STARTUP FINANCESFORECASTING, MODELLING & METRICS

MY VANTAGE POINT

EXCITED ALIGNED

VC PROCESS (SIMPLIFIED)

FINANCIALS? I DON’T HAVE THOSE.

1) UNIT ECONOMICS 2) MARKET OPPORTUNITY 3) CASH FLOW PLAN

SURE YOU DO…

REVENUES & COSTS ASSOCIATED WITH A BIZ MODEL ON A UNIT BASIS (COMMON DENOMINATOR)

UNIT ECONOMICS

EXAMPLE

DEMAND THAT A FIRM CAN EXPLOIT BECAUSE IT IS NOT BEING ADDRESSED

MARKET OPPORTUNITY

EXAMPLE

#Registered MarketSize(buy) MarketSize PercentageAfrica 190,152 57,045,600$ 34,227,360$ 5.27%Americas 480,879 144,263,700$ 86,558,220$ 13.32%Asia 1,311,823 393,546,900$ 236,128,140$ 36.33%Europe 1,163,058 348,917,400$ 209,350,440$ 32.21%Oceania 465,395 139,618,500$ 83,771,100$ 12.89%WorldTotal 3,611,307 1,083,392,100$ 650,035,260$ 100%

EXPECTED INFLOWS & OUTFLOWS OF CASH OVER A DEFINED PERIOD OF TIME

CASH FLOW PLAN

EXAMPLE2014 2015 2016 2017 2018 2019

OperationsCashIn Revenue 598,000$ 1,867,500$ 4,975,000$ 6,965,000$ 8,955,000$

CoGS 100,000$ 337,500$ 1,012,500$ 1,275,750$ 1,125,000$ContributionMargin 498,000$ 1,530,000$ 3,962,500$ 5,689,250$ 7,830,000$

83% 82% 80% 82% 87%

CashOut Salaries $330,000 $770,000 $1,320,000 $1,980,000 $2,750,000WorkingCapital $84,375 $253,125 $318,938 $281,250 $421,875Rent+OfficeExpense $20,000 $43,750 $65,625 $87,500 $109,375R&D/Prototyping $150,000 $500,000 $625,000 $687,500 $756,250Legal/Accounting $50,000 $100,000 $150,000 $225,000 $337,500Marketing $149,500 $466,875 $746,250 $1,044,750 $1,343,250Total $783,875 $2,133,750 $3,225,813 $4,306,000 $5,718,250

CashFlowfromOperations (285,875)$ (603,750)$ 736,688$ 1,383,250$ 2,111,750$

FinancingEquity $500,000 $1,000,000 $0 $0 $0SRED $25,000 $75,000 $250,000 $312,500 $343,750

CASHBALANCE $200,000 $439,125 $910,375 $1,897,063 $3,592,813 $6,048,313

FINAL THOUGHTS

IF YOU WERE GOING TO BUILD ONE OF THESE…

YOU’D PROBABLY WANT SOME OF THESE FIRST

DISCUSSION

EXAMPLE"Beachhead"Rep(BH) "Farmer"Rep(F)

BillingsDeals/Month 3.00 4.00Deals/Year 36.00 48.00AvgPricePoint 6,500$ 6,500$$/Rep/Year 234,000$ 312,000$

CostsBase$ 65,000$ 45,000$Commission% 15.0% 12.5%Commission$ 35,100$ 39,000$OTE$ 100,100$ 84,000$AllocatedCosts 35,000$ 25,000Total 135,100$ 109,000$

ContributionMarginFirstYear$ 98,900$ 203,000$FirstYear% 42% 65%LifeTimeValue$ 566,900$ 827,000$LTV/CAC 4x 8x