Six blocks for the assumptions that drive the model: revenue drivers, growth, COGS, opex, funding, scenarios. Numbers without assumptions are noise.
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Financial Projections (Narrative)
6 blocks · 2-row grid
"Numbers are answers. Assumptions are how investors check the math."
What it is
A six-block memo that pairs every number in the model with the assumption that produced it. Revenue drivers state the formula; growth assumptions justify the pace; COGS and opex name the unit and step costs; funding and runway state what the model needs and gives back; scenarios pre-commit a response to a worst case.
Origin
Investors learned the hard way that hockey-stick spreadsheets without narrative are noise. The narrative companion to the financial model emerged as the artifact that survives questioning — when a partner asks "why this growth rate?", the founder needs a one-paragraph defence, not a blank stare.
When to reach for it
You're fundraising and want the model to survive a partner meeting.
You're running a board update and need to defend the next 12 months in writing.
You're onboarding a new CFO or finance hire who needs the model's mental model.
The blocks
Worked example uses A Series A SaaS startup.
What good looks like
Name the 2–3 inputs whose product is revenue (customers × ARPU × months, or similar). Start values from real data.
Example — A Series A SaaS startup
ARR = paying accounts × annual contract value. Today: 240 accounts × $14k = $3.4M ARR. Net retention 112% (expansion 18%, gross churn 6%).
What good looks like
Growth rate per driver with a mechanism — "we hire 4 AEs in Q2, each ramps to 6 deals/quarter."
Example — A Series A SaaS startup
40 net new accounts/quarter Q1–Q2 (current 28/quarter, +3 AEs hired Jan), ramping to 70/quarter by Q4. ACV +8% YoY from packaging changes.
What good looks like
Per-unit cost broken down. How margin shifts at scale. Be honest about hosting, support, payments.
Example — A Series A SaaS startup
Hosting $130/account/year (AWS reserved + Cloudflare), payments 2%, CX time $400/account/year. Current gross margin 76%, target 82% at 1,000 accounts.
What good looks like
Headcount ramp × loaded cost, marketing spend, tools, professional services, step-changes by milestone.
Example — A Series A SaaS startup
Salaries 65% of opex; +12 hires planned (6 eng, 3 GTM, 2 CSM, 1 finance) loaded at $170k. Marketing $80k/month rising to $150k post-funding. Tools / infra $25k/month.
What good looks like
Cash, burn, months of runway, and the next-round size with a 6-month buffer before it must close.
Example — A Series A SaaS startup
$4.2M cash today. Burn $480k/month. Runway 8.7 months. Series A target $18M close by month 6 — kickoff month 1.
What good looks like
Best / Base / Worst defined by a single lever each. Pre-committed response for the worst case.
Example — A Series A SaaS startup
Best: 70 new accounts/quarter from Q1, raise at $90M pre. Base: ramp as above, raise at $65M. Worst: <40/quarter — pause 3 of 6 eng hires, cut marketing 40%, extend runway to 14mo.
How to use it
Write drivers before growth rates. A growth rate without an underlying driver is a wish.
Use ranges where you're uncertain. A 60–80% gross margin is more credible than a confident 73%.
Tie every step-change in opex to a hire or milestone in the team plan.
Define the worst case with a pre-committed response. A worst case with no response is a hope.
Common mistakes
Treating "20% MoM forever" as an assumption rather than a wish.
Hiding hosting and payments in a 90% software-style margin.
Three scenarios that all look like the base. The worst case has to actually hurt.
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