Two Years of the Real Numbers of a Startup: Redfin

05Oct07

The CEO of Redfin shares his financial model and the real numbers for the last 2 years. Very interesting data indeed, even if you just read it for the data points.

The estimates were deliberately made to look worst so that they can utter the words “we beat projections” when it comes to funding later rounds. Interestingly though, I guess everybody does that, and I guess all the VC also know that this is done, so how much of this is already taken into account by both sides?

Also wouldn’t creating the worst financial model also lower your valuation for the current round where you would probably give up a sizable chunk of equity? Interesting how this is balanced out… take a higher valuation now, meet expection down the line and probably still get the same funding with more equity in the founders hand, or lower expectation, give up more equity now and make it easier to get a 2nd round, but by then you have given up more equity.

Financial Models for Underachievers: Two Years of the Real Numbers of a Startup