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This is a highly simplified model that is trying to illustrate the impact of missed revenue targets on cash burn. To keep it simple, the model makes a range of simplifying assumptions. For example, it is assumed that your dollar retention rate is 100%, that in any given year you add the same amount of net new ARR every month, and that 100% of your new deals are paid upfront for 12 months.
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2018
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ARR added:12
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Jan 2018Feb 2018Mar 2018Apr 2018May 2018Jun 2018Jul 2018Aug 2018Sep 2018Oct 2018Nov 2018Dec 2018
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ARR beginning of month$6.00M$7.00M$8.00M$9.00M$10.00M$11.00M$12.00M$13.00M$14.00M$15.00M$16.00M$17.00M
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Cash-in from 2017 renewals$0.50M$0.50M$0.50M$0.50M$0.50M$0.50M$0.50M$0.50M$0.50M$0.50M$0.50M$0.50M
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Cash-in from new business$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M
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Total cash-in$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M
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Total cash-out$2.00M$2.10M$2.20M$2.30M$2.40M$2.50M$2.60M$2.70M$2.80M$2.90M$3.00M$3.10MTotal net burn:
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Net burn$0.50M$0.60M$0.70M$0.80M$0.90M$1.00M$1.10M$1.20M$1.30M$1.40M$1.50M$1.60M$12.60M
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ARR end of month$7.00M$8.00M$9.00M$10.00M$11.00M$12.00M$13.00M$14.00M$15.00M$16.00M$17.00M$18.00M
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2019 - budget
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ARR added:18
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Jan 2019Feb 2019Mar 2019Apr 2019May 2019Jun 2019Jul 2019Aug 2019Sep 2019Oct 2019Nov 2019Dec 2019ARR end of year:
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ARR beginning of month$18.00M$19.50M$21.00M$22.50M$24.00M$25.50M$27.00M$28.50M$30.00M$31.50M$33.00M$34.50M
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Cash-in from 2018 renewals$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M
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Cash-in from new business$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M
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Total cash-in$3.00M$3.00M$3.00M$3.00M$3.00M$3.00M$3.00M$3.00M$3.00M$3.00M$3.00M$3.00M
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Total cash-out$3.35M$3.60M$3.85M$4.10M$4.35M$4.60M$4.85M$5.10M$5.35M$5.60M$5.85M$6.10MTotal net burn:
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Net burn$0.35M$0.60M$0.85M$1.10M$1.35M$1.60M$1.85M$2.10M$2.35M$2.60M$2.85M$3.10M$20.70M
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ARR end of month$19.50M$21.00M$22.50M$24.00M$25.50M$27.00M$28.50M$30.00M$31.50M$33.00M$34.50M$36.00M
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ARR y/y growth rate179%163%150%140%132%125%119%114%110%106%103%100%
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2019 - lower growth scenario
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ARR added:12
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Jan 2019Feb 2019Mar 2019Apr 2019May 2019Jun 2019Jul 2019Aug 2019Sep 2019Oct 2019Nov 2019Dec 2019
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ARR beginning of month$18.00M$19.00M$20.00M$21.00M$22.00M$23.00M$24.00M$25.00M$26.00M$27.00M$28.00M$29.00M
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Cash-in from 2018 renewals$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M$1.50M
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Cash-in from new business$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M$1.00M
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Total cash-in$2.50M$2.50M$2.50M$2.50M$2.50M$2.50M$2.50M$2.50M$2.50M$2.50M$2.50M$2.50M
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Total cash-out$3.35M$3.60M$3.85M$4.10M$4.35M$4.60M$4.85M$5.10M$5.35M$5.60M$5.85M$6.10MTotal net burn:
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Net burn$0.85M$1.10M$1.35M$1.60M$1.85M$2.10M$2.35M$2.60M$2.85M$3.10M$3.35M$3.60M$26.70M
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ARR end of month$19.00M$20.00M$21.00M$22.00M$23.00M$24.00M$25.00M$26.00M$27.00M$28.00M$29.00M$30.00M
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ARR y/y growth rate171%150%133%120%109%100%92%86%80%75%71%67%
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Created by Christoph Janz of Point Nine Capital
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www.pointninecap.com
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