Is the bet worth taking? What does the investor — including yourself — get back?
Business Alignment
| Question | Answer |
|---|
| What venture? | [name] |
| Who is the investor? (self, friends, institutional) | [who] |
| What's the investment period? | [months/years] |
| What's the alternative? (opportunity cost) | [what else could this capital do] |
| What conviction level is the return estimate? | HIGH / MEDIUM / LOW / NONE |
Total Investment Required
| Category | Amount | When | Conviction |
|---|
| Development (product build) | $[X] | Months [X-X] | |
| Marketing (launch + first 6 months) | $[X] | Months [X-X] | |
| Operations (legal, compliance, tools) | $[X] | Months [X-X] | |
| Working capital (buffer) | $[X] | Ongoing | |
| Total | $[X] | | |
Burn and Runway
| Metric | Value | Source |
|---|
| Monthly burn (pre-revenue) | $[X] | Cash flow projection |
| Monthly burn (post-first-dollar) | $[X] | Cash flow projection |
| Total investment | $[X] | Above |
| Runway at current burn | [X] months | Investment / burn |
| Runway with revenue offset | [X] months | Adjusted for projected income |
Break-Even Analysis
| Metric | Value | Formula | Conviction |
|---|
| Break-even revenue (monthly) | $[X] | Fixed costs / contribution margin % | |
| Break-even customers | [X] | Break-even revenue / ARPU | |
| Time to break-even | [X] months | From cash flow projection | |
| Revenue at Month 12 | $[X] | From cash flow projection | |
| Revenue at Month 24 | $[X] | From cash flow projection | |
| Revenue at Month 36 | $[X] | From cash flow projection | |
3-Year ROI
| Year | Revenue | Costs | Net | Cumulative | Conviction |
|---|
| Year 1 | $[X] | $[X] | $[X] | $[X] | |
| Year 2 | $[X] | $[X] | $[X] | $[X] | |
| Year 3 | $[X] | $[X] | $[X] | $[X] | |
| Metric | Value |
|---|
| Total 3-year investment | $[X] |
| Total 3-year return | $[X] |
| Net return | $[X] |
| ROI | [X]% |
| Payback period | [X] months |
Sentence Test
One sentence:
"Investing $[X] over [X] months. Break-even at [X] customers. [X]% ROI over 3 years. The ask is $[X] for [specific use]."
If you can't say this without hedging, the numbers aren't ready.
Risk-Adjusted Return
| Risk | Impact on ROI | Mitigation | Residual Risk |
|---|
| No product-market fit | ROI = -100% | Validate before building | |
| Slower growth than projected | ROI halved | Bear case scenario | |
| Key person dependency | Operations stop | Document + automate | |
| Competitor enters | Margin pressure | Positioning moat | |
| Regulatory change | Cost increase | Compliance built in | |
Kill Decision
| If this happens | By this date | Then |
|---|
| Zero revenue | Month [X] | Pause and reassess |
| Below bear case | Month [X] | Pivot offer or market |
| Burn exceeds projection by [X]% | Any month | Cut to essentials |
| Runway below 3 months | Any month | Emergency fundraise or wind down |
Questions
If you're investing your own time and money, what return would make you glad you chose this over a salary?
- What's the honest probability of the base case — and would you bet your savings on it?
- If the 3-year ROI is negative, what non-financial return justifies continuing?
- What's the smallest version of this venture that could prove ROI positive?