How to Build a Financial Model

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

It’s best to build your own financial model so you understand it thoroughly.

Here are the steps to build your financial model:

Define the goal for the model.  

Figure out how you will use it and what decisions you need to make.

This will determine what details you need to include in your model.

Input your historical results as this will set the format of the model.

Start with revenue and figure out what drives it such as number of customers paying or number of products sold. 

Calculate Cost of Goods Sold and include it as part of the revenue section.

Next, add salaries into the model as this is one of the biggest expenses you have.

Add in the other businesses expenses related to sales, marketing, and administration.

Set up a working capital section as you’ll need funds in the bank to pay expenses ‘til the revenue comes in.

Calculate your growth projections for each month for the next 24 months.

Review the model to see if it is achievable.

Finally, choose key metrics to include in the model and capture information that calculates those metrics.


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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On this episode of Investor Connect, Hall welcomes Sophie Liao, Founding Partner at Oyster Ventures.

Oyster Ventures is a seed-stage-focused venture fund based in San Francisco, New York, and Hong Kong. They target companies that bring liquidity and efficiency to antiquated industries and with massive potential to scale.

Since 2016, they have launched three funds and deployed capital into 80+ startups. Their checks start at $25k to $200k, from Pre-Seed to Series Seed. They typically continue to invest in their portfolio companies from Series A to C and beyond, and they can write checks up to $5M+.

Oyster Ventures generally doesn’t lead rounds, but when they do, they will invest $500k to $2M. When they lead, they join the board as a director or observer. They happily invest in companies anywhere in the world but have a preference for standard jurisdictions and structures (e.g., Delaware C Corps, Hong Kong or Singapore Limited companies, SAFEs, etc.) They don’t invest in markets they don’t understand well or markets that require deep specialization to evaluate. While they do invest in cryptocurrency and blockchain companies, they very rarely invest in crypto-tokens without an equity component. They don’t invest via SPVs, by mandate, they don’t invest in mainland China, and they don’t invest in uncapped notes and SAFEs.

Sophie is a three-time fund manager with a top-performing record by IRR. She was MD at Rothenberg and VP at Draper Dragon before setting off on her own to found Oyster Ventures as a solo GP in 2017. Prior, she co-founded and sold a VFX startup to a large media company in 2015. Before that, she ran M&A strategy and started her career by launching joint ventures for U.S-Asia cross-border businesses in the TMT sector.

Sophie discusses her investment thesis, advises entrepreneurs and investors and describes some of the challenges they face.

You can visit Oyster Ventures at www.oyster.vc, via LinkedIn at www.linkedin.com/company/oyster-vc, and via Twitter at www.twitter.com/oysterventures.  

Sophie can be contacted via email at sophie@oyster.vc, and via LinkedIn at www.linkedin.com/in/sophie007. 

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For more episodes from Investor Connect, please visit the site at: http://investorconnect.org  

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/  

For Feedback please contact info@tencapital.group   

Please follow, share, and leave a review.

Music courtesy of Bensound.