Gate the capital
Money is released one gate at a time. Each gate has a written pass mark, set before the work starts. A weak idea can cost us a few thousand dollars to stop, not a few hundred thousand.
01 · The thesis
Three habits that change the return
Most ventures lose their capital in the same place: they spend heavily on building before they have learned what it would take to win. We change the order, and we make the learning cheap and repeatable.
Template the work
Viability report, finance model, competitive landscape, cap table, go-to-market plan and pitch all start from one reusable template. The second venture costs less to analyse than the first, and the tenth less again.
One model, every document
The finance model feeds the viability scorecard, the dilution table and the value pitch. The pitch can never disagree with the numbers, because it is generated from them.
The usual way
Build first and learn late. Analysis redone from scratch on every project. Numbers scattered across files that drift apart. The pitch written at the end, by hand, from memory.
The Simplify way
Learn first and build with evidence. Analysis starts from a template built to be reused. One model feeds every document. The pitch is produced from the same data as the viability report.
Our standard
We aim to be better at this than anyone. That is a standard to be held to, not a claim already earned: we publish the gates and the math, we hold every venture to the pass marks, and we change the templates when the evidence says they are wrong. The rest of this page lets you test the logic yourself.
02 · The process
Eight stages from idea to value pitch
Choose a stage to see what we do, the template you get, and the gate the venture has to pass before more capital is released.
The template library
Durations are planning targets for the process, not measured results. Costs on this page come from the sliders in chapter 4.
03 · Viability
A sample viability report you can change
Sample venture: subscription software that replaces spreadsheets and email for scheduling and billing in mid-size service businesses. It is a generic example chosen only to show the method. Change the inputs and watch the scorecard, finance model, competitive landscape and upside respond.
Inputs
Seven-test scorecard
| Test | Result | Pass mark | Status |
|---|
Five-year finance view
RevenueEBITDAEBITDA below zero
Yr 1Yr 2Yr 3Yr 4Yr 5
| Yr 1 | Yr 2 | Yr 3 | Yr 4 | Yr 5 |
|---|
Competitive landscape
Where the buyer's alternatives sit, and where we choose to stand. Move the two sliders to place the sample venture.
Potential upside, by scenario
Bear halves the share won and raises churn and CAC. Bull lifts share and trims churn and CAC. Exit value uses the multiple chosen in chapter 5 ().
| Case | Yr 5 rev. | Break-even | Peak need | Exit | Verdict |
|---|
How this model works
Customers at the end of year 5 equal reachable customers times the share won. Adoption follows a curve that accelerates over the five years. New customers each year equal the net gain plus those lost to churn. Revenue uses the average customer count times price. EBITDA is gross profit minus the cost of winning customers (new customers times CAC) minus team and overhead, which grows at the rate you set. Peak funding is the deepest point of cumulative EBITDA. LTV is price times gross margin divided by yearly churn. Payback is CAC divided by monthly gross profit per customer. Pass marks: market pool at least $100M (watch $50M); LTV to CAC at least 3 (watch 2); payback within 18 months (watch 24); gross margin at least 70% (watch 55%); EBITDA breakeven by year 4 (watch year 5); peak funding within 80% of the capital envelope (watch 100%); fit at least 7 and ease at least 6 (watch 5 and 5). No failing test and no watch: Go. No failing test: Go with conditions. One failing test: Hold. Two or more: Stop.
04 · Capital efficiency
Same ideas, less capital wasted
Take the same batch of ideas through two approaches. The usual way learns slowly, so weak ideas reach the expensive build stage. The Simplify way screens harder and cheaper at the early gates. Both approaches face the same market, so stages 6 to 8 stop weak ideas equally. Both can also stop a good idea by mistake, and ours stops slightly more.
Assumptions
Where ideas are stopped
Good ideas aliveWeak ideas alive
Side by side
| Usual way | Simplify |
|---|
Stage costs and screening assumptions
Costs are per idea, in thousands of dollars. Screen rates are the share of weak ideas stopped at that stage. Good ideas are wrongly stopped at 2% per early gate in the usual way and 3% in ours. These are planning assumptions we will replace with measured figures from real ventures.
05 · Returns and dilution
What a check becomes, after dilution
The sample venture raises three rounds of outside capital after launch. Set your check, switch pro rata on or off, and see ownership after each round, then your return at exit based on the scenario selected in chapter 3 ( case).
Your investment
Edit the rounds and option pool
Ownership after each round
Return by scenario and exit multiple
Multiple of money returned on your total investment, using your check and rounds above. Shaded row is the scenario you are viewing.
How dilution is calculated
Each round issues new shares equal to the amount raised divided by the post-money value (pre-money plus amount raised). Option pool additions are created before the round and dilute everyone who already holds shares. With pro rata on, you buy your existing percentage of the new round, so only the pool addition dilutes you. Exit value is year 5 revenue times the multiple, and every holder is treated as holding common shares: liquidation preferences, debt, fees, taxes and time to liquidity beyond the years set are not modelled. Internal rate of return uses round 1 at year 0, round 2 at year 1.5, round 3 at year 3 and the exit at the year you set.
06 · Portfolio
Many ventures, one range of outcomes
Run the whole pipeline 2,000 times. Each run draws which ideas are good, which gates stop which ideas, and how large each exit turns out. Capital is what the parent spends getting ventures to launch. Value is Simplify's retained stake in each launched good venture. The downside is shown on purpose.
Assumptions shared with chapter 4
Multiple of capital returned, across 2,000 simulated portfolios
Usual waySimplifyLeft of 1× loses money
How the simulation works
Each idea is good with the probability you set. Every idea moves through the eight stages in chapter 4, spending that stage's cost and being stopped by chance at the screen rates shown there. A good idea that survives all eight stages launches and exits for a random value drawn from a lognormal distribution with the average you set (spread 1.0, so many exits are small and a few are large), multiplied by Simplify's retained stake from chapter 5. The multiple is total exit value divided by total capital spent. The random draws use a fixed seed, so the same inputs give the same picture. Stage 6 to 8 outcomes follow the market and are the same for both approaches. Follow-on rounds, fees, time and taxes are not modelled.
07 · Value pitch
The pitch writes itself from the model
Stage 8 produces a one-page value pitch from the same data as the viability report, the cap table and the returns. This is the page for the sample venture, as it stands with the inputs you set. Change anything in the earlier chapters and it rewrites.
Want to see this on a real idea?
The process, the templates and the model are the same ones we run on every venture. If you would like to talk about how this could work for your capital, write to us or leave your details and we will be in touch.