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I feel like there 2 very different use cases for financial models: - Early-stage fundraising. The numbers are wrong, everybody knows it, but you have to show t
by stephnass 6y ago
I feel like there 2 very different use cases for financial models:
- Early-stage fundraising. The numbers are wrong, everybody knows it, but you have to show that curve going up and right.
- Later-stage (maybe 1-year post-revenue?) when there is some level of robustness behind the numbers, and you do it because it's useful to pilot the company
- hoi 6y agoEarly stage is also about ensuring that the levers are understood and that the thinking about the right things to measure and what to action are appropriate in understanding the business. Less about the numbers, more about the variables.. why are you measuring this, why arent you measuring that? What actions will you take to try to get to this number? This would give the investor a better sense of how the founder thinks.
- JaakkoP 6y agoAgree 100%. Very different needs with the two lots.
- Silhouette 6y agoAlso agree here. Rational financial planning is, of course, essential for managing a business sensibly. However, vague intuition + random luck generator + huge uncertainty != a useful financial plan. I feel like a lot of startups could summarise their financial slides with something like "We anticipate an outcome somewhere between failing within three months and becoming the next Facebook, with somewhere between Ramen profitability within six months and a unicorn exit at 8-10 years being most likely."