Startup Excel Model
Originally published: 21/11/2016 15:29
Publication number: ELQ-93159-1
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Startup Excel Model

A startup financial model that can be sent to a Venture Capital, Private Equity Firm or Hedge Fund.

A few words about this model:

1/ It is a real model that I built for a client (prospective clients you can see my work)

2/ It is not a template for you to use (I suppose if you changed all the assumptions it's usable, but...), but the component parts are recommended for capital raising

3/ The model is for a "triple play" telcom business (cable, voice and data) so the cost of sales part of the model is over 100 assumptions and the CAPEX is fairly involved including physical constraints; this "complexity" is designed to show industry knowledge to financing sources;

4/ The model includes the following tabs:
- Sources and Uses
- Assumptions (which also includes the Financial Summary--P&L and balance sheet information)
- Financial Statements (which includes the P&L, balance sheet, revenue detail, COS detail, CAPEX row 178, and debt schedule row 251)
- Cash Flow Statement
- OPEX (operating expense detail and the headcount plan)

5/ The model makes extensive use of named fields (after you open the model press F5); named fields make it easier to understand formulas because you use a name instead of a cell reference in the formula

6/ In addition to being a startup, the strategy called for a series of acquisitions (a rollup) which are modeled

7/ The model uses a customer acquisition cost driver for the organic growth of subscribers

The auditing tool bar in Excel may aid in understanding. Click View>Toolbars>Formula Auditing

Please remember that the complexity of the model serves a purpose--to demonstrate knowledge of a complex industry. Most models can be successfully built with fewer assumptions about revenue and cost of sales.

- Robert Hacker,

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Further information

A few things that would have changed the model design include:

1/ If I had a complex debt structure (combination of a line of credit, term loan and mezzanine debt) I would have used a separate tab for the "debt schedule" to make it easier to find

2/ If I had an operating company (instead of a startup) I would have included historical information for at least three years in the "financial summary" and probably have given it a separate tab; if you have a good operating history of revenue growth or a turnaround I would include five years of historical data

3/ If I had historical information on each acquisition, I would have forecasted/modeled each acquisition on a separate named tab (with a separate P&L and a balance sheet) and then consolidated them; such a presentation would have made it easier to understand the economics of each business unit and to evaluate the reasonableness of the purchase price

4/ If the headcount additions were based on time instead of capacity requirements (as shown in the model) I would have used date triggers to drive headcount additions

4.5 / 5 (483 votes)

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