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I’m a CPA, and my firm is the accounting partners and interim CFO for 700+ startups (a few of which are mobile tech/apps) and I’ve helped many of my companies build financial models that have gotten the thumbs up from top VC firms and the pickiest of investors/board members.
While you may be able to start with a template, keep in mind that your business is unique, and therefore your model should be as well. Here are some common points that you’ll want to include in your financial model:
3 Years of Projections. Occasionally investors will ask for more/less, but start with 3 years.
3 Statement Model. Include a Profit & Loss Statement, Balance Sheet, and Statement of Cash Flows. Each should balance and tie back to each other (this gets tricky).
Your KPI’s should be your Drivers. Every company has a dashboard of metrics that they track growth and success by. A few examples include number of users, customers, margin, customer acquisition cost, Twitter followers, website traffic, etc. Look to the past and show that there is a correlation between X (could be # of Sales Reps) and Y (could be your revenue), then use this as a driver towards the future projections.
Churn Customers will leave. Account for this.
Waterfalls. Your financial model should be dynamic. Waterfalls show how you actually performed against your budget and then resets the future accordingly.
Focus on explaining your company’s strategy using numbers. For a mobile app, this means you’ll be spending on customer acquisition costs, focusing on product let sales, etc. Startup financial projections for a mobile company that has a subscription element really are similar to a SaaS company, so showing new users, existing users, churn, net users, etc. is what a VC will expect to see. We have free financial models available, and also have a page dedicated to explaining SaaS accounting - check them both out. These models take a lot of time to build and are highly personalized, so it really is best to consult with a professional. If you’re planning on raising $3M+ you should come prepared with a well thought out financial model.
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