Why It’s Okay to Tell Your Investors That You Don’t Have a Clue

Of all of the misconceptions about startup life, I think the most profound—and ultimately damaging—is the myth of the savior leader: the magical CEO who creates the perfect product/service and business model that erupts into a runaway success. The cold, hard truth is that it takes both time and much iteration before most entrepreneurs get it right.

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Why Your Boss Is Still a White Guy

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.

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Startup Financial Modeling, Part 4: The Balance Sheet, Cash Flow and Unit Economics

By Will Little and Troy Henikoff

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.

Download a Copy of the Example Model

To make following along this final article easier, download a free copy of our example financial model here. Remember, understanding the nuances of your own unique business is critical, so only use this (and any other model you find online) as a guide while you build your own model from scratch.

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Kicking The Can

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.

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Startup Financial Modeling, Part 3: The Income Statement and Custom Detail Tabs

by Will Little and Troy Henikoff

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.

But first, in case you aren’t yet convinced that it’s worth your time to build a financial model for your business, here’s a quick video we put together showing how a model can be used to gain insight about what assumptions drive forecasted cash most significantly:

We’ll discuss these types of learning nuances in more detail in our next (and final) post in this series. But first, we have some work to do in order to fill out the model.

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Startup Financial Modeling, Part 2: Start with Your Assumptions

by Will Little and Troy Henikoff

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.

Good financial models are built from the bottom up. They have assumptions that flow into backup sheets that flow into monthly statements that flow into annual summaries. You literally start with the smallest component and start building up.

What is an Assumptions Tab?

The assumptions tab should be the first tab within your spreadsheet and contain variables that will be referenced from other tabs. Rather than manually entering data into your income statement, you’ll roll up variables across your assumption and detail tabs. The ONLY place you should ever type a number is into an assumption cell. Every other cell is a calculation based on the assumptions!

The types of assumptions you’ll want to define are unique for your business type. Most commonly they are related to expected revenue from each product/service you sell, expected costs, initial investment dollars in the bank, etc…

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Startup Financial Modeling, Part 1: What is a Financial Model?

by Will Little and Troy Henikoff

This series is the result of a friendly debate I had recently with Troy Henikoff (Techstars Chicago 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.

He invited me to a 90-minute lecture he gave where he overwhelmingly convinced me and the room that, indeed, founders need to take the time necessary to build their models from scratch. After I asked him where I could find his lecture material online, he suggested we co-author this article series since there weren’t many solid resources available. We sincerely hope you find this series helpful. 

What is a Financial Model?

In short, a financial model is an abstract mathematical representation of how a company works (and more importantly, how it will work going forward). The model has inputs and outputs. The inputs are the assumptions that drive the model, things like what drives your customer acquisition cost, what your churn rates are, how much you pay people, etc. The outputs are a set of projections that show how the company will perform if the assumptions are true. One model can produce multiple sets of projections given different assumptions.

Based on a set of assumptions, a financial model is used to make smart decisions (e.g. how many sales people to hire and what to pay them). The model includes financial projections that are tied mathematically to the assumptions, which allows operators to “play with the variables” in order to understand how certain decisions might affect the future health of their company.

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Strong Suit 027 What VC’s Really Look For in Founders

I know you’€™ll enjoy this candid conversation with Mark Achler, Managing Director of MATH Venture Partners, the $28M venture fund based in Chicago. Mark pulls back the curtain on: What VC’€™s really look for in an entrepreneur / What sets apart the entrepreneurs who make it & those who don’€™t / The single-most vital skill of an entrepreneur / And how Founder/CEO transitions can go smoothly… or terribly.

Hear The Podcast


Mark Achler: Your Startup Isn't About You

Your startup isn’t about you, and it’s not about your product, either.

Your startup is all about your customers. It’s hard to overstate how critically important this seemingly simple insight is.

I recently wrote an op-ed piece called “Entrepreneurs are Lazy,” about how entrepreneurs rarely seem to take the time to prepare before pitching to venture capitalists. In the piece, I raised the question of how these entrepreneurs can expect to deliver effective pitches without understanding how we think and make decisions.

Showing up poorly prepared at an investor’s office makes for a bad first impression, sure. But more importantly, it raises a serious red flag about the viability of your business.

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Why this Chicago VC thinks entrepreneurs are lazy


Entrepreneurs are lazy. Yeah, you heard me. Some of the hardest-working people I know are lazy when preparing to meet with financial people.

Let me explain.

I’m a venture capitalist. Our fund, MATH Venture Partners, invests in tech companies. Every day we meet with three or four new entrepreneurs who pitch us in the hopes that we will back their dreams. Not to be too dramatic, but in many cases our decision whether or not to invest could be the difference between their survival and having to close down. It’s that important.

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Troy Henikoff on Startups: You Need to Make Sales a Priority

I have spent the last 25+ years starting, running, mentoring, and investing in digital technology companies. Just the other day, an entrepreneur asked me a simple question:

"What is the most costly mistake you see first time founders make?"

It took me a minute to think about it, but then it felt like the clouds parted and the answer was so clear: customers.

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In this quick interview, you'll discover how to identify & build your startups's "Unfair Advantage".


Troy is a legend in the Chicago startup community. He started and sold a number of startups, before becoming a full-time investor. 

Currently, Troy is both Managing Director of Techstars Chicago (the leading 3-month startup bootcamp) and Managing Director of MATH Venture Partners (the $28MM early-stage venture fund). He also teaches entrepreneurship at Kellogg School. 

Stop tinkering with your product. Instead, nail your unique distribution strategy...how you'll capture customers and revenue. And your startup will live to fight another day. 

Watch the interview here

Find out what a leading Venture Capitalist looks for in entrepreneurs

Mark pulls back the curtain on:

— What VC’s really look for in an entrepreneur

— What sets apart the entrepreneurs who make it & those who don’t

— The single-most vital skill of an entrepreneur

— And how Founder/CEO transitions can go smoothly…or terribly (Did you know that fewer than half of Founders still run their business 3 years after taking VC funds?)

Watch here

Creating Urgency around Corporate Innovation

What intrapreneurs in established firms must do to succeed. Based on insights from Mark Achler. 

“I think courage is really important, especially in intrapreneurship,” Achler says. “It takes courage to stand up, put your neck out on the line, and fight for what you believe in. It’s that moral imperative that says, “I have to do this. We have to do this,” and to do so with a sense of urgency.”

“What separates the intrapreneur is not only that willingness to take the leap, but to feel like you have to, like you can’t help yourself.”

Read more at KelloggInsight


Persistence Alone is Not Enough When Starting a Business


Without empathy, I wouldn’t have succeeded.”

Being an entrepreneur is hard—most fail. Let’s face it, the odds are against us. It takes dogged persistence and fierce determination to push past all the obstacles and naysayers. But bulldog persistence alone is not enough. Gritty determination without empathy is a little like a mental illness – doomed to repeat the same mistakes over and over. Let me explain.

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