Last version published: 06/10/2017 17:21
Publication number: ELQ-64263-4
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Ecommerce Financial Fundraising Excel template
This is the best excel model template you will find on fundraising for your ecommerce startup
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Raise for your ecommerce startup and understand all the operational details
Whether you’re raising for your ecommerce startup, or needing to develop an operational plan to understand how you are going to grow and not run out of cash, you need an excel model. The problem is that they’re really hard to build. You don’t have time to spend 2 months building one, you need to be executing. Paying someone smart to build one can cost $10k+ which is crazy. There has to be a better way!
Over the past few years I have needed a financial model to raise for various companies and there was nothing around. Over the years I've build multiple versions and built up learnings. If you search around the internet you can find some models which aren't exactly bad... but just really limited in terms of functionality. These doesn't solve the problem of just having something which just works and gets you back to building (Which actually matters). This is the model I wish existed. It's pretty bad ass.
Now, this isn't for every ecommerce business. I was just asked for a subscription ecommerce version (like Dollar Shave Club) which we will churn out soon. This is for traditional eretailers with physical inventory they sell, like normally.
Here are some great presentations to use when forecasting in your financial model and making sure your metrics are in line with reality. Flick through the decks as you work through each section of the model and check you are trending towards these numbers. It's perfectly ok for your numbers to look a little crazy in the early days (When you have a few customers and little revenue, no metrics/ratios will make sense). What matters is how you evolve.
They can be found here as well as detailed screenshots:
How the ecommerce financial model was built
The ecommerce financial model is a combination of the best aspects of multiple exceptional fundraising models which have closed single and double digit $ VC rounds, and learnings over many years of model building. All the learnings from top tier VCs have been included (The KPIs and charts they want to see). The best approaches have been combined and improved upon to deliver the definite model for founders who are going to execute big results.
We’ve drawn on our years of experience operating startups at early and growth stage to create something that just works. There is not a needless level of detail, nor a sparsity of assumptions to illustrate a depth of logic and insight. Everything included has been considered as to whether it adds value and if investors will “want to know and ask.” The structure also enables founders to change the model to fit the exact needs of their startup (particularly in revenue forecasting).
Key features of the ecommerce model
-> Right timeline: 36 months of monthly forecasting with 3 annual summaries
-> Flexible for actuals and forecasts: Actual and forecasts with sheets which combine your numbers in P&Ls to the exact month magically
-> Staff: Manual and automated forecasting of staff. For most staff you can decide the month your staff will join (Such as developers or a CFO) and the month they are terminated. Furthermore you can set a date and salary increase (such as post-series-A) and salaries will increase on that date, and adjusted for bonus and payroll taxes and benefits. For support, recruitment and channel sales staff, your staff requirement flexes as you scale automagically to your desired assumptions
-> Expenses: Granular assumptions to rapidly forecast your G&A, S&M, R&D and CAPEX. Logistics, photography, delivery and payment requirements as well as analysis of your unit economics are done in their own seperate sheet
-> Cohort approach to forecasting: Get a cohort based forecasting model without the work. Input a few assumptions and you can see the revenue, costs, orders and units from each monthly cohort, for both first and repeat orders
-> SKU breakdown: Rapidly forecast new and repeat revenue and costs for both consignment and outright stock by making assumptions for your SKU categories
-> Comprehensive marketing plan: Forecast your entire marketing plan across paid, organic, email, blog and social media channels with no heavy lifting. All the relationships between the channels are deeply integrated so social rebroadcasts will result in newsletter sign-ups
-> Detailed KPIs: Full dashboard of all your KPIs
-> Charts: Breadth of beautiful charts to graphically explain your business
-> Full blown P&L: Detailed, logical P&L explaining your business model step by step in the secret style some of the fastest growing internet companies in the world use, that is now available to you!
-> Summary P&L: Easily copy and paste your summary P&L into your pitch deck
-> Sources and uses: Get insight into your fundraise requirements. Four beautiful charts to copy paste into your pitch deck
Technical features of the SaaS model
-> Fully integrated and automated model: Get insights from KPIs if your assumptions make sense, so you look like a pro with a plan
-> Standardised structure on each sheet: Every monthly calculation in the ecommerce financial model starts in the same column which makes it easy to audit
-> Consistent: Consistently colour coded cells for formulas, links and assumptions applying best practice from global, top-tier investment banks. All cells are perfectly aligned
-> Comments: Comments on all assumptions so you know what to input and why
-> No hard coding: No hard coded numbers in any formulas
-> Open editing: Model is not locked, you are free to restructure as much as you like!
-> Clear linking: Links to each sheet are always at the top of each sheet to track and understand where assumptions come from and what sheets are driving another one
-> Separate actuals and forecasts in your P&L: Easily update your model monthly during your fundraise without fuss. Combine months by simply adding a date of your choice
-> Dynamic year end: Set your year end at a month of your choosing. All annual adjustments are made automatically with powerful formulas
-> Accounting: Cash and revenue accounting
-> Forecast period: 36 months of forecasting with 12 month summaries for each forecast year
-> Change assumptions every month: Make the ecommerce financial model assumptions as simple or complicated as you like. Every assumption is mapped out on it’s own row. For example, any month you want to increase your pricing for consignment repeat purchasing, simply change that month. If you want to keep your assumptions linear, the formulas support that decision automatically and by standard. Most growth assumptions also come with 'optimisation' rows
The sheets in the model
1/Formatting: Set the dates for your actuals and forecasts as well as customisations such as your currency and denominations (e.g. Thousands of dollars)
2/ P&L Actual: This is the P&L of your actual numbers
3/ P&L Forecast: Detailed forecast P&L of your startup
4/ P&L Combined: This combines the forecast and actual sheets together
5/ P&L for Deck: This combines the summary forecast and actual sheets together for the first 12 months and for 3 years annual to insert in your pitch deck
6/ Source and Use: Use this to figure out how much to raise and to present your 'sources and use' of money you raise in your 'ask' slide
7/ KPI: A detailed summary of all your KPIs
8/ Charts: Summary of charts from across sheets
Staff Forecasts for all staff (Other than warehouse, photography and customer care staff). All the related staff and G&A costs
9/ Expense calcs: Logistics including shipping, photography, customer care, payments and stock purchasing assumptions/calculations
10/ D&A - Tax: Calculate your depreciation (there is no amortization) and your tax simply
11/ Cohort build: Orders and revenue are forecasted by cohort in detail. All assumptions are at the top. Mechanics are below
12/ SKU: Forecast your SKU and the revenue and cost basis per SKU which are critical for your margins!
13/ Marketing: Centralizes the marketing data and applies conversion rates to create 'registered users' of your site (Which then buy)
14/ Paid & Organic: Organic growth and paid traffic to the site. Feeds to the traffic build in 'Marketing'
15/ Email: Calculates the sign ups to your email database. Feeds to the traffic build in 'Marketing'
16/ Blog & Social: Calculates the traffic that comes from promotion activities by blogging and social media. Feeds to the traffic build in 'Marketing'
What do I need to use this model?
You need Excel. Google Sheets is never to be used for a fundraising model as the functionality is limited.
This works on both Mac and PC and was built on both.
You should install the ‘Solver Add-in’ and ‘Analysis TookPak’ if you do not have it installed already. These are free and standard Microsoft add-ins.
We do not have ‘iterations’ in this model, but in case, turn them on in your calculation settings.
This is not needed, but if you want to be a boss in Excel, download http://www.asap-utilities.com/. There are some really useful tools if you need to build models. It only works on PC though (as do the other cool tools).
Ideal for Traditional ecommerce companies
Who should use this model
The model is very detailed and powerful. It assumes you have a decent understanding of ecommerce and navigating excel. Every effort has been made to make it simple for a founder to get impressive results without having to be advanced in model structuring (We did the hard work).
Who this is for
Are you building the next top ecommerce or physical retail startup? Need to provide a AAA model for Venture Capitalists to secure a big round or just understand your operational requirement in detail for strategic planning? Do you need a detailed model to understand every key aspect of your business? This is it.
This model is for all ecommerce companies that have a non-subscription business model. The model forecasts for a three year period on a monthly basis.
The ideal user:
-> Building a physical ecommerce or retail startup (This is not a subscription model)
-> Is comfortable with numbers and wants to have control over their model with fairly granular assumptions
-> Is at inception to around series-A stage of fundraising
-> Likes to impress and enjoys a beautiful model
-> Wants to show investors they applied a very vigorous, logical approach to their forecasting and operations
-> Wants a model that runs rings around hotshot bankers without the crazy cost
-> Needs a logical, consistent model they can use customize for their own purposes (Ideal)
Not adapted to subscription ecommerce, unless you want to refactor the model a little bit. 50Folds can customise models as consultants
What this model doesn’t do
There are a number of additions which could have been added to this model and have purposefully not included. If you have seen models with other frills, trust there are reasons why they have not been included. Let’s go through some of these so you understand:
-> Traditional cash flow statement and balance sheet: There is a cash based accounting section to understand your actual cash burn. Investors don’t really care about your BS and CFS sheets like a PE company would. They care about the logic of your model to show it is thoughtful. They care how much revenue you will generate to size the market opportunity (how they will get rich) and how ambitious you are. The BS and CFS are useful at growth stage companies when there is a line of sight on meaningful forecasts- early stage you don’t really have many reliable numbers so they serve to create information overload
-> Detailed inventory forecasting and logistics: The VCs are investing in you and the potential. The timing of shipments from China and what you model as how many units fit in a container don’t matter. Yes, you need to include the high-level costs, but you don’t need to have this level of detail in your model. It should be taken for granted you know how to execute. We forecast your inventory through inventory days, which is a nice simple way of doing it
-> GAAP and IFRS accounting: This model is based off an approach used by high-growth ecommerce companies like Rocket Internet which is more insightful for these purposes. You can share your accounts in IFRS if you have ‘actuals,’ but your forecasts don’t need to adhere to these accounting standards. Generally though, all the principles of accounting are applied as feasible
-> Cap table: It is best to have this separately so it is a distinct conversation rather than bundling it with your forecasts
-> DCF and valuation: Having a DCF at early stage is totally ridiculous, particularly as the assumptions don’t make sense (What's your discount rate? Show me how to do your WACC...). A DCF is also not how VCs value early stage companies. Including a DCF or multiples is not how you want to approach a valuation discussion with investors and I think can actually harm you in negotiations. I recommend not putting a valuation in the model
-> Marketplace distribution: The model assumes you sell on your site and not principally on Amazon. It’s key to build a brand to create a business and have strong margins. You can add a line to make deductions for marketplace fees if you need to
Complicated paid marketing assumptions: We want to show logic not needless complexity. There is some very smart logic in calculations for emails and the like, but we try keep the number of assumptions down so you can discuss what’s important (Like CPC and budget, not keyword volumes)
-> Growth modelling: If you are at growth stage, you will have a lot more visibility on your actuals and have more historic reporting. This is not the best approach to modelling and fundraising for you. But the cool thing is, if you know basic excel, it's easy to add columns for your actuals if you like
Who might find this model hard
We don’t offer returns, but want to make sure you succeed; so if you are new to excel and ecommerce and aren’t willing to put in some work to learn, this model might not be for you.
If you don’t know how to use a (SUM) function you may find it overwhelming if you need to understand every detail. Every line has been broken up to be logical to understand, so with a little diligence anyone can be a total boss.
If you don’t understand how marketing works (such as what CTR is), then this model may have too much detail for you to handle.
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