financial-modeling

Startup Financial Modeling

Investors speak in numbers. This skill provides a framework for building compelling financial models for fundraising — 3-scenario forecasts, business-model-specific templates, unit economics analysis, and transparent assumption documentation.

Connectors (Optional)

Connector	Additional Functionality
~~spreadsheet	Auto-generate models in Google Sheets or Excel with real-time collaboration
~~knowledge base	Auto-reference historical financial data and metrics history
~~analytics	Auto-collect actual data, forecast vs actuals reconciliation
~~CRM	Revenue forecasts based on sales pipeline

No connectors? You can build solid financial models with web research and user input alone. Output results as markdown tables or CSV and copy to your spreadsheet.

---

How It Works

┌─────────────────────────────────────────────────────────────────┐
│                   FINANCIAL MODELING                              │
├─────────────────────────────────────────────────────────────────┤
│  Core Features (Standalone)                                      │
│  ✓ 3-scenario forecasts (Base/Bull/Bear) 3-5 years               │
│  ✓ Business-model templates (SaaS/Marketplace/Commerce/Services) │
│  ✓ Unit economics (CAC/LTV/Payback/LTV:CAC)                     │
│  ✓ Cohort-based revenue modeling                                │
│  ✓ Runway & burn rate calculations                              │
│  ✓ Assumption documentation & sensitivity analysis              │
├─────────────────────────────────────────────────────────────────┤
│  Enhanced Mode (With Connectors)                                 │
│  + ~~spreadsheet: Auto-generate in Google Sheets/Excel          │
│  + ~~knowledge base: Auto-reference historical data              │
│  + ~~analytics: Auto-collect actual data                        │
│  + ~~CRM: Revenue forecasts from sales pipeline                 │
└─────────────────────────────────────────────────────────────────┘

---

Getting Started

"3-year financial model - SaaS, MRR ₩10M, CAC ₩300K"
"Calculate unit economics - CAC, LTV, Payback"
"Calculate runway - current cash ₩500M, monthly burn ₩50M"
"Marketplace financial model - GMV-based"

---

Output Format

3-Scenario Financial Model Summary

# Financial Model: [Company Name] - [Business Model]
**Date:** [Date] | **Forecast Period:** [Start Month] ~ [End Month] (3-year/5-year) | **Scenarios:** Base/Bull/Bear

---

## Executive Summary

| Scenario | Year 3 Revenue | Year 3 EBITDA | Burn | Additional Funding Needed |
|----------|----------------|---------------|------|---------------------------|
| Bull | [Amount] | [Amount] | [Amount] | [None/₩X] |
| Base | [Amount] | [Amount] | [Amount] | [₩X] |
| Bear | [Amount] | [Amount] | [Amount] | [₩X] |

**Key Assumptions:**
- Base: [Realistic growth rate — market average level]
- Bull: [Aggressive growth rate — top 25% benchmark]
- Bear: [Conservative growth rate — risk-adjusted]

---

## Scenario Details

### 📊 Base Scenario (Most Likely)

**Revenue (Unit: ₩)**
| Year | Y1 | Y2 | Y3 | YoY Growth |
|------|----|----|----|-----------||
| Revenue | X | Y | Z | Y2→Y3: +W% |

**Key Drivers:**
- [Driver 1]: [Assumption and rationale]
- [Driver 2]: [Assumption and rationale]

**P&L Structure:**
| Line Item | Y1 | Y2 | Y3 | Y3 % of Revenue |
|-----------|----|----|----|-----------------||
| Revenue | X | Y | Z | 100% |
| COGS | -A | -B | -C | -D% |
| Gross Profit | E | F | G | +H% |
| OpEx | -I | -J | -K | -L% |
| EBITDA | M | N | O | +/-P% |

---

### 🚀 Bull Scenario (Upside Case)

**Key Differences:**
- [Major difference vs Base 1]
- [Major difference vs Base 2]

**Revenue (Unit: ₩)**
[Simplified table — key metrics only]

---

### ⚠️ Bear Scenario (Downside Case)

**Risk Factors:**
- [Major risk 1 + impact]
- [Major risk 2 + impact]

**Revenue (Unit: ₩)**
[Simplified table — key metrics only]

---

## Unit Economics

| Metric | Year 1 | Year 2 | Year 3 | Target/Benchmark |
|--------|--------|--------|--------|-------------------|
| CAC | [Amount] | [Amount] | [Amount] | [Benchmark] |
| LTV | [Amount] | [Amount] | [Amount] | [Benchmark] |
| LTV:CAC | [Ratio] | [Ratio] | [Ratio] | 3:1+ |
| Payback | [Months] | [Months] | [Months] | <12 months |
| Gross Margin | [%] | [%] | [%] | >70% (SaaS) |

**Interpretation:**
- [Health assessment]
- [Areas for improvement]

---

## Funding Plan

**Current State (Base Scenario):**
- Current cash: [Amount]
- Monthly burn rate: [Amount]
- Runway: [X months] ([End date])

**Additional Funding Required:**
- [Round]: [Amount] by [Timing]
- Use of funds: [1. Item — Amount], [2. Item — Amount]

**Funding Needs by Scenario:**
- Bull: [None or modest amount]
- Base: [Planned amount]
- Bear: [Larger amount or earlier timing]

---

## Key Assumptions

### Revenue Assumptions
- [Assumption 1]: [Value] — [Rationale]
- [Assumption 2]: [Value] — [Rationale]

### Cost Assumptions
- [Assumption 1]: [Value] — [Rationale]
- [Assumption 2]: [Value] — [Rationale]

### Sensitivity Analysis
Most sensitive variables:
1. [Variable 1]: 10% change → Year 3 revenue [X]% impact
2. [Variable 2]: 10% change → Year 3 EBITDA [Y]% impact

---

## Next Steps

- [ ] Build detailed monthly model in spreadsheet
- [ ] Perform sensitivity analysis by scenario
- [ ] Generate summary charts for board/investors
- [ ] Set up performance tracking dashboard

---

Execution Flow

Step 1: Identify Business Model

Checklist:
- Business model: SaaS / Marketplace / E-commerce / Services?
- Current stage: Pre-revenue / Early traction / Growth?
- Revenue model: Subscription / Transaction fees / Product sales / Hourly?
- Key metrics: MRR / GMV / Transaction volume / Number of projects?

Select appropriate template by business model → see references/model-templates.md

Step 2: Collect Current State Data

Core Data:
- Current revenue (MRR, GMV, monthly revenue, etc.)
- Customer count & growth rate
- Unit economics (CAC, LTV — if available)
- Team size & payroll
- Current cash & burn rate

Enhanced (With Connectors):
- ~~analytics: Auto-collect actual metrics
- ~~CRM: Sales pipeline data
- ~~knowledge base: Historical financial data

Step 3: Design Scenarios

Base Scenario (50-60% probability):

Principles:
- Realistic and achievable growth rate
- Based on market average or comparable company benchmarks
- Reflect known risks, but exclude severe shocks
- "Most likely" outcome

Example Assumptions:
- Customer growth: +10-15%/month (market average)
- Churn: 3-5% (benchmark)
- CAC: Maintain current level or modest improvement

Bull Scenario (20-30% probability):

Principles:
- Growth when everything goes well
- Top 25% benchmark
- Strong product-market fit, successful channel optimization
- "Optimistic but realistic" outcome

Example Assumptions:
- Customer growth: +20-30%/month (aggressive marketing)
- Churn: ≤2% (product improvements)
- CAC: 20-30% reduction (channel optimization)

Bear Scenario (10-20% probability):

Principles:
- Key risks materialize
- Conservative assumptions
- Market slowdown, increased competition, execution challenges
- "Difficult but not worst-case" outcome

Example Assumptions:
- Customer growth: +5%/month (market slowdown)
- Churn: 8-10% (intensified competition)
- CAC: 20% increase (channel efficiency decline)

Step 4: Model by Business Model

Each business model has unique drivers and metrics. See references/model-templates.md for detailed templates.

SaaS:

Core Drivers:
- New MRR (New Customers)
- Expansion MRR (Upsell/Cross-sell)
- Churn MRR (Cancellations)
- Net MRR = Prior + New + Expansion - Churn

Cohort-based Revenue:
- Monthly new customer cohorts
- Retention curve per cohort
- Monthly ARPU changes

Marketplace:

Core Drivers:
- GMV (Gross Merchandise Value)
- Take Rate (commission rate)
- Revenue = GMV × Take Rate
- Two-sided supply/demand growth

Liquidity Metrics:
- Transaction completion rate
- Repeat purchase rate
- Demand per supplier

E-commerce:

Core Drivers:
- Monthly order volume
- AOV (Average Order Value)
- Repeat purchase rate
- Revenue = Order Count × AOV

Cohort Analysis:
- First purchase cohorts
- Repeat purchase patterns
- LTV calculation

Services/Agency:

Core Drivers:
- Billable headcount
- Hourly billing rate
- Utilization rate
- Revenue = Headcount × Hours × Billing Rate × Utilization

Project-based:
- Average project size
- Monthly project count

Step 5: Model Cost Structure

COGS (Cost of Goods Sold):

SaaS:
- Hosting costs (AWS, GCP)
- Third-party API costs
- Customer support costs (partial)
Target: Gross Margin 70-80%

Marketplace:
- Payment processing fees
- Fraud prevention costs
- Customer support
Target: Gross Margin 60-70%

E-commerce:
- Product COGS
- Shipping costs
- Inventory management
Target: Gross Margin 40-60%

Operating Expenses:

R&D / Product:
- Engineer salaries (25-35% of revenue)
- Tools & infrastructure

Sales & Marketing:
- CAC budget (New customers × CAC)
- Marketing team salaries
Target: 30-50% of revenue (growth stage)

G&A (General & Administrative):
- Executive salaries
- Legal, accounting, office
Target: 10-15% of revenue

Step 6: Document & Validate Assumptions

Assumption Documentation Structure:

## Key Assumptions Document

### 1. Customer Acquisition
- **Assumption:** [X] new customers/month
- **Rationale:** [Past 3-month avg Y customers × growth rate Z%]
- **Risk:** [CAC increase, channel saturation]
- **Validation:** [Monthly performance tracking]

### 2. Churn Rate
- **Assumption:** [X]%/month
- **Rationale:** [Past 6-month avg + benchmark]
- **Risk:** [Product gaps, intensified competition]
- **Validation:** [Cohort analysis]

[Repeat for all major assumptions]

Sensitivity Analysis:

Top 3 most impactful variables:
1. Customer growth rate: ±10% → Year 3 revenue ±X%
2. Churn rate: ±2%p → Year 3 revenue ±Y%
3. CAC: ±20% → Profitability achievement ±Z months

---

Business Model Considerations

SaaS (Software as a Service)

Core Metrics:

• MRR (Monthly Recurring Revenue)
• ARR (Annual Recurring Revenue)
• Net Revenue Retention (NRR)
• CAC Payback Period
• Rule of 40 (Growth rate + EBITDA margin)

Modeling Approach:

• Cohort-based MRR buildup
• Separate expansion & contraction
• Annual vs monthly contract mix

Detailed Template: references/model-templates.md → SaaS section

Marketplace

Core Metrics:

• GMV (Gross Merchandise Value)
• Take Rate (commission rate)
• Liquidity (transaction completion rate)
• Repeat transaction rate

Modeling Approach:

• Two-sided supply/demand growth model
• Liquidity curve (low initially → high at maturity)
• Take rate progression (low initially → increases with brand strength)

Detailed Template: references/model-templates.md → Marketplace section

E-commerce

Core Metrics:

• GMV
• AOV (Average Order Value)
• Repeat Purchase Rate
• Inventory Turnover

Modeling Approach:

• Separate new vs repeat customers
• Incorporate seasonality
• Inventory turnover & cash conversion cycle

Detailed Template: references/model-templates.md → E-commerce section

Services/Agency

Core Metrics:

• Billable headcount
• Utilization Rate
• Hourly billing rate
• Project size & duration

Modeling Approach:

• Headcount-based capacity model
• Project pipeline → revenue conversion
• Productization roadmap (services → SaaS transition)

Detailed Template: references/model-templates.md → Services section

---

Unit Economics Framework

Core Metric Definitions

1. CAC (Customer Acquisition Cost)

CAC = (Sales & Marketing Spend) / (New Customers)

Includes:
- Marketing campaign costs
- Sales team salaries (all or portion)
- Marketing tools & infrastructure
- Ad spend, events, content creation

Excludes:
- Customer Success (retention costs)
- Product development costs

2. LTV (Lifetime Value)

LTV = (ARPU × Gross Margin) / Churn Rate

SaaS Example:
- ARPU: ₩100K/month
- Gross Margin: 80%
- Churn: 3%/month
- LTV = (100K × 0.8) / 0.03 = ₩2.67M

Or:
LTV = ARPU × Avg. Customer Lifetime × Gross Margin

3. LTV:CAC Ratio

Healthy Ratios:
- 3:1+ → Healthy
- 2:1~3:1 → Needs improvement
- <2:1 → Risk (broken unit economics)

Investor Expectations:
- Seed: 2:1+ (prove initial efficiency)
- Series A: 3:1+ (scalability)
- Series B+: 4:1+ (maturity)

4. CAC Payback Period

Payback = CAC / (ARPU × Gross Margin)

Targets:
- SaaS: <12 months
- Marketplace: <6 months
- E-commerce: <3 months

Example:
- CAC: ₩300K
- ARPU: ₩100K
- Gross Margin: 80%
- Payback = 300K / (100K × 0.8) = 3.75 months

Unit Economics Improvement Strategies

Reduce CAC:

• Strengthen organic channels (SEO, content, word-of-mouth)
• Optimize channels (eliminate low-efficiency ones)
• Improve funnel conversion rates

Increase LTV:

• Reduce churn (product improvements, stronger CS)
• Upsell/Cross-sell (increase ARPU)
• Expand usage (usage-based pricing)

---

Runway & Burn Rate

Basic Calculation

Runway (months) = Current Cash / Monthly Burn Rate

Burn Rate = Monthly Revenue - Monthly Costs

Example:
- Current cash: ₩500M
- Monthly revenue: ₩50M
- Monthly costs: ₩100M
- Burn: -₩50M
- Runway: 500M / 50M = 10 months

Fundraising Timing

Rule of Thumb:
- Start next round when 6 months of runway remain
- Time to close: 3-6 months (Seed/Series A)

Example:
- Current runway: 12 months
- Start fundraising at month 6
- Close target: months 9-12
- Safety margin: Additional 3-6 months (for Bear case)

Runway by Scenario

| Scenario | Burn Rate | Runway | Funding Needed | Timing |
|----------|-----------|--------|-----------------|--------|
| Bull | -₩30M | 16 months | None | - |
| Base | -₩50M | 10 months | ₩500M | Month 6 |
| Bear | -₩80M | 6 months | ₩1B | Immediately |

Decision Rules:
- If Bull probability is high → defer additional funding
- If Bear risk is high → secure funding now or reduce burn

---

Assumption Documentation & Transparency

Why Document Assumptions?

1. Investor Confidence — Investors evaluate your thinking process, not just numbers.
2. Team Alignment — Ensure everyone starts from the same premises.
3. Traceability — Validate assumptions against actual results.
4. Agility — Quickly adjust when assumptions prove wrong.

Assumption Documentation Template

# Financial Model Assumptions Document
**Model Version:** v1.3 | **Date:** 2024-11-15

---

## 1. Customer Acquisition

### 1.1 New Customers (Monthly)
- **Base:** 100 customers (+15% MoM)
- **Bull:** 150 customers (+25% MoM)
- **Bear:** 60 customers (+8% MoM)

**Rationale:**
- Past 3-month average: 85 customers/month
- Base: Double marketing budget → +15% growth (benchmark)
- Bull: Viral effect + channel optimization
- Bear: Market slowdown + higher CAC

**Risks:**
- CAC higher than expected → fewer customers
- Competitor aggressive marketing → market saturation

**Validation:**
- Monthly performance tracking
- CAC & conversion rate by channel

---

## 2. Churn Rate

### 2.1 Monthly Churn
- **Base:** 3.5%
- **Bull:** 2.0%
- **Bear:** 6.0%

**Rationale:**
- Past 6-month average: 4.2%
- Base: Product improvements + stronger CS → benchmark level
- Bull: Enterprise customers → half the churn
- Bear: Product gaps + intense competition

**Risks:**
- Product defects discovered
- Competitor launches strong alternative

**Validation:**
- Cohort retention tracking
- Churn reason interviews

[Repeat for all major assumptions]

---

Investor Presentation Summary

Financial Slides for Pitch Deck (3-4 slides)

Slide 1: 3-Scenario Revenue Forecast

Chart:
- X-axis: Year 0 → Year 3
- Y-axis: Revenue (₩)
- 3 lines: Bull (top), Base (middle), Bear (bottom)
- Highlight Year 3 numbers

Key Message:
"Base scenario: Year 3 revenue ₩[X], [Y]% CAGR"

Slide 2: Unit Economics

4 boxes:
┌─────────────┬─────────────┐
│ CAC         │ LTV         │
│ [Amount]    │ [Amount]    │
└─────────────┴─────────────┘
┌─────────────┬─────────────┐
│ LTV:CAC     │ Payback     │
│ [Ratio]     │ [Months]    │
└─────────────┴─────────────┘

Benchmark Comparison:
"Ours: 3.2:1 / Industry avg: 3:1"

Slide 3: Use of Funds

Waterfall or pie chart:
- Product Development: 40% (₩X)
- Sales & Marketing: 35% (₩Y)
- Team Expansion: 15% (₩Z)
- Operations & Contingency: 10% (₩W)

Milestones:
"Within 12 months: [3 key goals]"
"Within 24 months: [Next round readiness]"

Slide 4: Cohort Economics (Optional)

Cohort Retention Curve:
- Monthly cohorts (M0 → M12)
- Retention % or Revenue $

Key Message:
"12-month cohort: [X]% retention, [Y]x revenue expansion"

---

Related Skills

Effective when used alongside this skill:

• startup-metrics — Define core metrics by business model
• market-sizing — Validate revenue ceiling with TAM/SAM/SOM
• fundraising-process — Financial requirements by funding round
• pitch-craft — Integrate financial slides into pitch deck
• investor-update — Include financial performance in monthly updates

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Tips

1. Start simple — Don't aim for a perfect model from day one. Focus on core drivers and refine progressively.

2. Document assumptions — Investors evaluate your thinking, not just numbers. Back up all major assumptions with reasoning.

3. Base scenario must be realistic — Bull/Bear are extremes, but Base should be the "most likely" outcome.

4. Unit economics come first — If one customer doesn't make economic sense, scaling only amplifies the problem.

5. Build monthly models — Annual summaries are for pitches; operations require monthly tracking.

6. Think in cohorts — Especially for SaaS/Marketplace, cohort-based revenue modeling is most accurate.

7. Compare against actuals — Your model is a living document. Update assumptions monthly based on results.

8. Connect to spreadsheet — Use ~~spreadsheet connector to auto-generate in Google Sheets for real-time team collaboration.

9. Reference benchmarks — Leverage industry averages, public comps, and VC benchmark reports.

10. Do sensitivity analysis — Identify which variables have the greatest impact and manage those intensively.

---

Detailed Templates

For business-model-specific financial model templates, see:

📄 references/model-templates.md

Includes:

• SaaS financial model (MRR buildup, NRR, Rule of 40)
• Marketplace financial model (GMV, Take Rate, two-sided growth)
• E-commerce financial model (GMV, AOV, repeat rate, inventory)
• Services/Agency financial model (headcount, utilization, projects)
• Monthly detailed structure for each model
• Spreadsheet formula examples