Startup Diligence Guide: The D+ Financial Model

October 10, 2025

Part 4 in the “Navigating Diligence: The Bling Capital Playbook” Series

This is Exercise 4 in the Bling Capital Diligence Playbook.

In the first three exercises, you identified the pain point and why you’re 10x better, segmented your customers, and sized your venture-scale market. Now it’s time to connect those inputs into a simple financial model that shows how much money you need, over what period, to achieve which goals.

This guide is designed for pre-seed and seed-stage founders, though the framework applies to later-stage companies as well. It’s meant to be built by founders themselves — no finance lead required — and uses a cash-based approach (not GAAP) to simplify planning and highlight key assumptions.

Not all pre-seed companies will be generating revenue yet, and that’s okay. The goal is to create a model that captures how capital will be used to reach the next milestone — even if revenues come later.

Founders and venture investors often dismiss the need for a financial model for a pre-seed or seed round.

We disagree.

A “D+” financial model (we use “D+” to refer to the skeleton gist where you can get 80% of the impact across in 10 minutes - something you can put together in 30-60 minutes that almost passes but is still rough, yet captures the key top-level points) outlines key assumptions about:

hiring pace (which hires in what functions at what months)
key cash expenditures (including sales and marketing spend)
when revenue comes in (if at all)
cash balance
number of months of runway

This approach is useful because it allows us to rapidly convey key assumptions and potential impacts without getting bogged down in details, facilitating early-stage discussions and initial evaluations. All of these bullets are critical to ensure “you are raising enough money” to achieve the “key goals of the round.”

This post will outline

Why we value a financial model
The Bling Capital approach
Common mistakes founders make when creating their financial model

We also provide an easy to use P&L template that will help prepare you to answer common questions that many investors ask.

Why We Value a Financial Model

A financial model ties together all the elements of your business and shows how it will unfold over time. During fundraising diligence (and importantly, during the operating period), founders and investors need to answer this simple question: How much money do you need, over what period, to achieve which goals?

Here is a sample “mad libs” format:

Hire x people at month M1, M2, M6, M12
Pay them $D annually
Founders will pay themselves $F
First revenues expected by M4 when product is ready.
Go live with 1 customer in M4.
Acquiring 3 new customers each subsequent month each paying $R in monthly revenue
Monthly Gross margins will be $G and is based on $C in monthly Cost of Goods Sold (COGS) to service the customers. $G = $R - $C
We will spend $K on sales and marketing per month
Based on the above we need $Y in capital over 18 months with $B buffer to reach our milestones

At this stage, founders have far greater control over costs than revenues — and that’s what the model should emphasize. Gross profit contributes to reducing burn, not just increasing revenue, so it’s important to show how efficiency improves over time.

Benefits of a Financial Model

Validate the size of the raise: “We need to raise $2.5M to get ‘full credit’ for product-market fit, and ‘partial credit’ for monetization and distribution.”

Clarify spending plan: “We will hire 3 people over 3 months. We will be ‘product-ready’ in January but will not collect revenue until March. Each month after March, we will acquire 3 new customers. We will spend $10K on three distribution channels over Z months.”

Reveal opportunities to optimize resource utilization and identify bottlenecks which must be unblocked to grow: “We identified a need to focus the sales team and reduce the amount of time it takes to onboard customers, and will implement a set of low effort self-serve features.”

A financial model helps founders demonstrate to investors their ability to:

Manage capital and allocate resources: “I know how I will use the funds and where I plan to spend them.”
Illustrate the company’s path towards meeting objectives for the round: “We’ll acquire X customers each month, reaching $D recurring revenue in 18 months.”
Tell the financial story of the business: “These are the inputs, our assumptions, and the outputs. Do you agree?”

A financial model helps founders get ahead of questions investors ask during diligence. In some cases, investors will give founders “forward credit” for a believable financial story about how the business will unfold over the next 12-18 months. A believable financial model now helps investors underwrite your ability to raise future rounds at higher valuations.

Common Objections and Our Responses

“Come on, we are a pre-seed company”: Yes, and basic assumptions should outline the amount of raise. Could be even as simple as “we need to hire 5 people to build product for 12 months, so we need $Y total for this round, and we want 3 model customers by the end of it. Give us buffer for +6 months, so we need 18 months of cash” (literally, a 5 minute exercise)
“All models are wrong anyway”: Yes, we know. All investors and operators know. But they should show the underlying assumptions, the general direction, which is important to be outlined clearly.
“This exercise takes forever and is false precision”: You can build a D+ model in 30-60 minutes that outlines the key assumptions. That is far more important than a “A+ investment banker model” with false precision. Again, key assumptions of drivers of the business help clarify for everyone both the operating plan and also cash buffer needed.

As a heuristic:

Pre-seed: If you’re raising $2M, target net burn of ~$110K/month or less for 18 months
Seed: If you’ve raised $5M, start lean, around ~$110K/month (same as prior round), until you’ve demonstrated product-market fit with a core base of users representative of your target market and are showing early signs of distribution that is working. This means users are using your product regularly, retaining, and paying (or showing high willingness to pay), and you know how to find more of them. Once these proof points are in place, you’ve “earned the right” to increase burn towards ~$200K/month to accelerate growth. Note: We use ~$200K/month as a rule of thumb, and it is case dependent — we believe it is always better to be efficient with spend.

These benchmarks are useful for sanity-checking your raise amount and expected runway.

The Bling Capital Method

The financial model should be set up with lines and sections that clearly and instantly answer all the questions investors are looking to answer:

How many people are you hiring and when?
When do you first get paying customers? (or should we assume nobody will pay for the next 12-18 months)?
How much are you budgeting for sales and marketing tests, knowing that we can be unsure of their performance?
How much cash are you consuming monthly (i.e., fast burning candle vs. slow burning candle)?
How many months of runway does this imply?

When going through a financial model exercise with founders, we want the monthly financial “actuals” since the inception of the company and forward projections for the next 18-24 months. Key line items include number of customers, revenue, COGS, gross margin, major operating cost items (i.e. headcount, marketing spend), net income/cash burn, and cash position. All on one sheet in monthly format, with historicals flowing into projections.

Let’s do this together: Use our template and answer the questions:

How many people are you hiring and when?
How many people are you hiring, and when? Input the title, department, salary, and start date into the “Hiring Plan” tab. A sample answer could be:
- We currently have 3 full-time employees and we plan to hire another 5 over the next 12-18 months.
- We will hire 1 AI-ML engineer and 1 frontend engineer by the end of this year or early next year.
- We will have a founder-led sales playbook ready for when we hire our first 2 account executives beginning of Q2 next year
- We plan to hire 1 designer in 2025 to help polish the product
When do you first get paying customers
In the “SaaS Operating P&L” tab, complete lines 5-16. Common questions and sample answers below: .
- When will you launch the product?
  - We will launch our product at the end of September and onboard our first customer in October.
- How fast are you growing (vs churn)?
  - We will be growing 2-3 customers per month with founder-led sales, then 4-5 customers per month with 2 AEs.
  - We expect low churn; 1-2 customers per year.
- What types of customers do you have (i.e. service vs. software) and what are the different characteristics between them?
  - For customer count by type, we only have one customer type.
- Our blended revenue starts at $500 and will increase to $800 as we launch more enterprise features.
- How profitable is your business from a unit economic perspective?
  - We will be charging $800 per month. For each dollar we make, we will be paying $0.10 or less in COGS resulting in 90%+ gross profit.
- How is Gross Profit improving over time (and why/how)?
  - We will start by charging $500 per month and increase pricing to $800 over the next 9-12 months. We will start by paying $0.55 in COGS but that will decrease to $0.10 or less per customer through economies of scale.
How much are you budgeting for sales and marketing tests
- We are budgeting $2K per month to test marketing channels, this will result in an estimated CAC of $Z
- We will not be spending much on marketing as we focus our efforts on cold outbound
How much cash are you consuming monthly
- How much are you spending per month on Research and Development?
  - We will be spending less than $70K per month across 2 founders and 3 engineers.
- How much are you spending per month on Sales and Marketing [2]?
  - We have reserved $2K per month for testing various marketing channels. We will be spending $7K per month on our 2 AEs on a fully loaded basis.
- How does burn increase over time?
  - To start, monthly salaries will be about $40K for 3 FTEs, resulting in a total monthly burn of about $50K. Once we onboard the 4 additional FTEs, we expect burn to increase to $60K-$70K per month.
How many months of runway does this imply?
- Our plan gives us 24 months of runway but realistically we believe it will take us only 12-18 months to hit the goals for this round.

After completing the model, we should implement these important checks for our work.

Tie ins:

Double check formulas and assumptions. For example, growth in revenue should match some sort of investment in expenses (i.e., product building or 3x marketing spend 3x leads 3x new ARR add).

Reality check:

If you have historicals, you should be able to look back 6-12 months on the same sheet for sanity check for realistic figures.. You want to avoid situations where you have unrealistic assumptions for example:
- If suddenly in one month your headcount triples, it’s generally unrealistic.
- If you’re suddenly growing 10% month-over-month, it’s generally unrealistic.

The output of this exercise should be a clear and succinct set of bullets, answering all the questions investors are looking to answer in the “mad libs” format, with a link to your work.

Common Mistakes

We have outlined common mistakes founders run into when preparing a financial model, why it matters, and the cost of getting it wrong.

Overestimating growth: “You planned for 10% month-over-month growth for your SaaS business. Your projections were off, you didn’t raise enough money (burned too much) to get to the next inflection point”
Not right-sizing your raise: “Your financing amount should match your cash trough with some buffer. Saying you want to raise a $5M round when in fact you only need $2M…”
Assuming “best in class margins” at the start: “Often you will have to do things that are not scalable such as including a services component before you automate certain parts of the business/productize and you have to include those assumptions.”
Model doesn’t capture one or more key assumptions: “You didn’t model required customer experience and support hires, so your runway is shorter than we thought.”
Over-aggregation of resources: “You hid the relationship between effort and returns by including only one line for headcount and salary, thus you missed the dependency between sales and marketing headcount and revenue growth.”
Forecasted assumptions vs. historical results: “You assumed the sales team could consistently close 3x the number of customers starting next month compared to last month, and you were wrong. Why?”
Misestimating time/effort to capture a resource: “You planned to triple engineering headcount in one month, but it actually took six months which was more realistic.”
Not including material expenses: “You did not know you needed to hire 3-4 customer support people, and now we need to either raise another round or slow growth.”

Final Takeaway

A well-constructed financial model provides a clear roadmap for your business, answers key investor questions, and helps ensure you have the necessary funding to reach your milestones. It outlines funding needs and key assumptions, helping you align resources with your goals for this round while keeping your planning focused and practical.

Remember: At pre-seed and seed, this exercise is less about precision and more about clarity — showing that you understand your levers, can manage capital efficiently, and can tell a believable financial story for the next 12-18 months.

Next Up: Current Team + Hiring Plan

In Part 6, we’ll dig into why we ask for the full current team and key hires required in the next 12-18 months.

We’ll cover:

Why it matters
How it builds confidence in the operating plan
The impact on cash runway and option pool