VC Modelling Case Study
Coming from the PE world, how basic should a modelling exercise be for a case study for a VC role? Have taken a look at the Macabus template it's frankly somewhat shocking how little detail goes into in terms of build up / cash flow projections (https://macabacus.com/excel/templates/venture-cap…) versus a typical LBO model that has all sorts of sensitivities/cases and detailed cash flow build up (granted you aren't using EBITDA multiples in VC).
Ultimately wondering if it's better to focus on other metrics (revenue, run-run subscriptions, etc.) for these case studies versus upside/downside cashflow scenarios?
Early stage company models have very sensitive assumptions because of the level of uncertainty. Because of that, it would be pointless to thoroughly model out 100% of the details like you would in a traditional LBO.
The key insight to modeling would be more to find out which 1-2 key levers would drive or sink the most value of the company. Qualitatively, form your thesis from there if the 1-2 levers would hold up well across your 5-7 year horizon.
Curious though - could I get your thoughts on why you’re looking to move from PE to VC?
VC valuations do feel more finger in the air vs LBO. For later stage VC companies you can compare recurring revenue multiples, gross margins, rule of 40 etc to comps to sense check valuations.
Also consider the type of security and any IP that might have value in a liquidation scenario (eg participating or non participating preferred with or without caps).
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