Financial Model MVP for Founders
get the basics right - all the tips & tricks
This blog post is
guest-written by the legend Tom Hunter (finance recruiter) and
Your Financial Model is not automatically believed.
It is a test of whether you understand your business well enough.
The actually important part is that you can explain it out loud without help.
Founders increasingly build models themselves.
Some of these models hold up, but many do not.
The difference is never about how the model looks.
It is about what the model reveals, and what it doesn’t, when an investor or an experienced operator starts asking questions about the assumptions behind the numbers.
We wanted to go deep on this
» so we asked the best startup finance specialists who have set up and built finance functions for early-stage startups.
Where do you start? The minimum viable structure
If a pre-seed or seed founder is going to build their own financial model from scratch, where do they start, and what is the minimum viable structure they need to nail?
Luke set the right positioning before anyone got into spreadsheets.
“A financial model should be done from first principles. What is the purpose of why you’re doing this? It falls into two buckets. You’re articulating your business vision to an outside audience, typically investors, or you’re helping yourself as a founder better understand the business and where to allocate capital without running out of money. There’s no reason a model can’t do both, but it’s worth keeping in mind what the purpose is, because the minimum viable version is very different for each.”
LUKE RIX | Co-Founder and CEO, KC Ventures
Dan discusses runway in the most concrete way.
“How much do you need? Not in perpetuity. From this raise to the next raise. If you’re hoping to close in three months, you bridge from now to the close, then from the close to the next raise. When you’re speaking to investors, you need to talk about how much you need, why, what you’re spending it on, and the milestones to hit to get to the next round. You don’t need three-way at this stage. It’s literally a P&L forecast and how that translates into runway, with a cumulative cash flow line at the bottom.”
DANIEL ROSS | Advisor, Triple Bubble & Euphemia
Michael laid out the simplest structural test.
“Three questions, in order:
how do you make money,
what does it cost to deliver, and
what does it cost to run and grow the company?
Everything flows from those three. Three to five tabs: assumptions, revenue, costs, P&L, cash. Every number should trace back to a real-world assumption you can defend out loud. Bottom-up, not top-down. Build from the unit up, not from the market down.”
MICHAEL BATKO | Co-founder & CEO, Hourglass AI
Marc goes through the answer practically, what to nail first and what to add as the model matures.
“At a minimum, founders need three things: a clear set of assumptions, a two-year P&L forecast, and a two-year cash flow forecast. Those three elements answer the most important question at this stage: ‘Will we create enough value before we run out of cash?’
The next layer is understanding the mechanics of the business. Revenue streams should be modelled separately, key hires broken down across COGS, sales and marketing, R&D and G&A, and the major financial decisions made explicit.
The best models go one step further. They deconstruct the P&L, incorporate capex, tax and super obligations, and translate strategy into a realistic cash runway. Ideally, a model shouldn’t just tell you where you’re going. It should tell you what decisions matter most along the way.”
MARC ORCHARD | CEO & Co-Founder, Planet Startup
Bryn took the most practical view on starting tools.
“Look online for a SaaS financial model. There are a few good templates out there. Alternatively, we just had a client use Claude from scratch, and it did a pretty good job. Either way, even if you start from a template, use Claude to QA and challenge your assumptions. The hard part is that if you’re not a finance professional or someone who’s done a lot of raising, you don’t know what you’re missing. so once you have your model built, test it out with a fellow founder who has already raised and knows what investors will be scrutinising.”
BRYN LEGGETT | Founder, HelloCFO
Tom’s thoughts. Focus on what you are trying to achieve. Who is this for and what are they looking to see?
The five answers come together on a simple structure of assumptions, revenue, costs, P&L and cash across three to five tabs. If you cannot trace the revenue back to a real assumption, then you have a forecast you cannot explain.
Which mistakes actually damage credibility?
What are the most common mistakes you see when founders build models themselves at this stage, and which of them actually damage credibility with investors versus which are cosmetic?
Michael drew super clear line between what hurts and what does not.
“The cosmetic stuff, formatting, colours, tab structure, is annoying, but nobody passes on a deal because of your font. The credibility-killers are different.
Top-down market sizing: ‘we’re capturing 0.5% of a $10B market by Year 3’. That’s not a model, that’s a wish. Hockey stick with no explanation: revenue flat for 12 months then suddenly up and to the right. With no assumption driving the inflection, it tells me you don’t understand what creates growth in your business.
Gross margin that’s suspiciously perfect, 85% from month one with no nuance. And no cash flow tab: if you can’t tell me your runway, you don’t understand how a business actually runs.”
MICHAEL BATKO | Co-founder & CEO, Hourglass AI
Marc walked through the three that matter most to him.
“The biggest mistakes are surprisingly simple.
First, not having a model at all. Investors don’t expect perfection, but they do expect evidence that you’ve thought through the economics of the business.
Second, building something so complicated that nobody (including the founder) can quickly understand the next 24 months of cash flow and profitability. Complexity doesn’t create credibility - clarity does.
And third, outsourcing the model and then being unable to explain it. A financial model is ultimately a reflection of your thinking. If you can’t defend the assumptions, investors won’t trust you or the numbers.”
MARC ORCHARD | CEO & Co-Founder, Planet Startup
Bryn went hard on the assumption layer, where most founders will go bullish without realising it.
“Unrealistic growth assumptions tends to be number one. People assume they can scale customers way too quickly, don’t appreciate ramp rates, and pitch at top quartile metrics straight out the gate. If you’re too bullish, you’re hoodwinking yourself and selling an overly optimistic view to investors.
The second is not appreciating the cost stack, what your COGS will be, what it actually costs to run and scale. And the third is static assumptions: revenue and customers grow, but overhead is held flat. Revenue per FTE looks too efficient and the cost base is wrong.”
BRYN LEGGETT | Founder, HelloCFO
Luke flagged the historical disconnect that hurts founders during due diligence.
“The biggest mistake is building a model that’s a point in time, then saying ‘this is what it’ll look like’ without lining up the historicals. The most fluid models I see show how things have happened for the last period, then how those same areas grow into the future.
When they’re misaligned, your forecast shows five revenue types with specific growth rates, then I look at your P&L and they’re completely separate. And the worst answer you can give when someone asks about your model is ‘I don’t know, my accountant built it.’”
LUKE RIX | Co-Founder & CEO, KC Ventures
Dan discussed the consequences. Inflated costs do not just damage credibility, they damage deal terms.
“The biggest mistake is forecasting out too far. 24 months max at this stage. 12 months you should have high conviction on, 12 to 24 with line of sight. Beyond that, accuracy is a bonus.
The second is overinflating the cost base. If your forecast tells you that you need more money, you go to investors asking for more, and you make yourself a riskier opportunity. That hurts dilution and valuation.
It’s common for founders to model conservatively, inflate their cost base and ask investors for more than they need as a result. Investors can see through this and it will hurt you on deal terms.”
DANIEL ROSS | Advisor, Triple Bubble & Euphemia
Tom’s thoughts. If a mistake tells the reader the founder does not understand the business, it is a credibility killer, and if it is just untidy, it is cosmetic. The five mistakes are distinct: no model, built backwards, unrealistic growth, no historical tie and overinflated costs hurting deal terms.
How should the model tie to the pitch?
How should a founder’s model tie to their pitch and the milestones they’re raising for, and what does it look like when this is done well versus badly?
Marc’s gives a crystal clear summary.
“When done well, the model, the pitch and the milestones all tell the same story. The strategy is clear, the numbers support the narrative, and investors can easily connect capital invested with outcomes delivered.
When done poorly, the documents contradict each other. The pitch promises one thing, the milestones suggest another, and the financial model tells a different story altogether. That’s where credibility starts to break down.
The best founders understand that a financial model isn’t separate from the pitch deck. It’s the pitch deck with the maths underneath.”
MARC ORCHARD | CEO & Co-Founder, Planet Startup
Luke went further on the part most founders treat as a slide, when it should be treated as a thesis.
“What people underestimate is use of funds. Most founders think of it as a pie chart at the end of the deck. 30% to engineering, 60% to office, 5% to merch. What investors actually want is: how are you going to take the capital, and what’s the outcome you’ll deliver? That’s not where you’re spending. That’s what the spend will result in.
The model should show: we’ll allocate capital here, and the outcome will be this MRR, this level of product acceleration, this new go-to-market channel. Everyone tells you how they’ll spend the money. Almost nobody tells you the outcome of that spend.”
Luke also flagged an issue that he sees most commonly.
“When a model is extremely detailed. Very few people opening it can get their head around it. A pitch deck is purposely lightweight. The companies I see do well have a document between the two, a business FAQ or investor memo, where you delve deeper into strategy and explain the assumptions behind the model. It’s the bridge.”
LUKE RIX | Co-Founder & CEO, KC Ventures
Dan focuses on the cost ramp detail that exposes founder thinking under due diligence.
“Ramp matters, and it often gets missed in the pitch deck because you’re presenting grouped numbers. When the investor sees your model, what’s being interrogated is how you think as a founder. Where people come unstuck is flat-phasing all their costs. It looks amateur because that’s not how it works in practice. Your cost base scales. You don’t hire everyone day one.
When we’re investing, we want to understand what this ramp looks like particularly when we plan to release capital in stages based on milestones, in which case how you model ramp will have a direct impact on deal terms.”
DANIEL ROSS | Advisor, Triple Bubble & Euphemia
Bryn’s addition was the one most founders avoid until it is too late.
“Something a founder needs to challenge themselves on, even if it’s not in the pitch deck, is scenario B. What if I don’t quite execute and hit the targets? Will I run out of cash halfway there and not deliver on the promises I’m making?
You need to identify the handful of levers that will get you runway extension if you’re off plan. Nobody wants to sell the perfect view of the world. If one thing falls out of alignment, the whole thing falls over.”
BRYN LEGGETT | Founder, HelloCFO
Michael pulled it all back to one point
“The model is a communication tool. It’s saying: here’s how I believe this business works, here are my assumptions, here’s what I’m betting on. The best models come from founders who’ve spent serious time thinking about the business, not serious time on the spreadsheet.”
MICHAEL BATKO | Co-founder & CEO, Hourglass AI
Tom’s take. The model is your pitch quantified. That is the most consistent point across five voices, and where most founder-built models fail. Is that they only describe where the money goes, instead of emphasises what it produces.
What tools and cadence keep the model alive?
What tools or AI would you point a founder to today, and once the model is built, what’s the right cadence for keeping it alive? What should they be updating weekly, monthly, quarterly?
On tools and AI, Michael started with the basics.
“For building: Google Sheets. Not Excel, not Notion. Shareable, collaborative, free. For scenario modelling, Causal or Runway are worth looking at. They force you to separate assumptions from outputs. AI has genuinely changed sense-checking. A founder who uses AI to pressure-test their model before a raise shows up better prepared than one who doesn’t.”
MICHAEL BATKO | Co-founder & CEO, Hourglass AI
Luke and Dan both pointed to AI as a working partner during the build, not the builder.
“I still build in Google Sheets, in a structure that matches the format people expect. The build is still manual, but what’s different now is the ability to check the model and get deep into it. That’s usually something like Claude. It picks up errors, changes, and pressure-tests assumptions. For a founder, it’s about building something you’re confident with, then running it through AI to make sure it’s accurate.”
LUKE RIX | Co-Founder & CEO, KC Ventures
“If you’re capable, go into Claude, tell it what you want to do, and tell it to ask you questions to build out your assumptions and cost base. It should be able to do that with some refining.”
DANIEL ROSS | Advisor, Triple Bubble & Euphemia
Bryn focused on the nuance of AI
“Claude is good to guide you through commercial thinking and help spot gaps. But it may produce a slightly too simple version of the model, and shortcut the proper thinking you need to put into your assumptions. Using it to guide you and spot gaps is one thing. Using it exclusively to build is risky. As with any AI, you need to know what to steer it towards.”
Bryn also flagged the resource most founders do not know about for sense checking later stage assumptions.
“If you’re projecting to Series A, test your model against industry benchmark data. ICONIQ Growth has a great set of online benchmarks. We use that data with Series A, B and C clients to sense-check assumptions.”
BRYN LEGGETT | Founder, HelloCFO
On cadence, Marc went hard on weekly rigour.
“Most founders spend too much time building their model and not enough time using it.
We encourage founders to review their numbers every week. At Planet Startup, we run a 30-minute finance rhythm every Monday, and we encourage clients to do the same. Whether it’s an operational model, a budget versus actual report, or a rolling forecast, the objective is simple: identify issues early and make better decisions faster.
A financial model shouldn’t be a fundraising document that gets opened once every six months. It should be a decision-making tool that helps founders navigate the business every week.”
MARC ORCHARD | CEO & Co-Founder, Planet Startup
Michael laid out a layered rhythm.
“Weekly: cash balance and your two or three leading indicators. Pipeline, trials, churn signals, whatever moves first. Fifteen minutes. Just to stay sane.
Monthly: full P&L versus forecast. Where did you miss, where did you beat, and what does that tell you about the assumptions? Reforecast if something material has changed.
Quarterly: pull back and revisit the fundamentals. Have your unit economics played out the way you expected? Update the model for what you’ve actually learned, not just what happened.”
MICHAEL BATKO | Co-founder & CEO, Hourglass AI
Luke introduced the budget versus forecast distinction that most founders are unclear on.
“A budget is what we pulled together at a point in time. These are the targets. A forecast is what I actually think will happen now, with all the new information.
Startups change so rapidly that you can be two months in and your budget’s no longer relevant. But you don’t throw it out. Your forecast should reflect all the new information, and that needs to happen at least monthly.”
LUKE RIX | Co-Founder & CEO, KC Ventures
Dan agreed on monthly tracking but drew a line on when to actually change assumptions.
“Monthly at a minimum: total revenue, total OPEX, budget versus actual. How am I tracking? Quarterly is when you tweak assumptions. I wouldn’t play with assumptions any earlier than that. At this stage, things change so dramatically. A bad month can be followed by a good month. You need a trend before making wholesale changes.”
DANIEL ROSS | Advisor, Triple Bubble & Euphemia
Bryn gave an underrated piece of advice on this.
“If you’re not going to engage someone to help build the model, at least get it reviewed by people a few steps further down the journey. Founders or operators at Series A, B or C companies, a few steps ahead of you. That’s invaluable validation, and they’ll challenge your assumptions and the way you’re presenting it.”
BRYN LEGGETT | Founder, HelloCFO
Tom’s take. On tools, the consensus is clearer than I expected. Google Sheets/Excel remains the default, specialist scenario tools are there when the complexity is necessary.
AI is unanimously a partner, not a builder, because AI will produce something serviceable but it will not produce something you can explain directly, unless you have done the thinking yourself.
On cadence, the weekly versus monthly discussion is mixed, the important element is tracking for trends and patterns. Then adjusted for any assumptions that aren’t confirmed
The takeaway
The financial model at pre seed and seed is not a forecast, it is your business thinking into a quantifiable format. If you take only one thing from the five voices in this piece, it is that. The numbers are the artefact and the thinking is the asset.
Investors do not automatically believe your forecast, since nobody can predict three years of revenue at seed. What they are testing is whether you understand the business well enough to make defensible assumptions, trace them to outcomes, and tell the story of how money turns into milestones hit.
The founders who get this build models that are simple, explainable and tied to their pitch. The ones who do not build models that look impressive and fall apart at the first follow-up question.
About the Guest Writer
Tom Hunter, Founder, Story Recruitment.
Tom is the founder of Story Recruitment, specialising in placing the first finance hire and first CFO in tech, fintech and deep tech startups across ANZ. He works exclusively with venture-stage founders at pre-seed through to Series C, making their first senior hire into finance or first CFO.
Tom hosts The CFO Track Podcast, Australia’s leading Accounting/Finance careers podcast. He has 29,000+ LinkedIn followers and his content generates over 2M organic views per year across a highly engaged network of accounting and finance professionals in Australia and New Zealand.
He also created TomBot, an accounting and finance hiring, career and market advice chatbot for the Australian market. Free to use and built from over 600 of Tom’s posts over the last 2 years.
Storyrecruitment.com.au
tombot.storyrecruitment.com.au
linkedin.com/in/tom-hunter-story
For any questions, free advice or a general sense check of the market for finance hiring, don’t hesitate to get in touch at tom.hunter@storyrecruitment.com.au
