The myth of the financial model

The first time I set out to raise funding for my first company, Discourse Media, I spent months—actual months—building a financial model. 

We had just launched our first digital news website, TheDiscourse.ca. I had some promising early metrics, a handful of enthusiastic users who were converting to our paid membership model, and a lot of ambition. So naturally, I found a consultant and set out to build a five-year financial model.

The result? A thing of spreadsheet beauty. Multiple tabs. Pivot tables. Cascading formulas. Revenue projections broken down by channel and audience segment. It was…impressive. And also: completely useless.

We built it off assumptions based on early adopters—the very first audience members we had. They were passionate, sure. But building a five-year forecast based on that cohort is like planning a city based on a campsite.

And when I sent that model to investors? It didn’t help me raise money. In retrospect, I think it probably hurt. Here are four lessons I’ve learned about the true purpose of financial models.

Lesson one: Building your own model is a form of power

Looking back, I now see that this first model was not just a tool—I had made it into a kind of armor.

At the time, I was early in my entrepreneurial journey. I didn’t have a finance background. I was running a mission-driven company, led with purpose and heart—but financial spreadsheets felt like foreign territory. I was insecure. I felt imposter syndrome in every pitch meeting. So I did what many first-time founders do when they feel out of their depth: I outsourced my confidence.

I found a fancy consultant. I poured hours into interviews and strategy docs. And I told myself that if the model looked “professional” enough, maybe I would look like a pro too.

What I hadn’t yet realized was this: financial expertise is often wielded as a form of power. In rooms where I was the only woman, or the only founder building an impact company, I’ve had numbers weaponized against me—used as a way to assert dominance. Technical language can become a tool to consolidate influence. And if you’re already carrying the weight of not feeling like you belong? That kind of posturing can crush you. 

Once I began building models myself—not to impress anyone, but to understand my business—it changed the game in terms of my confidence. I took back power. Because when you know your numbers, when you know why you chose those assumptions, when you can talk through your revenue plan without flipping through a consultant’s appendix—that’s not just credibility. That’s ownership.

Lesson two: Complexity ≠ credibility

Here’s what changed for me: I figured out the secret that folks who wield finance jargon as power don’t want you to know — financial models are not rocket science. In fact, founders who know their businesses and markets better than anyone are usually the best people to build their models. And anyone with grade school math skills can do it.

The reality is that if your model is so complex you can’t explain how a number was calculated, it’s not serving you. If you have to ask someone else how your forecast works? You’re not in control.

You don’t need an advanced degree to model your business. You need a clear head, a few formulas, and the courage to put your assumptions down—even if they’re rough. I now build models I can explain in 10 minutes. They’re not fancy. But they are mine.

Lesson three: The real job of a model is to help you think

A financial model isn’t supposed to be a prediction machine. It’s a clarity machine. At its best, it helps you:

• Understand how your business works (or doesn’t yet)
• Identify and test your riskiest assumptions
• Communicate how you think about trade-offs
• Prioritize what to do next
• Spot red flags early—and fix them

When you’re using a model to raise funding, the goal is to show investors how you think. The one thing they know with certainty is that the model won’t be exactly right. What they care about is: Do you know what matters? Are you learning fast? What are your ambitions when it comes to growing the business?

Lesson four: Don’t let the model distract you from the work

So how exactly did that fancy model hurt me in those early investor conversations? For one, it revealed that my bold growth projections were built on shaky early metrics. But more importantly, it signaled that I was spending my limited time in the wrong places.

Instead of digging deeper into what our early adopters loved about our product, talking to users, testing growth channels, and refining our offering—all the messy, real work of building a business—I was polishing a vanity spreadsheet.

Looking back, I realize this wasn’t just a strategic misstep. It was fear. I didn’t feel ready to do until I had planned every detail. The model was a safety blanket.But startups are not built in spreadsheets. Planning has its place—but in the early days, doing is what teaches you what matters. Rapid experiments, scrappy wins, honest failures. That’s the data you need to make a model that actually means something—and that will help you raise your next round of funding.

The bottom line

Financial models are powerful—but they’re not magic. They won’t raise money for you. They won’t fix a broken product. And they definitely won’t make you more credible than you already are.

Build a model because you want to understand your business better. Build it to clarify your assumptions, to learn, to lead. Build it yourself—even if it’s messy.

And remember: your job isn’t to impress anyone with your spreadsheet. Your job is to build something real. And when you’ve built something real, and have a real grasp of and confidence in your business, you won’t need a fancy model to communicate to funders why they should bet on you.

I want to hear from you: What are the topics we don’t talk about enough in the startup world? What’s your messy moment — the one where it all almost fell apart? What did you do to get through it? 

Submit your stories, your questions, your “someone please talk about this” ideas to herstartuplife@indiegraf.com 

Let’s make this space together because we need impact entrepreneurs. I’m so glad you’re here.