1. Financial Modeling Made Easy by Andrew Wood & Jacob Gordon
Using numbers to tell your story
Financial Modeling Made Easy by Andrew Wood & Jacob Gordon

2. Welcome to Financial Modeling Made Easy
Andrew Wood
Jacob Gordon
Entrepreneur's Perspective
A Venture Capital Perspective

3. What is Financial Modeling?
Common Definition:
A financial model is a set of assumptions about future business conditions that drive projections of a company's revenue, earnings, cash flows and balance sheet accounts. In the end it is a dynamic tool.
Our Definition:
It is a tool in your investor-search toolkit to tell your story with numbers. It can create alignment across the team and forces you think about the drivers in your business. The ultimate goal of any business is to generate cash. The financial model tells others how you plan to do this.

4. Let’s Get Perspective You do not have to be an excel ninja.
A Financial Model is not real and does not drive value?
The only valuation that matters is the EXIT value.
Financial modeling is a continuous exercise that is never really done.
You need to know when to stop and who to elicit feedback from.

5. Investor Search Process – Other Tools
Send Executive Summary to generate interest (excerpts)
Non Disclosure Agreement
Meeting to present the pitch deck (try to get this face to face)
Follow up with Full Pitch Deck, Business Plan and Financial Model
Term Sheet, Cap Table, Private Placement Memorandum
Due Diligence (Defend your Model)

6. Steps in building a model
1.Historical Analysis
A few years of analysis
Calculate ratios
2. Assumptions
Build ratios
Explore drivers that are non financial
Build your schedules
3. Forecast
Forecast Financial Statements
Sales Detail Assumptions
Cost Assumptions
4. Valuation
Discounted Cash Flow to derive a return assumptions
5. Other Analysis
Stress test
Graphs, dashboards
Sensitivity analysis
Steps in building a model

7. Move left to right then down - the same way you read a book
Consistent Formula Use
Align your months and years in the same columns across all spreadsheets
Mark input cells in blue or another color
Avoid elaborate formula
Simplicity over complexity
Focus on Key Drivers
Consistent in Level of Detail
Best Practices

8. Now let’s actually do some modeling… followed by Q&A