Following up on last week’s blog – we received several questions about the “Understanding Financials” section of the blog and more so about how to put together workable financial projections for a start-up/small business - this week’s blog entry is by Thanasis Delistathis, Managing Partner of the early-stage information technology venture capital firm New Atlantic Ventures, and is reprinted with permission.
When pitching your business to venture investors, sharing a well designed financial model is very important! Why? Because how a financial model is designed helps investors learn some things about you and your business: it provides insights into how you think about your business, helps clarify what are the main assumptions that drive it and also implicitly sends messages about how you are approaching the business. Is this obvious? Not if you look at the inconsistent quality of financial models we see every day. For some entrepreneurs, it is almost like an afterthought. So I thought about creating a list of things that entrepreneurs and managers need to keep in mind as they design a model for their business. This advice applies to young startups as well as established or even public companies.
