Changelog

Significant update to the Exit Waterfall in the Cap Table and Exit Waterfall Tool:

• Edited the Exit Waterfall, Simple sheet to add in features previously only in the base Exit Waterfall and Exit Waterfall, Extended sheets, bringing this stucture to match the features in the previous Exit Waterfall sheets, and deleted the older sheets and renamed the Simple variant to just Exit Waterfall. This was done because the Simple version is built to use an easier formula structure than the pre-existing Exit Waterfall and Exit Waterfall, Extended sheets, and because of that it is easier to use because (1) the feature toggles to change the formulas based on the situation are no longer needed, and (2) is much easier to extend to cover more share classes and options. Previously it was very hard to extend the Exit Waterfall sheet to cover more than the prebuilt number of share classes, now it is 100x easier to extend it for any number of share classes, options with different strike prices, or warrants with different exercise prices.

Simpler, clearer,better, always innovating.

Sidenote: this Exit Waterfall structure, like the previous versions, is not built to handle unconverted convertible notes or SAFEs at exit, but can be done with a custom edit. Please contact me if you areinterested in that.

Major update to the Venture Capital Model (renamed from Venture Investor Model):

1. Portfolio Construction. Major rework to use the same portfolio construction method as the Venture Capital Model, Average Cap Table version, moving the prior Portfolio Construction inputs to the Get Started sheet and expands the number of rounds modeled from 4 to 6. This new approach allows you to model first checks at multiple entry points automatically (e.g. first checks at Seed and Series A, and then optional different follow-on strategies per each first check strategy). This is a major upgrade from previous versions which required a more complex approach to modeling multiple entry points (and where I offered different versions of the model for single-entr and multiple-entry strategies), and thus the previous multiple-entry version has been thus been deprecated.
2. Scenarios. Adds in the Scenarios sheet to evaluate multiple return scenarios simultaneously. This was prebuilt in many of the venture capital models but had not yet been built into this version.
3. Fund Waterfall. Adds in a new Waterfall section to the Forecast sheet to allow the model to handle up to three different LP bases with different return structures involving different preferred returns, return of capital, GP carry, and carried interest assumptions. In addition to this adding more detail to the LP return calculations and allowing for differential fee structures, this allows the model to handle scenarios where the fund has grants, philanthropic investors, or "catalytic" limited partners that may want no return of capital, limited returns, or different return expectations from the rest of the LP base. (Caveat that (a) currently different management fee rates for the LP bases is not supported at the detailed waterfall level, and (b)this waterfall currently only supports the case where all LPs are pari-passu to each other. Detailing the management fees by LP base and adding in LP seniority to the fund waterfall is next in the queue.)
4. Tracking. As part of this update the "Actuals Tracking" variant was not updated and has been temporarily deprecated. I anticipate working that feature into a later update.

Small update to the Venture Capital Model, Average Cap Table:

• Slight cleanup on Get Started to (a) change the calculation of average invested per company at exit for later rounds and (b) adjust the capital allocation to different stages, as well as edits on Forecast sheet to adjust the unrealized gains calculation.

Update to Venture Capital Model, Quarterly Forecast:

• Edited Forecast sheet and Get Started sheet to eliminate the circular reference that would happen if you choose to recycle using new and follow investments option on Get Started. The edits are in the calculations for deployment section on Forecast and a new set of calculations around capital allocation in the Portfolio Construction section on Get Started.

Update to Cap Table and Exit Waterfall Tool:

• Edited Exit Waterfall and Exit Waterfall, Extended sheets to fix how warrants are exercised cashless. Previously the cashless exercise would result in the proceeds distribution check being off because the foregone proceeds from the cashless exercise was not accounted for going back to other shareholders. The method was changed to adjust the number of shares issued tot he warrant holders by the value of the foregone proceeds by the cashless exercise, if that option is selected. Thank you Preten for finding this.
• I also adjusted the Exit Waterfall, Simple sheet for calculating proceeds to warrants; previously the method subtracted out the foregone proceeds from warrant holders and added them back to the other sharedholders, which resulted in the same result, but I adjusted the calcs to use the same method of adjusting the shares so that the methods are consistent.

Today I released an update to the Venture Studio Model that with edits to Total Investments, by cohort of New Investments, Proceeds, Writeoffs, and Invested Capital Exited, to not double count the proceeds from the investments in the studio, which flow through the studio and not the fund. Thank you James for finding this.

The Venture Capital Model, Manual Input model was updated with a new input structure to:

• Bring more flexibility to modeling follow-on rounds, unrealized gains and losses, and partial exits
• Add in features from the Angel and Venture Investor Tracking Model, allowing me to deprecate the model and streamline the model offerings.

Details on how the input structure works:

The last live session Cap Table and Exit Waterfall Masterclass cohort for 2024 is now ready for registrations. Questions, contact me anytime.

Today I released an update to the Ecommerce Forecasting Tool that adds an expanded approach to the Forecast sheet to forecast retention on a per-cohort basis and adds a new Historicals sheet to analyze past cohort performance. The Historicals sheet allows you to drop in historical retention data for your business and use it to automatically create an average retention curve for forecasting.

As always, you can download the updates through your original email receipt or by logging into Gumroad. The model is free; all donations, ratings and reviews are appreciated.

The Standard Financial Model is now even more standard. Kind of.

One thing that has been difficult for me to communicate is that the Standard Financial Model is prebuilt for a variety of different business models. For the last couple years, one way in which I communicated that was with different product titles - SaaS Financial Model, Standard Financial Model for Ecommerce, etc. - to show that the model was prebuilt for those types of business models. But the reality is that it's always been the same model, just with different starting assumptions, but that it was prebuilt to fit those businesses equally well. And while I noted that at every chance, it was still a bit confusing to some.

To make that more clear, I've simplified the product suite down to just the Standard Financial Model. Same product, same name, same focus, just clearer messaging and communication. There's no Standard Model for SaaS, etc. because there is no need for one. What I started writing are a series of guides on how to use it for different types of revenue models. Here are a few detailed examples:

• How to model SaaS using the Standard Financial Model
• How to model Ecommerce using the Standard Financial Model
• How to model Marketplaces using the Standard Financial Model
• How to Model Services and Consulting Businesses using the Standard Financial Model
• How to Model Hardware Businesses using the Standard Financial Model

If there's a guide that would be helpful for you, please let me know, happy to help.

Updated the Standard Financial Model to add in a section on viral growth. Details at Virality.