This is a complaint I often get from startups that deal with private equity investors. The analyst is asking for the number of customers, the number of sales people, the number of engineers in 2021. Who knows, right? Does this make sense?

Well, partially. Building a financial model for 2021 can be a valuable exercise in checking wither your business model makes sense. If you need to recruit 30 Fortune 500 customers in 4 years with 8 months sales cycles and head quarters which are based on a different continent, you cannot get away with 2 sales people and some search engine optimization in your marketing and sales budget. On the other hand, a consumer-focused company that needs to sign up 500,000 user does not need a huge enterprise sales operation.

It is this sanity check that investors want to do. Your "sales and marketing cost is 30% of our $100m 2021 sales" does not show - in most cases - that you have thought about what it would take to build such a company.

SlideMagic: a platform for magical presentations. Free student plan available. LEARN MORE