Latest Updates: monthly and annual three statement model added as well as a capitalization table.
A network or marketplace generally has similar logic in the revenue drivers. Every specific business will have their own nuance, but this 5-year financial model will provide a high level structure for creating monthly and annual pro forma reports as well as minimum equity requirements and cash contributions / distributions.
The entire model is based on having 3 general categories of product listings / interactions that can happen. Each group is configured based on the following assumptions:
Start month of category
Starting items listed per month
Monthly percentage growth (varied per year) of listed items
Average value per item listed / transaction value (varied per year)
Network fee (% per transaction charged to buyer and/or seller)
Percentage of listed items that actually transact (fill rate)
Listing fee % for sellers (charged to seller no matter if sold or not)
Advanced placement fee rate per category if applicable
Average increase in listing fee for advanced placements
There are also assumptions for ad revenue if your network makes money on ad display. This is driven by the expected number of impressions earned by the network and an expected CPM average. Impressions are based on average monthly users x average impressions per user per month x CPM.
General operating expenses are defined in categories such as S&M, G&A, and R&D as well as COGS. The COGS can be defined per a percentage of revenue as well as a fixed monthly amount over 5 years.
Final outputs include a range of visualizations / bar charts / line charts to describe the financial forecast as well as an IRR, DCF Analysis, and ROI for the owner and investor pools.
This model does have a dynamic cap table where investors can come in with contributions over time with a defined profit share per valuation at entry. The overall IRR for each is also displayed based on expected cash flows.