How Investors Use the Financial Model
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Investors use the financial model to understand not only the business but also to learn about the founder and their skills.
Here are some key points investors look for:
- Salaries -- investors look to see how well the team is compensated and if it fits the stage of the business.
- Customer acquisition and retention -- investors look to see you have built a system for acquiring customers and retaining them.
- Traction -- investors look to see what traction you have going so far.
- Knowledge of the business -- investors look at the numbers to see how well you know the costs of running the business and what factors drive revenue.
- Scale factors -- investors look at the costs and customer acquisition model to see how well the business can scale.
- Use of funds -- investors look to see how you are going to spend the funds raised and if it makes sense for the stage of the business.
- Potential outcome -- investors look to see if this is a venture business or a lifestyle business.
Consider how the investor will view your deal in building out your financial projections.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
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