‘Don’t Make This Huge Mistake on Your Financial Model’ – Entrepreneur
Andrew Cohen says, “Over the past few years, I’ve worked with dozens of startups through TechStars, General Assembly and the Edge EdTech Accelerator to help founders improve their financial models to secure potential funding. Whenever I ask the entrepreneurs to share their financial models with me, I almost always see one common characteristic: The models are almost entirely focused on expenses.
Now, don’t get me wrong. The ability to convey your forecast headcount, marketing budget and fixed costs is critical to demonstrate credibility and your expected use of investor funds. But VCs don’t really spend much time focusing on your predicted rent expense in month seven of year three; especially because your expected costs are likely to change anyway. That’s just a matter of accounting. What investors really want to see is a detailed analysis of the levers that drive your revenue”.
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