Metrics & Performance
Three-Statement Model
An integrated financial model linking the income statement, balance sheet, and cash flow statement.
A three-statement model is a foundational financial modeling framework that connects a company's income statement, balance sheet, and cash flow statement. Changes in one statement flow through to the others, creating an integrated view of financial performance. While more common in PE and growth equity, VC investors increasingly use simplified versions for later-stage deals.
In Practice
A growth-stage SaaS company builds a three-statement model showing how $20M in new ARR flows through revenue recognition, deferred revenue on the balance sheet, and operating cash flow.
Why It Matters
Understanding three-statement modeling helps VCs evaluate the financial health and trajectory of later-stage companies and build credibility with sophisticated founders.
Related Concepts
Further Reading
When Should a Startup Raise Venture Capital?
Not every startup should raise VC. The timing, market signals, and traction benchmarks that indicate you're ready — plus the honest case for when bootstrapping is the smarter path.
How to Build a Pitch Deck VCs Actually Read
VCs spend 3 minutes on your deck. Most of that on two slides. Here's the 12-slide framework that gets meetings, what investors skip, and the storytelling mistakes that kill deals.
How to Calculate Your Startup's Burn Rate (And Why It Matters)
Burn rate determines when your startup dies. Learn the difference between gross and net burn, how to calculate real runway, and the framework for knowing if you're default alive or dead.
Venture Debt Explained: When It Makes Sense and When It Doesn't
A comprehensive guide to venture debt — how it works, what it costs, when founders should take it, and the critical term sheet provisions that separate good deals from dangerous ones.
VentureKit
Ready to launch your fund?