Investor Connect Podcast

Back of the Envelope Financial Model

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In setting up a fundraising plan at a high level, you set a revenue target five years out. 

You then draw a line from today to that five-year mark. 

Your fundraise and hiring plan will come from that.

To calculate this quick and dirty version of the financial model, follow these steps:

  1. Start with current revenue.
  2. Apply your organic growth rate and map out your top-line revenue for five years.
  3. Calculate your revenue per person metric.
  4. Apply your expenses for five years using that revenue per person metric.
  5. Identify the negative profit line. 
  6. Set your fundraise to cover the negative working capital.

If the amount is greater than one million dollars, then break the fundraise into two rounds.

This will give you a rough idea of how much you need to raise and how many people you will need to hire. 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Direct download: Back_of_the_envelope_financial_model.mp3
Category:general -- posted at: 6:00am CDT