Source: medium.com | Re-Post Boomerang 6/21/19
Some businesses are just more capital efficient. While this is obvious in many cases, it’s not always so. Founders often have a sense for how much cash they’ll need to really prove things out and scale.
Understanding when inflows and outlays hit the balance sheet is critically important. Too many founders just do cash models and disregard the impact of lagging collections for example, which has a cascading effect on the rest of their decisions.
A model is only as good as the data/assumptions that underlie it. I find it helpful to be able to review a data room that documents historical financials and other quantitative data.