Written by — Co-Founder, Expert Sapiens
Reviewed March 2026
Finance & Accounting
What Is Financial Modeling?
Definition
Financial modeling is the process of building a structured, quantitative representation of a company's finances — typically in a spreadsheet — to forecast future performance and support major decisions.
A financial model translates a company's strategy into numbers: revenue projections (by product, channel, or cohort), cost structure (COGS, operating expenses, headcount), cash flow, and key performance metrics. For startups, a financial model typically includes a three-statement model (income statement, balance sheet, cash flow), unit economics, scenario analysis, and runway projection. For fundraising, investors expect models with clear assumptions, bottom-up revenue drivers, and a 3–5 year forecast. A model is only as good as its assumptions — an expert who understands your business model builds something that reflects reality, not just Excel mechanics.
Why it matters
A financial model is the language investors speak. Without one, you cannot have a credible fundraising conversation, plan hiring, or understand when you need to raise again. A financial modeling expert can build your first investor-ready model, rebuild an existing one with better structure, or work alongside your team to establish ongoing forecasting processes.