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.
A: At MATH Venture Partners we're focused on customer acquisition and so most of what we ask during these meetings is to learn about the customer acquisition strategy, current traction, go-to-market plan and related areas. Typically VCs will want to learn about the team, product and technology behind it, business model and sales. The most important thing to convey during the first meeting is,
1. What problem are you solving and what's the solution?
2. Who is your customer?
3. Why are you the best person to solve this? What is the unfair advantage or differentiators?