Model Presets Inputs
Currency
Select the currency you would like to use to model your startup from the list of 160 global currencies. Note that all the default recommended values assume US Dollars.
Model Start Year
Select the start year for the 5-year model. A 5-year forecast is standard for a startup financial model. It typically takes a few years for startups to breakeven, but a longer forecast can seem riskier to investors. Investors are used to seeing calendar-year models, so the model starts in January. So if your first month of revenue will be November 2025, your can start your forecast in either January 2025 or January 2026. Does your country use a different fiscal year? Flexible fiscal years is a feature on our product roadmap.
Opening Cash Balance
Enter the actual amount of cash on hand at the start of the 5-year model. Any previous investments entered on the cap table will be ignored for purposes of calculating cash. Here’s an example:
- Model starts in 2024
- We raised $500k in 2021 and $1m in 2023
- In January 2024, we expect to have $800k remaining in the bank
- $800k is the opening cash balance for this model
- I can enter the previous capital raises in the cap table, but it won’t affect the financial statements
Days Account Payable
This is the time it takes for your company to pay for Cost of Goods Sold (Direct COGS/COS) and is used to calculate Accounts Payable.
For example, if Cost of Goods Sold in January was $100 and Days Accounts Payable was 30, the expense will show up on the income statement in January, but the cash will not be paid until February. Instead, it will be listed as Accounts Receivable of $100 on the Balance Sheet.
A higher number will mean your company will have more cash on hand because you are selling goods that you have not yet paid for.
Days Inventory on Hand
Inventory purchases are automatically calculated by the model based on the Cost of Goods Sold (Direct COGS/COS) and the number of days entered.
Just go to “Model Presets” and adjust the “Days Inventory on Hand” to account for the average amount of inventory you want to keep on the books. The model will then forecast the purchase of inventory each month based on the Direct Cost of Goods Sold modeled in the expenses section. 90 days inventory means the amount of inventory on the books at the end of this month will equal the projected Cost of Goods Sold for the next 3 months. If your business does not carry inventory, enter 0.
This method smooths out cash flow and in our experience leads to less questions from investors. However, if your business depends on large purchases of inventory with long periods of time in between, you may want to build a separate internal forecast to manage major purchases and cash levels.
Bad Debt Expense % of Revenue
Enter the percent of revenue that will not be paid. This is typically 1-3% in industries that invoice after a product or service is delivered. Refunds, discounts, and inventory shrinkage belong in the Cost of Goods Sold and should not be included here.
Income Tax
Enter the effective income tax rate for the business. Most startups are pass-through entities and do not pay corporate income tax (enter 0). Types of pass-through entities include:
- Sole proprietorships
- Limited liability companies (LLCs)
- S Corporations (S Corps)
- General partnerships (GP)
- Limited partnerships (LP)
- Limited liability partnerships (LLP)
Customer Lifetime Value Discount Rate
This is used to calculate the “discounted cost of capital” for the Customer Lifetime Value analysis. 10% is fairly standard and unlikely to be questioned by investors.
If I invest $100 to acquire a customer, and they pay $500 over the next three years, my Customer Lifetime Value is $400. However, there is a hidden cost to my investment up front and their gradual payment: the opportunity cost of that capital investment. We adjust the Customer Lifetime value down to account for this hidden cost of time.