Over twenty years ago, a mentor of mine gave me some advice that I have never forgotten; I call it the “New York Times Test.” He declared his expectation that anything he said, wrote or did could end up in the New York Times one day, and he used that as a guide and to only say, write and do things that he would be proud of when they appeared on the front page.
We’re not even talking about the right causes of the diversity problem in tech yet.
For the second year now, VC firm First Round Capital has released a fantastic “State of Startups” annual report. First Round surveyed over 700 founders and CEOs of technology startups to get their impressions on the current landscape of the startup world. The survey covers things like whether or not we’re in a bubble, how the IPO market is looking, and--yes--diversity in the tech world.
If you haven’t had a chance yet, you should definitely check out the report. It’s a relatively quick read and will give you a good fix for how folks are feeling about the environment we’re in today. But I want to dig into one particular topic that is near and dear to my heart: the fact that only 3% of venture funding goes to women and a measly 1% goes to people of color.
In the first three articles in this series, we looked at the big-picture motivation for startup financial modeling, why it’s important to start with your assumptions, and how to practically build your income statement and custom detail tabs. Today, we’ll finish off the series by examining how to construct the final components necessary to complete your model, including a quick discussion of unit economics and how to best keep your model updated. Feel free to ping us on Twitter (@wclittle, @troyhenikoff) with any questions.
When it comes to investment structures, I hope that my 30+ years as an entrepreneur and VC has led to some wisdom about what works and what doesn’t because it certainly has led me to have strong opinions on the topic. People like to say that VCs are in the pattern recognition business. If that’s true, then today I’m seeing a troubling pattern developing around company valuations aided and abetted by the overuse of debt.
In the first two posts in this series, we examined why building a financial model for your startup is important and how to practically get started with your assumptions tab. Today, we’ll continue by diving into the income statement and supporting tabs used to calculate your projected revenue and expenses.
In the previous post of this series, we described what financial modeling is and why it is important for startup founders to build their own models from scratch. Today, we’ll begin by diving into how to practically start building a financial model. In coming weeks, we will also be covering the income statement as well as cash flow, balance sheet and keeping the model updated.
This series is the result of a friendly debate I had recently with Troy Henikoff (former Techstars Chicago Accelerator Managing Director) regarding the best approach for founders to take when building a financial model. More accurately, the “debate” was a strong adverse reaction from Troy after I shared a template I built for Prota Ventures’ portfolio companies. His feedback was, essentially, to never use a template and instead build each model from scratch.
Troy Henikoff, Managing Director of MATH Venture Partners and Techstars has so much knowledge to add. He sat down with Trish to talk offer some wisdom.