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Comment by JaakkoP | Hacker News Reader

I can only speak on behalf of my model (#3), but that's meant entirely for companies who want better visibility in their existing operations. Say, they want to figure out how much cash they have in the bank in 6 months, or can they afford to hire 3 more ppl next quarter.

Personally, I have found it hard to work with pre-revenue companies, especially if they come to me with a plan to hit tens of millions in revenue in just a couple of years since launching. Maybe a small percentage of them do, but given how many don't make even a single dollar I've tried to steer clear of pre-revenue startups. Companies with real revenue and growth seem to be a much better fit.

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I feel like there 2 very different use cases for financial models:

- Early-stage fundraising. The numbers are wrong, everybody knows it, but you have to show that curve going up and right.

- Later-stage (maybe 1-year post-revenue?) when there is some level of robustness behind the numbers, and you do it because it's useful to pilot the company

Early stage is also about ensuring that the levers are understood and that the thinking about the right things to measure and what to action are appropriate in understanding the business. Less about the numbers, more about the variables.. why are you measuring this, why arent you measuring that? What actions will you take to try to get to this number? This would give the investor a better sense of how the founder thinks.

Agree 100%. Very different needs with the two lots.

Also agree here.

Rational financial planning is, of course, essential for managing a business sensibly.

However, vague intuition + random luck generator + huge uncertainty != a useful financial plan. I feel like a lot of startups could summarise their financial slides with something like "We anticipate an outcome somewhere between failing within three months and becoming the next Facebook, with somewhere between Ramen profitability within six months and a unicorn exit at 8-10 years being most likely."

That is the same logic of later stage VCs. Which makes me appreciate those earlier stage investors even more as it is really tough statistically to pick the winners.

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