We recently heard from William Plumer, VP of Gen Cap America and holder of an Owen MBA. He gave some invaluable information and walkthroughs of financial modeling, crucial for our seven startups to understand.
“A back-of-the-napkin sketch won’t cut it and will fall apart. You need to understand the DNA of your model.”
The DNA of a financial model, he explains, includes initial capital, personnel assumptions (IT, MGMT, Bus/Dev Sales, Legal, Finance, etc), sales and marketing, rent and utilities, cash, inventory, A/R, A/P, personal credit cards, capital equipment (tools, IT infrastructure), capitalization, and others, depending on your industry.
“You’ll want to flesh out your model to reflect the next two years. That’s the sweet spot for startups.”