Startup Finances from 10000 feet

Terminology

  • Runway: How many months till there is no more money
  • Burn (rate): How many dollars are used each month
  • Cash: How much cash is in the bank account
  • Financing: Where money comes from and goes to
Pro Tip The Gazintas must always exceed the Gazoutas.

Building the model

  • Revenues: where do they come from?
  • Pricing: per unit? per user? per partner?
  • Costs: where do they come from?
  • Cost Drivers: what variables have an effect on costs?
  • Growth: What parameters in the model change over time
  • Growth: What is your objective?

What you can learn from the model

  • When are you going to run out of money?
  • What is the sensitivity to changing parameters?
  • When will your business become sustainable?
  • How much money should you raise?
  • Where is your money coming from
  • Where is it going?