Ask HN: How to evaluate a financial model for potential investment?
I'm an intern at a small VC that has been tasked with vetting a financial model for a startup we are considering investing in. The analyst that's overseeing my work said he wanted to throw me in and see what I could figure out, but will actually guide me threw the process next week. I just want to get as much of a head start as possible.
What should I be looking for? What process should I use? How is this generally done?
1 comment
[ 2.1 ms ] story [ 22.7 ms ] threadBasically, you want to understand what assumptions they've made and what they have backed those assumptions up with. It should start from customer acquisition channels, and widdle away until you have a cashflow statement that tells you the answers. Start you assessment from the basic business inputs.
In the end, you want to figure out if their model is realistic. That includes the assumptions and calculations.