Growth model

FAQ: What’s the difference between primary and secondary? The difference between primary and secondary share purchases lies in the stage at which the shares are bought and the parties involved in the transactions: In summary, primary share purchases involve buying newly issued shares directly from the company, providing capital to the company. Secondary share purchases, …

6. Minority vs. control – (Part 1) Cap table, primary vs. secondary, rollover equity Read More »

FAQ: How to go from ARR to Recognized Revenue? In the model walkthrough, recognized revenue is approximated as a % of Ending ARR. However, this is a simplifying assumption!   In reality, under the hood, it’s much more complex.  What’s really occurring is two processes at the same time: Below is a handy example tracking an …

10. Cohort analysis & SaaS revenue waterfall Read More »

FAQ: What are employee options? Companies grant employees options as a means of giving them ownership in the company. They serve as an incentive for employees, aligning their interests with those of the company’s long-term success. At the time of investment (and sometimes more often), companies usually “refresh” their employee option pool. This means they …

8a. Employee option pool Read More »

FAQ: Why are you counting the cash from options proceeds 3 times in the IPO scenario? Is that too many? First of all, just so that we’re clear, above we have 2 different scenarios: 1) M&A exit, 2) IPO exit. In the M&A exit, it’s clear that the cash from options proceeds should be factored in. …

16. IPO exits Read More »

Why include this bonus section? Note, this is a bonus section. The prompt didn’t ask for this analysis; however, I wanted to give you a mental model for how to size potential dilution for businesses in the future. Sizing expected dilution can be helpful in these situations: FAQ: What is dilution? Dilution is the degree …

15. **Bonus** Expected dilution Read More »

FAQ: I found another formula for CAC payback. What is the right formula for CAC payback, and how do I calculate net new ARR effectively? Before we dive into the specifics of CAC Payback, remember that metrics can be adjusted to suit your specific needs. Instead of focusing on a rigid definition, think about what …

13. Unit economics – LTV, CAC Read More »