Financial Model Basics for Pre-Seed/Seed (Plus a Simple Template)

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If you’re a founder raising a pre-seed or seed round, you don’t need a 30-tab Excel monster to impress investors.

But you do need a basic financial model that shows:

• You understand the business mechanics
• You’ve thought through your assumptions
• You’re not guessing your way to product-market fit

In this guide, I’ll walk you through a simple, startup-friendly framework for early-stage financial models—and share a downloadable template you can use in your own raise.

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1. What Is a Financial Model (And Why It Matters at Seed Stage)

A financial model is a forward-looking view of your business’s revenue, costs, and cash runway.

At pre-seed/seed, it’s not about precision—it’s about:

✅ Clarity
✅ Strategic thinking
✅ Storytelling with numbers

Most seed investors won’t dive into your model deeply…
…but they will judge you if it looks sloppy or unrealistic.

2. What Investors Actually Look For in Early Models

• Do the assumptions make sense?
• Do unit economics work long-term?
• Is the burn reasonable?
• Will this round last at least 12–18 months?
• Is this founder financially literate enough to operate lean but grow fast?

Want more on investor expectations?
See: Investor Metrics That Matter: A Founder’s 2025 Guide

3. What You Don’t Need at Pre-Seed

❌ 5-year DCFs
❌ Full balance sheets
❌ Audited statements
❌ Tax scenarios
❌ Complex SaaS cohort models (yet)

Keep it simple. Focus on runway, growth, and unit economics.

4. The 6 Must-Have Components of a Pre-Seed/Seed Financial Model

1. Revenue Forecast

How do you make money?

• Subscription? Transaction? Usage-based?
• Forecast revenue monthly over 12–24 months
• Use inputs-based logic, not wild guesses
  (e.g., users × price × conversion)

2. Cost of Goods Sold (COGS)

The direct cost of delivering your product.
This varies by business:

• Cloud infra (for SaaS)
• Customer support (for marketplaces)
• Fulfillment (for eComm)

3. Operating Expenses

Break it down into:

• Salaries
• Marketing
• Product/dev
• Tools and SaaS
• Office/admin

Show hiring plans and CAC logic.

4. Cash Flow / Burn

Show net burn monthly and your cash balance over time.
Make sure your raise lasts at least 18 months.

5. Use of Funds

If you’re raising $1.2M:

• $600K → Team
• $300K → GTM
• $200K → Product
• $100K → Buffer

6. Key Metrics

Include things like:

• CAC / LTV
• MRR / ARR
• Gross Margin
• Months of Runway
• Payback Period

5. Download the Simple Template (Google Sheets)

🧠 We built a 1-tab, startup-proof financial model template.

What’s included:

• 24-month projection
• Inputs-based revenue forecasting
• Cost breakdown
• Burn + runway logic
• Auto-calculated metrics

📥 Coming soon: Subscribe to Capitaly.vc Substack to get the free template when it drops.

6. The Golden Rule: Inputs > Outputs

Don’t say:

“We’ll hit $5M in ARR by Year 2.”

Say:

“If we acquire 1,000 users at $100/month with 3% churn, we land at $1.2M ARR by Month 18.”

Assumptions > Aspirations.

7. Bottoms-Up vs. Top-Down: Which to Use?

Top-down:

“This is a $10B market. If we get 0.1%, that’s $10M.”

👎 Sounds lazy. Skip it.

Bottoms-up:

“We can onboard 50 customers per month at $100/month.”

👍 Realistic and grounded.

8. How to Build from Zero: Start with These Inputs

MetricStarter AssumptionPrice per user$30–$100/monthCAC$100–$300Churn3–10%Team salaries$6K–$12K/month/personInfra/tools$1K–$5K/monthRevenue growth10–20% MoM early

Adjust as you learn.

9. What to Say in the Deck About Your Financials

Use a simple slide with:

• “Here’s what $500K buys us over 18 months”
• “Here’s our 18-month revenue ramp”
• “Here’s when we plan to raise Series A”
• Include 3–4 key metrics

Pair the slide with this blog:
Importance of Financial Projections in Series A Capital Raising

10. How to Present Your Model in a Meeting

Keep it tight:

• Start with the use of funds
• Show monthly burn and runway
• Highlight break-even point (if applicable)
• Only dive deeper if asked

Tip: Put key metrics at the top.
Don’t make investors scroll.

11. Common Mistakes to Avoid in Seed Models

❌ Unrealistic revenue growth
❌ Hiring 12 people in Month 1
❌ Underestimating CAC
❌ Forgetting churn
❌ Burn rate that doesn’t match your raise
❌ Not building it yourself (or understanding it)

12. Real Example: Seed-Stage SaaS Forecast

Startup: Dev productivity SaaS
ARR Goal: $500K by Month 18
Pricing: $50/user/month
Assumptions:

• 10 new customers/month → 180 by Month 18
• 5% churn
• CAC: $200
• 4-person team
  Raise: $900K = 18 months runway

Simple. Believable. Fundable.

13. Should You Use AI to Build Your Model?

Yes—AI can help structure it fast.

You can ask ChatGPT:

“Build a 24-month SaaS financial model with $50/user pricing, 5% churn, $200 CAC, and $100K monthly burn.”

But you still need to understand and own the logic.

14. How to Use the Model as a Strategic Tool (Not Just a Deck Slide)

• Forecast when you’ll need to raise again
• Pressure test different GTM strategies
• Align team hiring to growth
• Spot burn rate issues early
• Run investor update numbers monthly

15. How to Handle “What’s Your Revenue Forecast?” Questions

Best answer:

“We’re projecting $X by Month 12, driven by [inputs]. We’ll adjust quarterly based on actual traction.”

Be data-driven, not defensive.

16. What If I Have Zero Revenue?

You can still model:

• Users
• Waitlist
• Conversion to paid
• Product development timeline
• Cost forecast
• Capital needs

You’re modeling the path, not the outcome.

17. Should I Build in Excel or Google Sheets?

📈 Google Sheets = better for early-stage:

• Collaborative
• Easy to update
• Comment-friendly
• Integrates with investor workflows

Only switch to Excel for complex multi-tab models later.

18. What Happens If I Get the Model Wrong?

You will. Everyone does.

What matters is:

✅ You understand your own logic
✅ You update it regularly
✅ You adapt as real data comes in

This isn’t a prediction. It’s a decision-making tool.

19. Turn This Model Into an Update Tool

Each month, update:

• Revenue
• Cash balance
• Burn
• Runway
• CAC + LTV

Then paste into your investor update.

Want update templates?
Check out: Elevating Your Investor Outreach

20. Capitaly’s Financial Model Template: What’s Inside

We’ll be releasing a founder-friendly version that includes:

• Assumptions tab
• Revenue builder
• Hiring + burn plan
• Use-of-funds calculator
• Metrics dashboard
• Runway chart

Subscribe to Capitaly.vc Substack to get it first.

FAQs

1. Do I need a financial model at pre-seed?
Yes. Even a basic one shows you're serious and thoughtful.

2. How detailed should it be?
Simple but logical. 1–3 tabs max. Show key inputs, not fluff.

3. Can I use templates?
Yes—but customize the assumptions. Don’t blindly copy.

4. What if I’m not good at spreadsheets?
Use our template. Or ask your advisor to help structure it—but you must understand it.

5. How do I project CAC if I haven’t launched?
Use industry benchmarks and test with early ads or waitlist conversion.

6. Should I include it in the deck?
Only as a summary slide. Include the full model as a follow-up link.

7. How often should I update the model?
Monthly. Treat it like a live business tool, not a static file.

8. How long should my raise last?
Ideally 18–24 months of runway based on your forecast.

9. What’s a healthy burn at seed stage?
$25K–$100K/month, depending on team and traction.

10. What if I don’t have traction yet?
Model your assumptions: customer growth, pricing, launch cost, etc.

Conclusion

Your financial model doesn’t need to be fancy.

It needs to be believable, understandable, and founder-led.

Get your assumptions right. Build from the bottom up. And use the model to guide your raise—not just check a box.

Subscribe to Capitaly.vc Substack and get the simple, startup-friendly template to model your runway, traction, and raise with confidence.

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