💰 Investor-Ready Startup Financials

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Hi there - it’s Egemen👋 Thanks for reading Scalable.

Today, we have a deep-dive on startup financials, alongside some modeling frameworks, and we are brought to you by Slidebean.

This week’s edition should help you navigate around the financials a bit easier by covering common lingo, especially if you are running towards fundraising.

Here’s a snapshot of what’s on the menu today:

💡Spotlight: Slidebean

Slidebean helps you build and update your startup's financial model.

Financial modeling bootcamp is a one-week course for startup founders to craft investor-ready financial models.

With live sessions, handy pre-recorded lessons, and useful templates, you'll gain the skills to impress investors.

👇 I recommend checking out their program down below - interesting!

Investor-ready Startup Financials

Keeping up with your startup’s numbers can be a mess, especially as investors start requesting them.

We are running a 1-week LIVE workshop that covers:

• How to forecast startup growth based on real-world data

• Budgeting rounds of funding, and how long the capital should last

• Defining + tracking your Core KPIs

• Preparing an investor-proof startup proforma

Our alumni have gone out to raise over $300M in venture capital.

Book a Slot for $199

They also have a bunch of FREE useful templates in their website as well, take a look, I came across some pretty useful stuff.

🧠Deep-dive: Must-Know Financial Terms

Every startup founder needs a basic understanding of startup financials to be successful.

At first, these may sound daunting but it’s a lot simpler than that. By understanding a few key metrics, you’ll be well on your way.

Let’s break down the essentials. Here’s a quick guide to the must-know terms that will help you make informed decisions and impress your investors.

Gross Margin: Preliminary profitability before overhead.

• Formula: Gross Margin = 100 x ([Revenue – Cost of goods and services] / Revenue)

• Ideal for SaaS: 70%-90%

Burn Rate: Speed of spending cash reserves.

• Formula: Net Burn Rate = (Beginning cash balance – Ending cash balance) / Measurement period

Runway: Time until cash runs out.

• Formula: Runway = Cash in hand / Projected burn rate

Customer Lifetime Value (LTV): Total revenue per customer.

• Formula: LTV = (Average purchase value x Purchase frequency) x Average retention period

Customer Acquisition Cost (CAC): Cost to acquire a new customer.

Churn Rate: Percentage of lost customers.

• Formula: Churn Rate = (Customers at start – Customers at end) / Customers at start

Customer Retention: Percentage of retained customers.

• Formula: Customer Retention = (Customers at start – New customers) / Customers at start

Return on Investment (ROI): Investment success.

• Formula: ROI = Investment net profit / Investment cost or ROI = (Value – Project cost) / Project cost

These metrics are crucial for assessing and managing the finances of your startup, and if the more acquainted you are with these terms, the better your VC lingo will get!

👉 This is bit of a long topic to digest all at once, so stay tuned for more in the following editions!

🗺️ Method: Simple Cap Table Template

A cap table lists all company shareholders and their ownership stakes, crucial for understanding equity distribution.

Your cap table should be your bread-and-butter while you are going through a fundraising round, because investors care about how it looks.

Here is a simple cap table template after checking a bunch of different templates online.

Sometimes, keeping it simple is the trick.

👉 It’s pretty straightforward, and should give you a good head-start for more complex files.

☝️ Scaled this past week: Fireworks AI

Nvidia, Sequoia invest in Gen AI startup Fireworks AI’s $52M round - Fireworks is the scale of the week!

With this round, the total funding raised by the company accounts for $77 million and it is valued at $552 million.

What Fireworks does:

• Since their launch, Fireworks has made major upgrades to its platform and inked numerous deals with providers in the AI stack.

• Enables developers to quickly move AI applications from prototype to production.

⚾️ Catch: Saudi Arabia leads MENA VC funding

I came across the H1 2024 Saudi Arabia Venture Capital Report while I was doing some research and reading this week.

Saudi Arabia has led MENA VC funding by a remarkable proportion, compared to other GCC countries, throughout H1 2024.

Here are some of the key figures that I captured:

• FinTech led in the number of deals in the Kingdom, capturing 14% of the total deals in the first half of 2024.

• In the first half of 2024, KSA secured 54% of MENA's VC funding, up from 38% in the same period in 2023.

• E-Commerce/Retail was the top sector for VC funding in KSA, receiving $215 million (SAR 806 million) and accounting for 52% of the total.

Incredible progress indeed.

👋 Working on a startup? Here’s how I can help:

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