r\n  const triggerFooterPoint = footer.getBoundingClientRect().top + window.pageYOffset - footerHeight - footerHeight - footerHeight;\r\n  const phtoc = document.querySelector('#placeholder-toc');\r\n  const headers = document.querySelectorAll('.td-post-content h2');\r\n  const navLinks = document.querySelectorAll('#toc-list a');\r\n\t\r\n\tconst panel2 = document.querySelector(\"#toc .list\");\r\n\tvar icon = document.querySelector(\".toc-icon\");\r\n\r\n  let activeLink = null; \/\/ Declare activeLink outside the loop\r\n\t\r\n  \/\/ Function to handle scroll and add\/remove .sticky class\r\n  function handleScroll() {\r\n    const windowTop = window.pageYOffset || document.documentElement.scrollTop;\r\n    let currentHeader = '';\r\n\r\n    \/\/ Highlight user progress as the heading comes\r\n    headers.forEach(header => {\r\n\t\tconst headerTop = header.offsetTop;\r\n\t\tconst headerHeight = header.clientHeight;\r\n\t\tif (window.scrollY >= (headerTop - headerHeight + 700)) {\r\n\t\t\tconst currentHeaderId = header.getAttribute('id');\r\n\t\t\tconst currentHeaderText = document.getElementById(currentHeaderId).textContent;\r\n\/\/ \t\t\tconsole.log(\"current header text:\", currentHeaderText);\r\n\t\t\ttocTitle.textContent = currentHeaderText;\r\n\t\t\tcurrentHeader = currentHeaderId;\r\n\t\t\t\r\n\t\t\tif(window.innerWidth < 767){\r\n\t\t\t\ttocTitle.textContent = 'Table of Content';\r\n\t\t\t}\r\n\t\t}\r\n\t});\r\n\r\n    navLinks.forEach(link => {\r\n      link.classList.remove('active');\r\n      if(currentHeader != '') {\r\n\t\t  if (link.getAttribute('href').includes(currentHeader)) {\r\n\t\t\t  link.classList.add('active');\r\n\t\t  }\r\n\t  }\r\n    });\r\n\/\/     if (windowTop < triggerFooterPoint) {\r\n\/\/         toc.style.display = 'block';\r\n\/\/ \t}else{\r\n\/\/         toc.style.display = 'none';\r\n\/\/ \t}\r\n    \/\/ Update TOC title if sticky\r\n    if (windowTop > triggerPoint) {\r\n      if (!toc.classList.contains('sticky')) {\r\n        phtoc.style.display = \"block\";\r\n        toc.classList.add('sticky');\r\n        toc.style.width = `${tocParent.offsetWidth}px`; \/\/ Set width to match the parent element\r\n        toc.setAttribute('style', 'width: ' + tocParent.offsetWidth + 'px !important;');\r\n        toc.style.backgroundColor = \"#FFF\";\r\n\t\tpanel2.style.height = '0px';\r\n\t\t  icon.style.transform = \"rotate(180deg)\";\r\n\t\t  if(window.innerWidth < 767){\r\n\/\/ \t\t\t  const tocs = document.querySelector('#toc.sticky');\r\n\t\t\t  tocTitle.textContent = 'Table of Content'; \/\/ Reset title\r\n       \t\t  toc.style.width = '150px'; \/\/ Set width to match the parent element\r\n\t\t  }\r\n      }\r\n      if (currentHeader) {\r\n\/\/         console.log(\"activeLink:\", activeLink);\r\n        if (activeLink) {\r\n\/\/           tocTitle.textContent = activeLink.textContent; \/\/ Update TOC title\r\n          tocTitle.textContent = activeLink ? activeLink.textContent : \"\"; \/\/ Update title only if activeLink exists\r\n        }\r\n      }\r\n    } else {\r\n      toc.classList.remove('sticky');\r\n      phtoc.style.display = \"none\";\r\n      toc.style.width = 'unset'; \/\/ Reset to original width\r\n      toc.style.backgroundColor = \"#FFF\";\r\n      tocTitle.textContent = 'Table of Content'; \/\/ Reset title\r\n\t\tpanel2.style.height = panel2.scrollHeight + \"px\";\r\n\t\ticon.style.transform = \"rotate(180deg)\";\r\n    }\r\n  }\r\n\r\n    \/\/ Attach the scroll event listener to the window\r\n    window.addEventListener('scroll', handleScroll);\r\n\r\n    \/\/ Initial call to handleScroll to set the correct state on load\r\n    handleScroll();\r\n});\r\n\t\r\n\t\/\/ Open toggle TOC\r\n\t  document.addEventListener(\"DOMContentLoaded\", function() {\r\n\t\tvar tocHeader = document.querySelector(\"#toc .header\");\r\n\t\tvar toc = document.querySelector(\"#toc\");\r\n\t\tvar icon = document.querySelector(\".toc-icon\");\r\n\t\tconst tocTitle = document.querySelector('#toc-title');\r\n\t\tconst tocs = document.querySelector('#toc.sticky');\r\n \t\tconst tocParent = toc.parentElement;\t\t  \r\n\r\n\t\t  tocHeader.addEventListener(\"click\", function() {\r\n\t\t\tvar panel = this.nextElementSibling;\r\n\t\t\tif (panel.style.height !== '0px') { \/\/ Check if height is not 0px\r\n\t\t\t  panel.style.height = '0px'; \/\/ Set height to 0 for full collapse\r\n\t\t\t  icon.style.transform = \"rotate(180deg)\";\r\n\/\/ \t\t\t\ttoc.style.paddingBottom = '6px'; \r\n\t\t\t\tif(window.innerWidth > 768){\r\n\t\t\t\t\tif(!toc.classList.contains('sticky')){\r\n\t\t\t\t\t\ttoc.style.width = \"unset\";\r\n\/\/ \t\t\t\t\t\ttoc.setAttribute('style', 'width: ' + tocParent.offsetWidth + 'px !important;');\r\n\t\t\t\t\t}\r\n\t\t\t\t\tif (toc.classList.contains('sticky')){\r\n\t\t\t\t\t\ttoc.style.width = '${tocParent.offsetWidth}px';\r\n\t\t\t\t\t\ttoc.setAttribute('style', 'width: ' + tocParent.offsetWidth + 'px !important;');\r\n\t\t\t\t\t}\r\n\t\t\t\t}\r\n\t\t\t\tif(window.innerWidth < 767){\r\n\t\t\t\t\ttoc.style.width = \"unset\"; \/\/ Reset width\r\n\t\t\t\t}\r\n\t\t\t\ttoc.style.backgroundColor = \"#FFF1F1\";\r\n\t\t\t} else {\r\n\t\t\t  panel.style.height = panel.scrollHeight + \"px\";\r\n\t\t\t  icon.style.transform = \"rotate(0deg)\";\r\n\t\t\t  toc.style.backgroundColor = \"#FFF\";\r\n\t\t\t  tocTitle.textContent = 'Table of Content'; \/\/ Reset title\r\n\t\t\t\ttoc.style.paddingBottom = '24px';\r\n\t\t\t \tif(window.innerWidth < 767){\r\n\t\t\t\t\ttoc.style.width = `${tocParent.offsetWidth}px`; \/\/ Set width to match the parent element\r\n\t\t\t\t\ttoc.setAttribute('style', 'width: ' + tocParent.offsetWidth + 'px !important;');\r\n\t\t\t\t}\r\n\t\t\t}\r\n\t\t  });\r\n\r\n\t\t  \/\/ Close TOC when a link inside it is clicked\r\n\t\t  var tocLinks = document.querySelectorAll(\"#toc .list a\");\r\n\t\t  tocLinks.forEach(function(link) {\r\n\t\t\tlink.addEventListener(\"click\", function() {\r\n\t\t\t  var panel = document.querySelector(\"#toc .list\");\r\n\t\t\t  panel.style.height = '0px'; \/\/ Set height to 0 for full collapse\r\n\t\t\t  icon.style.transform = \"rotate(180deg)\";\r\n\t\t\t  toc.style.backgroundColor = \"#FFF\";\r\n\t\t\t});\r\n\t\t  });\r\n\t\t});\r\n<\/script>\r\n\r\n<!-- <script>\r\n\tvar pilihDaftarIsi = document.getElementById('pilihDaftarIsi');\r\n\t\r\n\tdocument.addEventListener('DOMContentLoaded', function() {\r\n\t\tvar dropdownFixedTop = document.querySelector('.dropdown-fixed-top');\r\n\r\n\t\tdropdownFixedTop.addEventListener('click', function() {\r\n\t\t\tvar dropdownContent = this.querySelector('.list_toc');\r\n\t\t\tdropdownContent.classList.toggle('show');\r\n\t\t});\r\n\r\n\t\twindow.addEventListener('click', function(event) {\r\n\t\t\tvar listTocTop = document.getElementById('list_toc_top');\r\n\r\n\t\t\tif (!dropdownFixedTop.contains(event.target)) {\r\n\t\t\t\tlistTocTop.classList.remove('show');\r\n\t\t\t}\r\n\t\t});\r\n\t});\r\n\t\r\n\tvar daftarIsiContainer = document.getElementById('toc_group_article');\r\n\tvar dropdownFixedTop = document.getElementById('dropdown-fixed-top');\r\n    var triggered = false; \/\/ Flag to keep track of whether the function has been triggered\r\n\r\n    window.addEventListener('scroll', function() {\r\n        if (!triggered && isCompletelyScrolledPast(daftarIsiContainer)) {\r\n            showSectionDropdownFixedTop(false);\r\n            triggered = true;\r\n        } else if (triggered && !isCompletelyScrolledPast(daftarIsiContainer)) {\r\n            showSectionDropdownFixedTop(true);\r\n            triggered = false;\r\n        }\r\n    });\r\n\r\n    function isCompletelyScrolledPast(element) {\r\n        var elementTop = element.getBoundingClientRect().top;\r\n        var elementBottom = element.getBoundingClientRect().bottom;\r\n        return elementTop < 0 && elementBottom < 0;\r\n    }\r\n\r\n    function showSectionDropdownFixedTop(show) {\r\n\t\tif (show) {\r\n\t\t\tdropdownFixedTop.classList.remove(\"show\");\r\n\t\t} else {\r\n\t\t\tdropdownFixedTop.classList.add(\"show\");\r\n\t\t}\r\n    }\r\n\r\n\/\/ Scrollspy function to highlight the active TOC item based on the scroll position\r\n  function scrollSpy(tocClass) {\r\n    const scrollPosition = window.scrollY;\r\n\r\n    \/\/ Find the active h2 and h3 headings based on their position in the corresponding TOC\r\n    let activeH2 = null;\r\n    let activeH3 = null;\r\n\r\n    const tocItems = document.querySelectorAll(`.${tocClass} li`);\r\n    tocItems.forEach(item => {\r\n      const a = item.querySelector('a');\r\n      if (!a) return;\r\n      const href = a.getAttribute('href');\r\n      const targetId = href.substring(1); \/\/ Remove the '#' from the href to get the target ID\r\n      const targetElement = document.getElementById(targetId);\r\n      if (!targetElement) return;\r\n\r\n      const targetTop = targetElement.getBoundingClientRect().top + scrollPosition;\r\n      const nextItem = item.nextElementSibling;\r\n      const nextTop = nextItem ? nextItem.getBoundingClientRect().top + scrollPosition : Infinity;\r\n\r\n      if (targetTop <= scrollPosition + 150) {\r\n        if (a.parentElement.parentElement === tocItems) {\r\n          \/\/ The h2 heading is at the root level of the TOC\r\n          activeH2 = { id: targetId, level: 'h2' };\r\n        } else {\r\n          \/\/ The h3 heading is nested under an h2 heading\r\n          const parentH2 = a.parentElement.parentElement.previousElementSibling;\r\n          if (parentH2) {\r\n            const h2Link = parentH2.querySelector('a');\r\n            if (h2Link) {\r\n              const h2Href = h2Link.getAttribute('href');\r\n              const h2Id = h2Href.substring(1);\r\n              activeH2 = { id: h2Id, level: 'h2' };\r\n            }\r\n          }\r\n          activeH3 = { id: targetId, level: 'h3' };\r\n        }\r\n      }\r\n\r\n      if (targetTop > scrollPosition + 150 && nextTop > scrollPosition + 150 && !activeH3) {\r\n        \/\/ Reset the activeH2 when there are no more active h3 headings\r\n        activeH2 = null;\r\n      }\r\n    });\r\n\r\n    \/\/ Update the active state for the TOC items\r\n    tocItems.forEach(item => {\r\n      item.classList.remove('active');\r\n      const a = item.querySelector('a');\r\n      if (a) {\r\n        const href = a.getAttribute('href');\r\n        const targetId = href.substring(1);\r\n        if ((activeH2 && activeH2.id === targetId) || (activeH3 && activeH3.id === targetId)) {\r\n          item.classList.add('active');\r\n\t\t  pilihDaftarIsi.innerHTML = a.textContent;\r\n        }\r\n      }\r\n    });\r\n  }\r\n\r\n  \/\/ Call scrollSpy for each TOC on window scroll\r\n  const tocClasses = ['list_toc', 'list_toc_float', 'list_toc_top']; \/\/ Add other TOC class names here if you have more than two instances\r\n  tocClasses.forEach(tocClass => {\r\n    window.addEventListener('scroll', () => scrollSpy(tocClass));\r\n  });\r\n<\/script> -->\r\n<!-- END script lama -->\r\n\t\r\n<script>\r\n    \/\/ Scrollspy function to highlight the active TOC item based on the scroll position\r\n  function scrollSpy(tocClass) {\r\n    const scrollPosition = window.scrollY;\r\n\r\n    \/\/ Find the active h2 and h3 headings based on their position in the corresponding TOC\r\n    let activeH2 = null;\r\n    let activeH3 = null;\r\n\r\n    const tocItems = document.querySelectorAll(`.${tocClass} li`);\r\n    tocItems.forEach(item => {\r\n      const a = item.querySelector('a');\r\n      if (!a) return;\r\n      const href = a.getAttribute('href');\r\n      const targetId = href.substring(1); \/\/ Remove the '#' from the href to get the target ID\r\n      const targetElement = document.getElementById(targetId);\r\n      if (!targetElement) return;\r\n\r\n      const targetTop = targetElement.getBoundingClientRect().top + scrollPosition;\r\n      const nextItem = item.nextElementSibling;\r\n      const nextTop = nextItem ? nextItem.getBoundingClientRect().top + scrollPosition : Infinity;\r\n\r\n      if (targetTop <= scrollPosition + 150) {\r\n        if (a.parentElement.parentElement === tocItems) {\r\n          \/\/ The h2 heading is at the root level of the TOC\r\n          activeH2 = { id: targetId, level: 'h2' };\r\n        } else {\r\n          \/\/ The h3 heading is nested under an h2 heading\r\n          const parentH2 = a.parentElement.parentElement.previousElementSibling;\r\n          if (parentH2) {\r\n            const h2Link = parentH2.querySelector('a');\r\n            if (h2Link) {\r\n              const h2Href = h2Link.getAttribute('href');\r\n              const h2Id = h2Href.substring(1);\r\n              activeH2 = { id: h2Id, level: 'h2' };\r\n            }\r\n          }\r\n          activeH3 = { id: targetId, level: 'h3' };\r\n        }\r\n      }\r\n\r\n      if (targetTop > scrollPosition + 150 && nextTop > scrollPosition + 150 && !activeH3) {\r\n        \/\/ Reset the activeH2 when there are no more active h3 headings\r\n        activeH2 = null;\r\n      }\r\n    });\r\n\r\n    \/\/ Update the active state for the TOC items\r\n    tocItems.forEach(item => {\r\n      item.classList.remove('active');\r\n      const a = item.querySelector('a');\r\n      if (a) {\r\n        const href = a.getAttribute('href');\r\n        const targetId = href.substring(1);\r\n        if ((activeH2 && activeH2.id === targetId) || (activeH3 && activeH3.id === targetId)) {\r\n          item.classList.add('active');\r\n        }\r\n      }\r\n    });\r\n  }\r\n\r\n  \/\/ Call scrollSpy for each TOC on window scroll\r\n  const tocClasses = ['list_toc', 'list_toc_float', 'list_toc_top']; \/\/ Add other TOC class names here if you have more than two instances\r\n  tocClasses.forEach(tocClass => {\r\n    window.addEventListener('scroll', () => scrollSpy(tocClass));\r\n  });\r\n<\/script>\r\n\t\r\n\r\n<!-- ToC List for desktop side bar, diganti jadi inject by php, di code snippet \"Sidebar Accordion\" -->\r\n<!-- <script>\r\n\tdocument.addEventListener('DOMContentLoaded', function() {\r\n        \/\/ Fungsi untuk mengubah teks menjadi format id\r\n        function formatId(text) {\r\n            return text.trim().replace(\/[^\\w\\d]+\/g, '_');\r\n        }\r\n\r\n        \/\/ Fungsi untuk membuat nested list\r\n        function createNestedList(parentNode, children) {\r\n            if (children.length === 0) return;\r\n\r\n            const nestedUl = document.createElement('ul');\r\n            children.forEach(child => {\r\n                const nestedLi = document.createElement('li');\r\n                const nestedA = document.createElement('a');\r\n                nestedA.textContent = child.title;\r\n                nestedA.href = `#${child.id}`;\r\n                nestedLi.appendChild(nestedA);\r\n                nestedUl.appendChild(nestedLi);\r\n\r\n                if (child.children.length > 0) {\r\n                    createNestedList(nestedLi, child.children);\r\n                }\r\n            });\r\n\r\n            parentNode.appendChild(nestedUl);\r\n        }\r\n\r\n        \/\/ Membuat objek untuk menyimpan daftar h2 dan h3 beserta judulnya\r\n        const headings = [];\r\n\r\n           \/\/ Mengambil semua elemen h2 dan h3\r\n        const elements = document.querySelectorAll('.td-post-content h2');\r\n\t\t\t\/\/, .td-post-content h3\r\n\r\n        elements.forEach(element => {\r\n            if (element.tagName === 'H2') {\r\n                const id = formatId(element.textContent);\r\n                element.id = id;\r\n\t\t\t\tif(element.textContent.toLowerCase() === \"key takeaways\") {return;} \/\/ Biar ga nampilin Key Takeaways di ToC\r\n                headings.push({ level: 'h2', id: id, title: element.textContent, children: [] });\r\n            } else if (element.tagName === 'H3') {\r\n                const id = formatId(element.textContent);\r\n                element.id = id;\r\n                if (headings.length > 0) {\r\n                    headings[headings.length - 1].children.push({ level: 'h3', id: id, title: element.textContent, children: [] });\r\n                }\r\n            }\r\n        });\r\n\r\n        \/\/ Membuat list HTML dari objek headings\r\n        const ul = document.getElementById('list_toc');\r\n        let currentUl = ul;\r\n        headings.forEach(heading => {\r\n            const li = document.createElement('li');\r\n            const a = document.createElement('a');\r\n            a.textContent = heading.title;\r\n            a.href = `#${heading.id}`;\r\n            li.appendChild(a);\r\n\r\n            if (heading.level === 'h2') {\r\n                \/\/ Menyimpan ul saat ini untuk menambahkan nested ul\r\n                currentUl = li;\r\n                ul.appendChild(li);\r\n            } else if (heading.level === 'h3') {\r\n                if (!currentUl.lastElementChild || currentUl.lastElementChild.tagName !== 'UL') {\r\n                    \/\/ Jika belum ada nested ul, buat satu\r\n                    const nestedUl = document.createElement('ul');\r\n                    currentUl.appendChild(nestedUl);\r\n                    currentUl = nestedUl;\r\n                }\r\n                currentUl.appendChild(li);\r\n            }\r\n\r\n            createNestedList(li, heading.children);\r\n        });\r\n\t\t\/\/ Dapatkan elemen ul dengan id 'list_toc_float'\r\nconst ulFloat = document.getElementById('list_toc');\r\nconst ulJourney = document.getElementById('list_journey');\r\n\r\n\/\/ Dapatkan isi (child elements) dari ul dengan id 'list_toc_float'\r\n\tif (ulFloat !== null) {\r\n\t\tconst clonedChildren = ulFloat.cloneNode(true).children;\r\n\t\tconst ulToc = document.getElementById('list_toc_float');\r\n\t\tconst ulTocTop = document.getElementById('list_toc_top');\r\n\t\tif ((ulToc !== null || ulToc !== undefined) && window.innerWidth > 1018){\r\n\t\t\tulToc.append(...clonedChildren);\r\n\t\t} else {\r\n\t\t\tulTocTop.append(...clonedChildren);\r\n\t\t}\r\n\t} \r\n\r\n\tif (ulJourney !== null) {\r\n\t\tconst clonedChildrenJourney = ulJourney.cloneNode(true).children;\r\n\t\tconst ulTocJourney = document.getElementById('list_toc_journey');\r\n\t\tulTocJourney.append(...clonedChildrenJourney);\r\n\t} \r\n\r\n\r\n\r\n\r\n\t\r\n        \/\/ Fungsi untuk mengambil tinggi navbar\r\n        function getNavbarHeight() {\r\n            const navbar = document.getElementById('tdi_34');\r\n            return navbar ? navbar.offsetHeight : 0;\r\n        }\r\n\r\n        \/\/ Fungsi untuk menambahkan offset posisi scroll\r\n        function scrollToElementWithOffset(elementId) {\r\n            const element = document.getElementById(elementId);\r\n            if (element) {\r\n                const offset = getNavbarHeight();\r\n                const elementPosition = element.getBoundingClientRect().top;\r\n                const offsetPosition = elementPosition - offset-40;\r\n\r\n                window.scrollBy({\r\n                    top: offsetPosition,\r\n                    behavior: 'smooth'\r\n                });\r\n            }\r\n        }\r\n\r\n        \/\/ Fungsi untuk menangani klik pada tautan judul\r\n        function handleTitleClick(event) {\r\n            event.preventDefault();\r\n            const href = event.target.getAttribute('href').substr(1);\r\n            scrollToElementWithOffset(href);\r\n        }\r\n\r\n        \/\/ Tambahkan event listener untuk semua tautan judul\r\n        const titleLinks = document.querySelectorAll('a[href^=\"#\"]');\r\n        titleLinks.forEach(link => {\r\n            link.addEventListener('click', handleTitleClick);\r\n        });\r\n\t});\r\n    <\/script> -->\r\n<!-- \t<style>#toc_group_float{display:block !important}<\/style> -->\r\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Before going deeper into the strategies, take a moment to see how the right tool can help your business reduce churn. Click the banner below to learn more.<\/p>\n<p><span data-sheets-root=\"1\"><a href=\"https:\/\/www.hashmicro.com\/my\/accounting-software?medium=moneysite-banner\" target=\"_blank\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/02\/accounting_definisi_en.webp\" data-desktop-src=\"https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/02\/accounting_definisi_en.webp\" data-mobile-src=\"https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/02\/accounting_definisi_en_m.webp\" alt=\"Accounting_Definisi\" class=\"responsive-image-banner\"><\/a>\r\n\r\n<script>\r\n    \/\/ check which image to use based on screensize\r\n    document.addEventListener(\"DOMContentLoaded\", function() {\r\n        function updateImageSource() {\r\n            var images = document.querySelectorAll('.responsive-image-banner');\r\n            var screenWidth = window.innerWidth;\r\n\r\n            images.forEach(function(img) {\r\n                var mobileSrc = img.getAttribute('data-mobile-src');\r\n                var desktopSrc = img.getAttribute('data-desktop-src');\r\n\r\n                if (screenWidth < 576 && mobileSrc) {\r\n                    img.setAttribute('src', mobileSrc);\r\n                } else {\r\n                    img.setAttribute('src', desktopSrc);\r\n                }\r\n            });\r\n        }\r\n\r\n        \/\/ Initial check\r\n        updateImageSource();\r\n\r\n        \/\/ Update on resize\r\n        window.addEventListener('resize', updateImageSource);\r\n    });\r\n<\/script><\/span><\/p>\n<h2 id=\"understanding-venture-capital-accounting\"><strong>Understanding Venture Capital Accounting<\/strong><\/h2>\n<p>Venture capital accounting tracks the financial activities of a VC fund rather than an operating business. Its primary focus is the fund&#8217;s investment portfolio, not day-to-day revenues and expenses.<\/p>\n<p>A traditional business uses accounting to measure profitability. A VC fund uses accounting to measure investment returns. The difference is fundamental. Furthermore, because VC funds invest in private, illiquid companies, <a href=\"https:\/\/www.hashmicro.com\/my\/blog\/accounting-automation\/\">standard accounting tools<\/a> are often insufficient.<\/p>\n<p>The table below summarizes the key differences between VC fund accounting and traditional corporate accounting.<\/p>\n<table style=\"width: 100%; border-collapse: collapse; font-family: Arial, sans-serif; font-size: 15px;\">\n<tbody>\n<tr>\n<td style=\"background-color: #990000; color: #ffffff; padding: 10px 14px; font-weight: bold; width: 25%;\">Aspect<\/td>\n<td style=\"background-color: #990000; color: #ffffff; padding: 10px 14px; font-weight: bold; width: 25%;\"><strong>VC Found Accounting<\/strong><\/td>\n<td style=\"background-color: #990000; color: #ffffff; padding: 10px 14px; font-weight: bold; width: 25%;\">Corporate Accounting<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Primary Focus<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Investment portfolio performance<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Operational revenues and expenses<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Main Financial Statement<\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">Statement of changes in partners&#8217; capital<\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">Income statement and balance sheet<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Asset Type<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Illiquid private company shares<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Operational assets (inventory, equipment)<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Revenue source<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Realized gains from exits<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Sales of goods or services<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Valuation Challenge<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">High. No market price exists<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Low assets have observable values<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Key Metric<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">NAV (Net Assets Value), IRR (Internal Rate of Return) , TVPI (Total Value to Paid-In) , DPI (Distributed to Paid-In)<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Net income, EBITDA, gross margin<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><strong>How Venture Capital Funds Are Structured<\/strong><\/h2>\n<p>To understand VC accounting, you must first understand how a VC fund is legally organized. Most funds operate as Limited Partnerships. This structure involves two groups of stakeholders.<\/p>\n<ul>\n<li><strong>General Partners (GPs)<br \/>\n<\/strong>GPs are the venture capitalists themselves. They source deals, conduct due diligence, make investment decisions, and manage portfolio companies. They also assume full legal liability for the fund&#8217;s operations.<\/li>\n<li><strong>Limited Partners (LPs)<br \/>\n<\/strong>LPs are the outside investors. They include pension funds, university endowments, insurance companies, and high-net-worth individuals. LPs provide most of the capital. However, they have no role in day-to-day fund management.<\/li>\n<\/ul>\n<ul>\n<li><strong>The Limited Partnership Agreement (LPA)<br \/>\n<\/strong>The LPA is the governing document of the fund. It defines the fund&#8217;s investment strategy and lifespan typically 10 years. It also outlines management fees, carried interest, distribution rules, and all accounting and reporting obligations. Every accounting decision made by the fund must align with the LPA.<\/li>\n<\/ul>\n<h3><strong>Key Accounting Concepts in VC Fund Structure<\/strong><\/h3>\n<ul>\n<li><strong>Capital Commitments: <\/strong>LPs pledge a set amount of capital over the fund&#8217;s life. They do not transfer all funds upfront.<\/li>\n<li><strong>Capital Calls: <\/strong>When the GP needs capital, they issue a call. Each LP transfers their pro-rata share of the requested amount.<\/li>\n<li><strong>Distributions: <\/strong>When an investment is exited, proceeds are distributed to LPs and GPs according to the waterfall structure in the LPA.<\/li>\n<li><strong>Net Asset Value (NAV): <\/strong>The total value of the fund&#8217;s assets minus liabilities. Accurately calculating NAV is<span id=\"2\"><\/span> the central challenge of VC accounting.<\/li>\n<\/ul>\n<h2 id=\"the-venture-capital-valuation-process\"><strong>How Startups Are Valued In Venture Capital<\/strong><\/h2>\n<p>Valuing early-stage startups is the most complex aspect of VC accounting. These companies often have no revenue, no financial history, and unproven business models. Consequently, accountants rely on specialized methodologies.<\/p>\n<h3><strong>Pre-Money vs. Post-Money Valuation<\/strong><\/h3>\n<p>These two concepts form the foundation of every VC deal.<\/p>\n<ul>\n<li><strong>Pre-Money Valuation:<\/strong> This is the agreed-upon value of the startup immediately before the new round of venture capital investment is injected. It reflects the value of the founders&#8217; idea, the intellectual property, the team, and any traction the company has achieved to date.<\/li>\n<li><strong>Post-Money Valuation:<\/strong> This is the value of the company immediately after the venture capital investment has been made. The formula is straightforward:<\/li>\n<\/ul>\n<div style=\"background: #f4f8ff; border-left: 4px solid #2563eb; padding: 18px 24px; border-radius: 6px; margin: 24px 0;\">\n<p style=\"margin: 0; font-size: 1.1em;\"><strong>Post-Money Valuation = Pre-Money Valuation + Investment Amount<\/strong><\/p>\n<\/div>\n<p>For example: a VC invests RM 2 million into a startup with a pre-money valuation of RM 8 million. The post-money valuation becomes RM 10 million. As a result, the VC owns 20% of the company.<\/p>\n<p>Understanding the relationship between these two figures is crucial for calculating equity ownership. The venture capitalist&#8217;s ownership percentage is determined by dividing the investment amount by the post-money valuation. For example, if a VC firm invests $2 million into a startup with a pre-money valuation of $8 million, the post-money valuation becomes $10 million. The VC firm now owns 20% of the company ($2 million \/ $10 million).<\/p>\n<h3><strong>The Venture Capital Method (VC Method)<\/strong><\/h3>\n<p>The VC Method works backward from a projected future exit value to determine the current valuation. It follows these steps:<\/p>\n<ol>\n<li><strong>Estimate Terminal Value: <\/strong>project the company&#8217;s expected revenue or earnings at exit, then apply an industry multiple.<\/li>\n<li><strong>Set Required ROI: <\/strong>VC investments are high-risk. Early-stage deals typically require a 10x to 30x return target.<\/li>\n<li><strong>Calculate Post-Money Valuation: <\/strong>divide the Terminal Value by the Required ROI.<\/li>\n<li><strong>Account for Future Dilution: <\/strong>adjust for additional funding rounds that will dilute early investors.<\/li>\n<li><strong>Calculate Pre-Money Valuation: <\/strong>subtract the current investment from the adjusted post-money figure.<\/li>\n<\/ol>\n<p>Because this method is sensitive to assumptions, accountants often combine it with other approaches such as the Berkus Method or the Scorecard Valuation Method.<\/p>\n<h3><strong>The ASC 820 Fair Value Hierarchy<\/strong><\/h3>\n<p>In the US, fair value measurement is governed by FASB ASC Topic 820. It categorizes valuation inputs into three levels:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li><strong>Level 1: <\/strong>quoted prices in active markets for identical assets.<\/li>\n<li><strong>Level 2: <\/strong>observable inputs other than quoted prices such as recent secondary transactions.<\/li>\n<li><strong>Level 3: <\/strong>unobservable inputs, such as internal financial models and projections.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Most VC investments fall under Level 3. This makes them highly subjective and subject to intense scrutiny during annual audits.<\/p>\n<h2 id=\"due-diligence-and-financial-metrics-in-vc\"><strong>Financial Due Diligence: What VC Accountants Look For<\/strong><\/h2>\n<p>Before committing capital, VC firms conduct rigorous financial due diligence. Even for early-stage companies, this process reveals a great deal about management quality and business viability.<\/p>\n<ul>\n<li><strong>Capital Efficiency and CapEx<br \/>\n<\/strong>Accountants first examine how a startup plans to use the invested capital. Is the business model capital-intensive or capital-light? For hardware or biotech startups, high <a href=\"https:\/\/www.hashmicro.com\/my\/blog\/capital-expenditure-capex\/\">projected capital expenditure (CapEx)<\/a> is common. Moreover, high CapEx means faster cash burn. Consequently, the company may need larger, more frequent funding rounds leading to greater investor dilution.<\/li>\n<li><strong>Return on Equity and Unit Economics<br \/>\n<\/strong>For later-stage investments, analysts examine return on equity (ROE). Traditional ROE may be negative for years in a startup context. Nevertheless, the trajectory matters. Analysts also evaluate unit economics particularly the ratio of Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC) as a proxy for capital efficiency.<\/li>\n<\/ul>\n<ul>\n<li><strong>Profitability Ratios and Path to Profitability<br \/>\n<\/strong>VC accountants analyze <a href=\"https:\/\/www.hashmicro.com\/my\/blog\/profitability-ratio\/\">gross margins, contribution margins, and operating margins<\/a>. High gross margins common in software businesses signal that the company can scale without proportionally increasing costs. In addition, analysts build financial models to project the startup&#8217;s path to profitability and assess whether the business model is fundamentally sound.<\/li>\n<\/ul>\n<ul>\n<li><strong>Working Capital and Cash Runway<br \/>\n<\/strong>The most common cause of startup failure is running out of cash. Therefore, accountants closely monitor working capital current assets minus current liabilities. A longer cash runway gives the startup more time to hit milestones and raise the next round at a higher valuation.<\/li>\n<\/ul>\n<h2 id=\"financial-reporting-and-compliance-for-vc-funds\"><strong>Financial Reporting and Compliance for VC Funds<\/strong><\/h2>\n<p><img decoding=\"async\" class=\"aligncenter size-full wp-image-18930\" src=\"https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/03\/VC-Fund-Financial-Reporting-Compilance.webp\" alt=\"VC Fund Financial Reporting &amp; Compliance\" width=\"1451\" height=\"637\" srcset=\"https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/03\/VC-Fund-Financial-Reporting-Compilance.webp 1451w, https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/03\/VC-Fund-Financial-Reporting-Compilance-300x132.webp 300w, https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/03\/VC-Fund-Financial-Reporting-Compilance-1024x450.webp 1024w, https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/03\/VC-Fund-Financial-Reporting-Compilance-768x337.webp 768w, https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/03\/VC-Fund-Financial-Reporting-Compilance-957x420.webp 957w, https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/03\/VC-Fund-Financial-Reporting-Compilance-150x66.webp 150w, https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/03\/VC-Fund-Financial-Reporting-Compilance-696x306.webp 696w, https:\/\/www.hashmicro.com\/my\/blog\/wp-content\/uploads\/2026\/03\/VC-Fund-Financial-Reporting-Compilance-1068x469.webp 1068w\" sizes=\"(max-width: 1451px) 100vw, 1451px\" \/><\/p>\n<p>Once capital is deployed, the fund accounting team shifts focus to <a href=\"https:\/\/www.hashmicro.com\/my\/blog\/financial-statement\/\">ongoing reporting and regulatory compliance<\/a>. LPs expect regular, transparent updates on how their capital is being managed.<\/p>\n<h3><strong>Capital Calls and Distributions<\/strong><\/h3>\n<p>When a capital call is issued, accountants calculate each LP&#8217;s exact pro-rata share. Meticulous record-keeping is essential here. Errors in unfunded commitment tracking can trigger liquidity crises for the fund.<\/p>\n<p>When an exit occurs, proceeds are distributed via the waterfall structure. A typical waterfall works as follows: LPs first receive <a href=\"https:\/\/www.hashmicro.com\/my\/blog\/return-on-assets\/\">return of capital<\/a>, then a preferred return (commonly an 8% hurdle rate). After that, GPs receive carried interest typically 20% of profits above the hurdle.<\/p>\n<h3><strong>NAV Calculation and Quarterly Reporting<\/strong><\/h3>\n<p>NAV is the cornerstone of VC fund reporting. It represents the total fund value at a specific point in time. Most funds report NAV to LPs on a quarterly basis.<\/p>\n<p>Calculating NAV requires determining the fair value of every portfolio company. Because <strong>most investments are Level 3 assets<\/strong>, accountants must apply approved valuation methods and document every assumption thoroughly. These valuations face intense scrutiny during the fund&#8217;s annual audit.<\/p>\n<h3><strong>Carried Interest and Management Fees<\/strong><\/h3>\n<p>Management fees are typically<strong> 2% of committed capital during the investment period.<\/strong> They step down to a percentage of deployed capital or NAV thereafter. Carried interest the GP&#8217;s profit share is more complex. Even unrealized carry must be calculated each quarter based on a hypothetical fund liquidation at current NAV. As a result, the waterfall must be recalculated every reporting period.<\/p>\n<h2 id=\"common-pitfalls-vc-accounting\"><strong>Common Pitfalls to Avoid in Venture Capital Finance<\/strong><\/h2>\n<ul>\n<li><strong>Waterfall Miscalculation<br \/>\n<\/strong>Errors in the distribution waterfall are among the most serious mistakes in VC accounting. Miscalculating preferred returns, catch-up provisions, or carried interest can lead to LP disputes and clawback liabilities. Furthermore, the difference between European whole-fund models and American deal-by-deal models adds additional complexity.<\/li>\n<li><strong>Inconsistent Valuation Methodologies<br \/>\n<\/strong>Switching between valuation methods without a documented reason draws immediate scrutiny from auditors and regulators. For example, moving from the Option Pricing Model to the Probability-Weighted Expected Return Method without justification signals inconsistency. Consequently, funds must maintain a formal, documented valuation policy from day one.<\/li>\n<\/ul>\n<ul>\n<li><strong>Commingling of Funds<br \/>\n<\/strong>Mixing the management company&#8217;s operating accounts with the investment fund&#8217;s capital is a severe compliance breach. It can result in audit failures, regulatory penalties, and permanent loss of LP trust. Therefore, strict separation of accounts must be maintained at all times.<\/li>\n<\/ul>\n<h2><strong>Pros and Cons of Venture Capital Funding<\/strong><\/h2>\n<p>Venture capital offers a unique set of advantages and trade-offs. Understanding both sides is essential whether you are a founder evaluating funding options or a fund manager explaining the VC model to prospective LPs.<\/p>\n<h3><strong>Pros of Venture Capital<\/strong><\/h3>\n<ul>\n<li><strong>Access to large capital: <\/strong>VC provides funding that banks and traditional lenders typically cannot. This is especially critical for capital-intensive or pre-revenue businesses.<\/li>\n<li><strong>No debt obligation: <\/strong>unlike loans, VC funding does not require repayment. The investor assumes the risk alongside the founder.<\/li>\n<li><strong>Strategic value beyond money: <\/strong>VCs bring industry networks, operational expertise, and credibility. Their involvement often opens doors to partnerships, customers, and future investors.<\/li>\n<li><strong>Validation signal: <\/strong>receiving VC backing signals market credibility. It attracts talent, press attention, and follow-on investors.<\/li>\n<li><strong>Aligned incentives: <\/strong>VCs only profit if the startup succeeds. Consequently, they are strongly motivated to support portfolio companies through difficult periods.<\/li>\n<\/ul>\n<h3><strong>Cons of Venture Capital<\/strong><\/h3>\n<ul>\n<li><strong>Equity dilution: <\/strong>founders give up ownership in exchange for capital. Multiple funding rounds can significantly reduce the founder&#8217;s stake over time.<\/li>\n<li><strong>Loss of full control: <\/strong>VCs often receive board seats and approval rights over major decisions. As a result, founders may no longer have full autonomy over the business.<\/li>\n<li><strong>High return expectations: <\/strong>VCs need outsized returns to offset the losses from failed investments. This creates pressure for rapid, aggressive growth which may not suit every business.<\/li>\n<li><strong>Long and rigorous process: <\/strong>raising VC funding takes time. Due diligence, term sheet negotiations, and legal documentation can span months.<\/li>\n<li><strong>Not suitable for all businesses: <\/strong>VCs target high-growth, scalable companies. Stable, profitable small businesses are generally not attractive to VC investors.<\/li>\n<\/ul>\n<h3><strong>VC vs. Other Funding Sources at a Glance<\/strong><\/h3>\n<table style=\"width: 100%; border-collapse: collapse; font-family: Arial, sans-serif; font-size: 15px;\">\n<tbody>\n<tr>\n<td style=\"background-color: #990000; color: #ffffff; padding: 10px 14px; font-weight: bold; width: 25%;\">Criteria<\/td>\n<td style=\"background-color: #990000; color: #ffffff; padding: 10px 14px; font-weight: bold; width: 25%;\">Venture Capital<\/td>\n<td style=\"background-color: #990000; color: #ffffff; padding: 10px 14px; font-weight: bold; width: 25%;\">Bank Loan<\/td>\n<td style=\"background-color: #990000; color: #ffffff; padding: 10px 14px; font-weight: bold; width: 25%;\">Angel Investor<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\"><strong>Repayment Required<\/strong><\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">No<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Yes<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">No<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\"><strong>Equity Given Up<\/strong><\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">Yes (Significant)<\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">No<\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">Yes (smaller)<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\"><strong>Funding Size<\/strong><\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">RM 1M++<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Varies<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Up to RM 500K<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\"><strong>Strategic Support<\/strong><\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">High<\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">None<\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">Moderate<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\"><strong>Growth Expectation<\/strong><\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">Very hugh (10-30x)<\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">Low<\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">High<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\"><strong>Best For<\/strong><\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">High-growth startups<\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">Established businesses<span id=\"3\"><\/span><\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">Early-stage startups<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><strong>What Kind of Company Attracts Venture Capital?<\/strong><\/h2>\n<p>Not every business is a fit for venture capital. VCs are highly selective. According to <a href=\"https:\/\/hbr.org\/1998\/11\/how-venture-capital-works\">Harvard Business Review<\/a>, VCs target a very specific window of opportunity companies that are past the earliest risk stage but not yet mature enough for public markets.<\/p>\n<p>Understanding what VCs look for helps founders position their business correctly and helps accountants build financial models that speak directly to investor priorities.<\/p>\n<h3><strong>1. Large and Growing Market<\/strong><\/h3>\n<p>VCs need their winners to be big. A startup operating in a small market cannot generate the returns needed to offset fund losses. Therefore, the target market must be large enough typically USD 1 billion or more and growing rapidly. VCs look for evidence of market tailwinds, not just current size.<\/p>\n<h3><strong>2. Scalable Business Model<\/strong><\/h3>\n<p>Scalability is non-negotiable. The business must be able to grow revenue significantly without a proportional increase in costs. Software, platforms, and marketplace models are attractive precisely because of this characteristic. In contrast, service-heavy or labor-intensive models are harder to scale efficiently.<\/p>\n<h3><strong>3. Strong Founding Team<\/strong><\/h3>\n<p>VCs invest in people as much as ideas. A strong team with relevant domain expertise, complementary skills, and a track record of execution is a key differentiator. Furthermore, resilience matters. VCs expect the road to be difficult they want founders who can navigate adversity without losing focus.<\/p>\n<h3><strong>4. Clear Competitive Advantage<\/strong><\/h3>\n<p>The startup must have<a href=\"https:\/\/www.hashmicro.com\/my\/blog\/competitive-advantage\/\"> something defensible<\/a>. This could be proprietary technology, a strong network effect, exclusive data, or a unique go-to-market approach. VCs avoid businesses that can be easily replicated by a well-funded competitor.<\/p>\n<h3><strong>5. Demonstrated Traction<\/strong><\/h3>\n<p>Ideas alone are rarely fundable. VCs want evidence of market validation. This includes early revenue, user growth, signed LOIs, or strong pilot results. Traction reduces perceived risk and strengthens the valuation argument during due diligence.<\/p>\n<h3><strong>6. Viable Path to Exit<\/strong><\/h3>\n<p>VCs need a way out. The fund has a finite lifespan typically 10 years. Consequently, they look for companies with a realistic path to an IPO or acquisition within that window. A startup with no natural acquirers and no public market comparables is difficult to underwrite.<\/p>\n<h3><strong>Summary: The VC Investment Checklist<\/strong><\/h3>\n<table style=\"width: 100%; border-collapse: collapse; font-family: Arial, sans-serif; font-size: 15px;\">\n<tbody>\n<tr>\n<td style=\"background-color: #990000; color: #ffffff; padding: 10px 14px; font-weight: bold; width: 25%;\">Invesment Criteria<\/td>\n<td style=\"background-color: #990000; color: #ffffff; padding: 10px 14px; font-weight: bold; width: 25%;\">What VCs Look For<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Market Size<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">USD 1B+ total addressable market, growing rapidly<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Business Model<\/td>\n<td style=\"background-color: #f5f5f5; padding: 10px 14px; border: 1px solid #CCCCCC;\">Scalable, asset-light, high gross margins<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Team<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Domain expertise, complementary skills, proven execution<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Competitive Moat<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Technology, network effects, or exclusive data<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Traction<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">Revenue, user growth, or strong pilot validation<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #ffffff; padding: 10px 14px; font-weight: bold; border: 1px solid #CCCCCC;\">Exit Potential<\/td>\n<td style=\"background-color: #ffffff; padding: 10px 14px; border: 1px solid #CCCCCC;\">IPO or M&amp;A path within 5-8 years<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><strong>Conclusion<\/strong><\/h2>\n<p>Venture capital accounting is far more than standard bookkeeping. It requires specialized knowledge of fund structures, valuation methodologies, regulatory frameworks, and complex financial instruments.<\/p>\n<p>From calculating NAV and managing capital calls to executing distribution waterfalls and ensuring ASC 820 compliance, VC fund accountants operate at the intersection of finance, law, and strategic judgment.<\/p>\n<p>For emerging fund managers and finance professionals entering the VC space, building a robust accounting infrastructure from the start is not optional it is a strategic foundation. Paired with the right ERP and finance module, it provides the transparency and operational discipline that institutional investors demand.<\/p>\n<h2><strong>FAQ About Venture Capitals Accounting<\/strong><\/h2>\n<ul class=\"bottom_faq\">\n<li>\n<details open=\"open\">\n<summary><strong>What is NAV in venture capital?<\/strong><\/summary>\n<p>NAV stands for Net Asset Value. It is the total value of the fund&#8217;s assets primarily its portfolio investments minus its liabilities. NAV is typically reported to LPs on a quarterly basis and is the primary measure of fund performance between exit events.<\/p>\n<\/details>\n<\/li>\n<li>\n<details open=\"open\">\n<summary><strong>Why is startup valuation so difficult in VC accounting?<\/strong><\/summary>\n<p>Most VC investments are in private companies with no observable market price. Their shares cannot be traded on public exchanges. As a result, accountants must use internal models and professional judgment to estimate fair value. These Level 3 valuations are inherently subjective and require thorough documentation.<\/p>\n<\/details>\n<\/li>\n<li>\n<details open=\"open\">\n<summary><strong>What is a distribution waterfall in venture capital?<\/strong><\/summary>\n<p>A distribution waterfall is the mechanism that determines how exit proceeds are divided between LPs and GPs. Typically, LPs first receive return of capital, then a preferred return. After that threshold is met, GPs receive carried interest. The exact structure is defined in the Limited Partnership Agreement.<\/p>\n<\/details>\n<\/li>\n<li>\n<details open=\"open\">\n<summary><strong>What is carried interest and how is it calculated?<\/strong><\/summary>\n<p>Carried interest is the GP&#8217;s share of the fund&#8217;s profits typically 20%. It is only paid after LPs have received their capital back plus a preferred return (hurdle rate). Even before exits occur, unrealized carry must be estimated each quarter based on a hypothetical liquidation of the fund at current NAV.<\/p>\n<\/details>\n<\/li>\n<\/ul>\n<p><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"FAQPage\",\n  \"mainEntity\": [{\n    \"@type\": \"Question\",\n    \"name\": \"What is NAV in venture capital?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"NAV stands for Net Asset Value. It is the total value of the fund\u2019s assets primarily its portfolio investments minus its liabilities. 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Most founders and finance professionals overlook: not every business fits the investment profile that VCs are actually looking for. According to the Securities Commission Malaysia Annual Report 2024, total committed funds in [&hellip;]<\/p>\n","protected":false},"author":39,"featured_media":17556,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[54],"tags":[],"class_list":{"0":"post-17550","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-accounting"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Venture Capital Accounting: What It Is and Who Actually Qualifies<\/title>\n<meta name=\"description\" content=\"Not every business qualifies for venture capital. 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