Build a bottom-up financial model to show potential investors you’re serious

Welcome to TechCrunch+ Tuesday

About 10% of startups will fail in their first year. Between years two through five, approximately 70% of companies will go under.

But those figures don’t matter when you’re pitching: Investors expect to see a business plan that describes how you plan to reach profitability within 3-5 years.

“While it may feel unfamiliar, as a founder there are a few key things to keep in mind that will ensure that your financial model is both a powerful tool for you and is also investor-ready,” writes legal/business advisor Anthony Millin.

In a detailed primer, he shares a framework for creating a 60-month bottom-up financial plan that accounts for early fixed expenses like R&D and marketing, which drive high burn rates during the first 12-18 months of operation.

“Remember, the goal here is to demonstrate a thorough understanding of your market and how your business scales, which is then reflected through the various assumptions you use to build the model,” writes Millin.

Thanks very much for reading,

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

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