So What are the VC’s looking for?
What do VC's expect from Startup?
Financial Model and Forecast
Financial model is the detailed financial statement of the company which includes revenues, cash flow, expenses, assets etc. There are different types of financial model that a startup can use, some of them are listed below:
Three Statement Model - A basic and most commonly used financial model which includes income statement, balance sheet of the company and cash flow statement
Forecasting Model - In this model we make sound and rational predictions about the future revenues, costs, customer base etc. using financial data and formulas.
Budget Model - Preparing budget overview for the future, based on the income statements and allocating the budget for marketing, business development, R&D etc.
Industry Revenue Multiplier Method - As the name suggests we use revenue multiple to arrive at the valuation of the company.
Merger Model (M&A) - In this a company can purchase or absorb another company. Merge means merger between 2 companies to create a new company.
ROI based Valuation Method - This method helps to determine the value of the company and the return of investment the investor will get for investing in the business.
In PSI we use various types of methods like Three Statement Method, Forecasting Method, Industry Revenue Multiplier Method and ROI based Valuation Method.
Unit Economics & VC Metrics!
These are, ARR, EBIDTA, CAC, LTV, CAC/LTV Ratio, 5 Year Revenue Forecast, Year 5 Exit Valuation FOR the Investor, Year 5 Exit Multiplier FOR the Investor, Year 5 Exit Options FOR the Investor
“Just like JP Morgan or any other Investment Banker, VC’s also don’t invest their own money. They get it from other Investors (LP’s) and give it to you the Startup. And we have the world’s largest VC / PE Funding Network with 1000+ VC, PE, Family Office Funds, Angel Investors from 20+ Countries. Plus we have the PSI Angel Network, Individual Angels who have approached us and are wanting to invest in Startups that WE recommend. This is unlike any other Angel Network where they expect the Angel to decide.
Moonshot Thinking! Look beyond the Obvious!