Startup Financial Models

Numbers that Explain Your Startup’s Potential

Find free startup financial models, or work with our experts to build a customized model for your company!

Healy Jones Startup Financial Models Expert

Healy Jones
Former VC and Startup Operating Expert,
VP of FP&A at Kruze Consulting

Startups create financial models to raise capital, sell to an acquirer or to manage the team’s budget. On this page, you’ll find financial models that you can download and use on your own, tips on how to build a financial model and information on how to work with an outsourced financial modeling firm like Kruze Consulting.

Free Financial Model Templates

Click here to jump to our free financial model templates that you can use on your own.

Free Model Templates
Operating Expenses
Cash Flows

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Why build a startup financial model?

A financial model is the numerical expression of your startup’s goals - how many customers you’ll have, how many people you’ll hire, how your margins will improve. The creation of a financial model should tease out the key metrics and assumptions that you will test as you execute your business plan. The best startup financial models are usually not “right” - but the differences between the projections and the actual results can drive insight into the company’s potential and the targeted industry’s dynamics. Understanding the difference between your projections and your actual results can also help your executive team make important business decisions.

Free Financial Models

We have created several financial models that you can use for free. These are excel spreadsheets that will help you create projections for your startup, provide the information you need to your 409A valuation firm, think through your cash burn and more. You’ll find helpful modeling tips, how-to instructions and videos below on this page - click here to jump to the modeling help section below. Simply click on the financial model you want to download to get started - they are free! And if you need help with your modeling project, reach out to us at Kruze Consulting and we’ll see if it makes sense to work with us on a consulting project.

Startup financial models key terms

Startup Deferred Revenue

Deferred revenue, also called unearned revenue, matters to startups that get paid up front for service that they will deliver over time. Deferred revenue hits the balance sheet, and slowly converts to revenue, so really matters when creating a startup's financial model. A very important thing to know about deferred revenue is that, since balance sheets balance, the asset that goes on the balance sheet to balance out a new deferred revenue liability is cash. So, why is deferred revenue a liability? If a company gets a payment in advance of delivering a service, you owe the service to the client. So it's a liability because you owe that service to them. Let's do a pretty simple deferred revenue example. Let's say you're a software as a service startup. A SAAS startup Your service is one hundred dollars a month and a client prepays for the full year, all 12 months. The clients pays the startup twelve hundred dollars. In month one, the startup is able to recognize 100 dollars’ worth of revenue. so they deliver one hundred dollars’ worth of their service to that client. Now the deferred revenue balance was that full cash amount that they received the twelve hundred dollars. And then the recognized revenue of $100 is deducted. At the end of that first month, there is an eleven hundred dollar deferred revenue balance for this client. And this will continue over the life of the contract until the last month when the last one hundred dollars is recognized and this startup has a zero-dollar balance in their deferred revenue account. Deferred revenue can cause some confusing impacts to a startup's cash position. This video will help explain deferred revenue, and how to model it into your startup's financial forecast.

Startup Financial Modeling 101

Top 3 considerations when building your startup’s first financial model: Know the goal to the model, as in, why are you building a model? Are you doing a back of the envelope financial validation of your idea? Or are you raising venture capital? Or does your team need to know their budget? Each of these requires different levels of detail. What are your business’ KPIs, as in what are the key performance indicators that will show you if your company is on the right track. These don’t just have to be accounting related, they could be about the product release schedule, the number of clients, etc. Don’t start from scratch, use an existing spreadsheet template. The act of connecting the cells and putting in the basic formulas is not going to help your startup grow - don’t spend the time on it. Take an existing, free model - like the one we offer, and use it.

Kruze Consulting Simple Startup Financial Model

This is a model that we've created and we provide for free on our website. We're giving this away because there are a number of startup executives who want to build a simple financial model for their startup and who are comfortable enough with Excel to do this on their own. And we also know that there are a large number of very early stage startups for whom hiring somebody like a Kruze Consulting to build a model just doesn't make sense. This model is a very simplified version of one of the model templates that we use when we create financial models for our clients. This free financial model has three main tabs. There's a summary tab, there's a graph tab, and there's a model tab. The summary tab is a high-level output that shows the income statement in cash and some of the KPI's of the startup. We've seen that CEOs really like to use this to try to understand the macro level growth and expenses of their startups. And this is also the output that a number of our clients have used in their pitch decks when they go on to raise venture capital. We know this-this output works well because our clients have raised over half a billion dollars in the past twelve months in seed and venture capital. So, this is something that we really do believe resonates well during the fundraising process. The graphs page is a graphical representation of some of the KPI's of the startup like revenue growth headcount growth. Cash burn. It's a really nice way to visually show what's happening and the impact of the financial projections. Finally, the model tab is the tab where all the magic happens. It's in here that you can enter your projections, your headcount, your expenses, for things like marketing. It will output your cash and your cash balance in the cash balance section which is down at the bottom of this tab. Use the instructions tab for the detailed instructions and how to run the model tab. We hope this free resource is helpful. We do offer financial modeling as a service to startup executives who are looking to get help when they're putting together their financial model. So, contact us if that's something you'd like to learn more about and to find out if engagement with Kruze makes sense.

Startup Budgeting

Having a solid budget helps your startup hit its goals without prematurely running out of cash. A number of us here at Kruze Consulting have worked in fast-growing startups and we've compiled our tips on how to make this budgeting process work. The most important thing is you need to understand or have a vision of what your long-term strategy is and what you need to do to achieve those goals. You'll want to bake your budget around what your strategy is, and the budget is actually the financial representation of that strategy. You got to make sure your team knows what the strategy is - what your financial goals are in terms of the revenue that you need to hit and the cash need to burn. Or what features need to be built and then you'll want to start to pay careful attention to the key parts of the budget. So, for most early-stage startups, the biggest part of burn is headcount. So, you want to pay careful attention to your headcount projections over the coming year and because you'll put this together with your team and your team will have their headcount projections. It will really help them manage their team in a particular know when they need to start recruiting so they'll know when they should be able to bring on additional heads. You should have a very strong opinion on what the revenue should be over the next year. So for example, if you're a SAAS company you should know what your next milestone needs to be in terms of recurring revenue so that you can successfully raise your next round. And then you'll want to build your plan and your budget around what it takes to get there. You want to be very careful around your burn rate. So you want to know how much money you're burning so that you don't prematurely run out of money. And then you'll want to know what your monthly burn is at the end of the year like the burn of the exit with at the end of the year so that you can project your cash out date. You want to make sure you're not... You want to make sure that you run out of cash when you expect to run out of cash which hopefully aligns with you being worth more and raising more capital. Once you've got all this put together you can make sure that it's carefully shared with your department leaders so they can come back and build their detailed budgeting plans with you. And also, they can very clearly understand what their goals are.

How to record Equity Investments on the Balance Sheet

There are two ways that startups might want to record equity investments that they get, like venture capital rounds, on their balance sheet. 1) The Official GAAP way - probably overkill for most startups 2) The way investors like to see it The GAAP way wants your equity section to have three accounts, Common Stock, Preferred Stock, and Additional Paid-in Capital. The hardest part of this is to calculate the Additional Paid in Capital is like the (Issue Price – Par Value) * Basic Shares Outstanding. Financing Costs are netted against this account. Investors prefer to see each new fundraising round as a new equity account. If you use this method, you’ll have Common Stock, Seed Series Stock, Series A, Series B, etc. You’ll subtract your financing costs against each rounds amount. In this method, if you haven’t really calculated APIC, don’t include it on your Balance Sheet - you don’t want to give the impression that you are doing things on a GAAP basis when you are not. Notice that once fundraising round is closed, new funds aren’t added to it. New funds are placed in a new fundraising Equity account. Why do venture capitalists prefer to see the Equity section in the non-GAAP, simpler method? Because it’s cost effective (from a cash-burn spent on accountants perspective) and it’s easy for them to understand how much the company has raised at each round of financing.

Budgeting tips

Here are a few tips for you as you're building a budget for your startup. 1- Headcount is going to be your primary expense in most cases, so this is the place to focus the most. Understanding why your different team members get hired, and how they help you get to the next milestone, is very important. 2- You should have a really strong opinion on the amount of revenue and the amount of cash burn that you'll have in the coming years. Don’t ask your department heads what they want to spend - tell them how much is available and ask them to work within the constraints. 3- Match the amount of cash you need with the size opportunity of the company that you're trying to build. If you are building a company with modest potential, don’t burn millions of dollars!

Where to start your Model

So you’ve got the great idea, and maybe even have the team put together. Heck, maybe you even have a client or two! Now you want to put together a financial model to figure out if you can raise capital, or how long you can last with your existing investment. How do you start that model? There is no single answer to the best way to get going, but here are a few places to think about at first:

  • How big is the market, and if you capture a small amount of it, do you have enough revenue to have a real business? VCs often ask this question - and it’s a good one for you as you try to decide how to formulate your business. Are you looking at a $100 million revenue opportunity in 3, 5 or 7 years? Or if you get a meaningful percent of the addressable market, will you only have a $5 or $10 million business? This will help you size how much venture funding you should think about raising (and how much you should burn in the near term).
  • How many people do you need on the team to get to your first milestones? If you need a developer or engineer, is that you or one of the other founders? Or will you need to have cash on the balance sheet to afford to pay a salary for an engineer? You’ll want to model out and project the salary requirements for the business in the first few years pretty carefully, as this is usually the majority of a startup’s cash burn at first.
  • Understand your product’s unit economics. How much will your clients pay, and what will your costs to deliver it be at first, then at scale? The goal is to understand when the company has a viable cash flow positive product. It’s totally OK, and normal, for a company to lose money on every sale at first, but you do eventually want to have positive cash contributions from your sales.

SaaS User Metrics Modeling Tips

SaaS companies have specific financial modeling needs. In particular, a SaaS company wants to have a strong understanding of its user metrics. This includes how many users are acquired, churned, upgraded in a given period (we usually model it monthly.) Secondly, the length of time of contracts, and how your company is paid, matter for SaaS companies. Annual contracts that are paid up front can create deferred revenue, which is great for cash flow but does present some challenges from a modeling perspective. Finally, many SaaS models that we create have different pricing tiers to help the SaaS company understand the influence and impact of different pricing plans on the company’s top line growth and profitability.

Modeling Customer Acquisition Costs (CAC)

What are Customer Acquisition Costs and how do you model them? CAC looks, on a per new unit (i.e. customer basis) how much you pay to get a new customer. So, if you spend $10,000 on sales and marketing and get 100 new customers, your CAC is $10,000 / 100, or $100. The costs that go into CAC usually have two components, fixed costs, and variable costs. Examples of fixed costs would be costs that don’t increase as your company grows. The salary for your demand generation team would be a clear example of a fixed cost - if they are scalable, then you can acquire 1 user or 100 in a period and still have the same salary cost. Some software costs don’t vary much as the company grows, such as the cost of SEO software. Variable costs move up as the company acquires more customers. Clear examples of variable costs include some online marketing costs, such cost per click advertising. The cost of a sales team can also be variable, as you likely need to hire an ever increasingly large sales team to help your company close more and more new clients.

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Kruze Consulting's Prices

Monthly accounting, bookkeeping and compliance, competitively priced for startups

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Financial Consulting

Staff Accountant $85
Senior Staff Accountant $110
Controller $140
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Venture Debt $300
CFO $250
Tax Advisory $395

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Client testimonials

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We're huge fans of Vanessa and the folks at Kruze Consulting. They set up our books, finances, and other operations, and are constantly organized and on top of things. As a startup, you have to focus on your product and customers, and Kruze takes care of everything else (which is a massive sigh of relief). I highly highly highly recommend working with Vanessa and her team.

Vivek Sodera
Vivek Sodera
Co-Founder @ Superhuman
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Kruze's financial infrastructure empowers me to focus on my team, our products, and our customers. As an entrepreneur I couldn't be happier.

Jake Lodwick
Jake Lodwick
Creator of Vimeo
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Avochato has been growing rapidly in the past year – in fact, too quickly for us to keep up with books, taxes, and budgeting for growth. Partnering with Kruze Consulting has been fantastic to manage, track, and analyze our finances while we continue focusing on building our customer base. Kruze’s team knows what startups need.

Alex De Simone
Alex De Simone
CEO @ Avochato
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I had a great experience working with Kruze Consulting when we raised Series A. They know what VCs need to see, and how to present a startup’s books and finances. If you are going to raise venture capital, you need experts like Kruze.

Chris Mansi
Chris Mansi
CEO @ Viz.ai
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Kruze Consulting is the perfect Accounting, Finance and Tax partner for Los Angeles Startups. Kruze delivers exceptional monthly reporting and financial projections. When we need help with benefits or payroll, Kruze solves our problems. Kruze does our taxes for a fraction of what previous accountants have charged. Thank you Kruze for being a great partner.

Brett O'Brien
Brett O'Brien
CEO @ FLYR
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Being a repeat tech entrepreneur, I know how challenging it is to find the ideal CFO - not only is it often expensive to find the right one, but CFOs who combine expertise with scrappiness, market vision and perspective with detail orientation and 'roll up your sleeves' execution is near impossible for an early stage company. So I've been thrilled to work with Kruze Consulting, who not only provide all the ideal characteristics of a top-tier tech CFO, but also live and breathe entrepreneurship themselves. I've known Scott and Vanessa for many years and their deep personal integrity and strong reputation in the industry and made it an easy decision to work with them again.

Tina Fitch
Tina Fitch
CEO @ HobNob
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NIH, NSF, and SBIR grant compliance can add a lot of overhead for a start-up. The Kruze team makes it easy, so we can spend our time growing the business instead of shoveling paperwork.

Charlie Silver
Charlie Silver
CEO @ Mission Bio
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As a startup, it’s incredibly important to keep track of where our money is coming from and where it’s being spent. Kruze Consulting really helps keep our books and taxes in order so that we can focus on the core business. Extremely responsive and very professional, the accountants at Kruze Consulting are a pleasure to work with. We’d highly recommend their services.

Peter Lai
Peter Lai
CEO @ Emburse

About Us

A CPA Firm Specialized in Startup Accounting & Finance

A CPA Firm Specialized in Startup Accounting & Finance

Startups are our niche, and our passion. Our clients have raised over half a billion in venture capital financing in the past 12 months. We are one of only a few accounting firms that specialize in funded startups - we only offer financial and tax services to fast growing startups in the Seed, Series A, Series B and Series C stages.

The Right Accounting Partner for Your Startup’s Next Round

The Right Accounting Partner for Your Startup’s Next Round

We know how to de-risk your startup’s next venture capital round. Our team makes sure sure you are ready to fly through your next VC’s accounting, HR and tax due diligence. And when you use us as your bookkeeper, we set up and keep up-to-date a due diligence folder so you can get that next round of fundraising.

A Leader in Cloud Accounting Software

A Leader in Cloud Accounting Software

Our practice is built on best of breed cloud accounting software like QuickBooks, Xero, Netsuite, Gusto, Zenefits, Expensify, Avalara, Brex iand Bill.com. Technology makes us more efficient, saving our clients money and letting us offer higher value services like FP&A modeling, 409A valuation and venture debt consulting. Startups deserve to work with CPAs using modern software.

Trusted by Top Venture Investors

Trusted by Top Venture Investors

Top angel investors and VCs refer Kruze because they trust us to give the right advice. Our clients are portfolio companies of top technology and Silicon Valley investors, including Y-Combinator, Kleiner, Sequoia, Khsola, Launch, Techstars and more. With us, your books and taxes are in order when it’s time to raise another round of venture financing.

What types of startups does Kruze Consulting usually work with?

What types of startups does Kruze Consulting usually work with?

Kruze Consulting works with a variety of funded Delaware C-Corps, but the majority of our companies have secured Seed, Series A, Series B and Series C. We look to partner with our startups, going beyond the typical accounting relationship and seeking to provide a higher level advisory role. We feel honored to be a part of making the world a better place, even if it’s one debit and credit at a time.

Accounting, Finance, Taxes, & Payroll all in one solution

Accounting, Finance, Taxes, & Payroll all in one solution

Startup CFO services, startup accounting and bookkeeping services, startup annual taxes, expense reports, payroll, benefits: we've got you covered. Custom tailored dashboards are provided weekly or monthly, depending on your preference. Startup founders are often too busy building their company that they don’t have time to take care of their finances. Traditionally, these startups have had to work with a basket of people to get their work done, including bookkeepers, accountants, AP clerks, CFOs, startup consulting companies, and tax accountants. Just coordinating the conversation between all these parties drained even more of a founder’s precious time. At Kruze Consulting, our founders have one point person to manage all startup accounting needs, which saves them time and money.

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