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At Intelectium, we have analyzed hundreds of models together with investment funds, business angels and family offices. And there is something that is always repeated: In less than 5 minutes, an investor knows if there is something that doesn't fit.
In this article we collect The most common warning signs that investors spot right away and that, often, go unnoticed by founders and how to avoid them from the start. Because, a model with errors or without coherence not only damages the credibility of the team: many times it directly closes the door to the round.
1. Underestimated operating costs: “too good to be true”
What's the problem?
A model in which operating costs seem negligible, salaries are too low for the type of talent that is required, or there are no marketing expenses in an acquisition phase... is a model that no one can believe. If 2M€ is expected to be billed in year 2 and the marketing budget is €20,000, something doesn't add up.
What image does it convey?
Lack of realism. And even worse: operational ignorance. An investor may think that the team has never managed a real company and that they underestimate the complexity of scaling.
How to avoid it?
Estimate costs realistically. To do this, it helps to contrast them with sector benchmarks, interviews with other founders and validations with advisors. It's not bad to have losses at the beginning: the serious thing is to disguise reality.
2. Lack of logic in revenue: how are you going to sell that?
What's the problem?
Revenue projections that grow exponentially without explaining the engine of that growth. If the startup goes from €10,000 to €1,000,000 in 12 months without changing the size of the sales team, without investment in acquisition or without expanding channels, growth seems like an act of faith.
What image does it convey?
Lack of rigor. The model may seem like an excel to justify a desired valuation, not a realistic projection built with commercial logic.
How to avoid it?
Work with sales funnels, conversion rates, commercial ramp-up or churn rates. If it grows, there must be a clear engine behind it: investment in recruitment, partnerships, new channels, etc.
3. Misaligned cash flow: not calculating when you run out of cash
What's the problem?
Models without a correct monthly cash flow forecast or without calculating the “runway” (month in which the company runs out of cash). This data is key to defining how much you want to lift and when.
What image does it convey?
Financial immaturity. If the team doesn't know how long they have with their current box, they can hardly plan future rounds or prioritize resources.
How to avoid it?
Build a well-timed operating cash flow, showing the gap between revenues and collections, real expenses and month-to-month cash requirements. And above all: show how the round helps to fill that gap.
4. Undersized or oversized equipment
What's the problem?
Some models plan to grow without hiring anyone else. Others, on the contrary: they set up a team of 25 people in the first year with minimum income. In both cases, the structure is not aligned with the business phase.
What image does it convey?
Disconnection with operational reality. Investors are looking for tight, efficient equipment that scales in stages, not leaps of faith.
How to avoid it?
Define critical roles well, hire when you really need them and link each hire to a business milestone: launch, growth, internationalization...
5. No consistency between key metrics
What's the problem?
Models that project MRR but do not reflect churn. CACs misaligned with ARPU. A very high LTV/CAC but without justification. These inconsistencies show that the model is not interconnected.
What image does it convey?
Ignorance of key metrics. The funds expect to see a model where all strategic variables are well defined and related to each other.
How to avoid it?
Design the model from the logic of the business: a coherent acquisition funnel, with connected CAC, LTV, MRR and churn. Excel should reflect the history of the business, not just add rows.
6. Without alternative scenarios or sensitivity
What's the problem?
A single scenario projected for 3 years with ideal growth. No sensitivity to lower revenues, delays or additional costs. What if something goes wrong?
What image does it convey?
Excessive optimism or lack of planning The investor needs to understand how a delay in the round, or a doubling of the CAC, will affect the business.
How to avoid it?
Simulate different scenarios: base, pessimistic, optimistic. Add sensitivity analysis on revenues, margins, and key costs. Even better if the model allows it dynamically.
Conclusion: Your Excel is Your Mirror
A professional investor needs little time to know if they are dealing with a team that understands their business in depth. Your financial model is your operational and strategic cover letter. If it doesn't reflect a complete mastery of the revenue, cost, investment and dilution model, “no” will be quick.
At Intelectium, we help startups build models that not only close rounds, but that serve as a real management tool. It's not about selling smoke. It's about convincing with real, consistent numbers aligned with a clear vision of the future.
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