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Draft

10
Min

Business Model

How you make money, when you break even, and why the model has optionality.

How Do We Make Money?

Let's be honest about revenue. Year 1 will be small. Year 2 will be better. Year 3 is where it gets interesting.

Revenue Model Evolution (4 Phases)

Phase 1: Proof of Concept (Months 0-6)

Revenue: €0

Why: You're validating product-market fit. Free access for 50-100 vetted users. Focus on feedback, iteration, retention.

Success metric: 70%+ weekly active rate. If users aren't coming back, revenue doesn't matter yet.

Phase 2: Freemium Subscription (Months 6-18)

The tiers:

Tier Price Limits Features
Free €0 3 requests/mo Basic search, redacted browsing
Professional €499/mo 20 requests/mo Advanced filters, saved searches, alerts
Enterprise €1,199/mo Unlimited API access, white-label reports, priority support
Custom Quote Custom Multi-seat, SSO, dedicated manager

Conversion assumptions:

  • 15% free → paid (industry average: 12-18%)
  • Average subscription: €7,200/year (blended across tiers)
  • 18% annual churn (better than SaaS average of 25%)

đź’ˇ Why Freemium Works Here

Free tier solves chicken-and-egg. Sellers list for free (supply). Buyers browse for free (demand). Once they see value, upgrading is easy. The 3-request limit creates urgency without feeling restrictive.

Phase 3: Transaction Economics (Months 12+)

Success fee: 0.25% on closed transactions >€5M

Who pays: Introducing party (typically seller/fundraiser)

Structure:

  • Self-reported with audit right
  • Payment: 50% at close, 50% at final distribution
  • Honor system initially, enforcement via network reputation

The reality check:

⚠️ Transaction Fee Honesty

Here's what we're NOT telling investors: 50-60% of deals will happen outside the platform after intro. Users will "forget" to report. Audit rights are hard to enforce.

So why include it? (1) Optionality—if it works, massive upside. (2) Investor expectations—they want transaction economics. (3) Alignment signal—we win when you win.

Conservative model: Assume 5% capture Year 1-2. Reality: probably 2-3%. Model breakeven without transaction fees to be safe.

Phase 4: Advanced Monetization (Months 18+)

Additional revenue streams:

AI Agent SDK

€2,500/mo for API access

Programmatic deal matching for AI agents. High margin, low support.

Premium Analytics

€500/mo add-on

White-label market intelligence reports for LP updates.

White-Label Platform

€5K+/mo

Private instances for large institutions. Custom branding.

Data Licensing

Quote-based

Anonymized market intelligence for research firms.

Financial Projections (Conservative Case)

Assumptions baked in:

  • 15% conversion rate (achievable based on customer research)
  • 18% annual churn (better than average, requires work)
  • 5% transaction capture Year 1-2, 12% Year 3 (realistic given enforcement challenges)
  • Average deal size: €15M (mid-market focus)
  • Success fee: 0.3% effective rate (after negotiation)

Year 1 (Months 0-12)

Total Users 250
Paying Subscribers 35
Subscription Revenue €252K
Transaction Revenue €0
Total Revenue €252K
Costs €975K
Net -€723K

Year 2 (Months 13-24)

Total Users 650
Paying Subscribers 115
Subscription Revenue €897K
Transaction Revenue €86K
Premium Add-ons €45K
Total Revenue €1.03M
Costs €1.42M
Net -€390K

Year 3 (Months 25-36)

Total Users 1,400
Paying Subscribers 285
Subscription Revenue €2.39M
Transaction Revenue €297K
Premium Add-ons €185K
API/AI Revenue €140K
Total Revenue €3.01M
Costs €2.08M
Net +€930K

Breakeven: Month 33-34

Cumulative cash burn: -€1.11M through Year 2, profitable by end of Year 3

Sensitivity Analysis

What if things go better—or worse—than plan?

Scenario Y3 Revenue Y3 Net Cumulative
Conservative (70%) €2.11M +€30K -€1.05M
Base (100%) €3.01M +€930K -€183K
Optimistic (130%) €3.91M +€1.83M +€740K

📌 What This Tells You

Even in conservative case (70% of plan), you're close to breakeven by Year 3. Base case gets you profitable. Optimistic case gives you growth capital. The model has room for error—that's good risk management.

Unit Economics

Customer Acquisition Cost (CAC):

  • Year 1: €2,400 per paying customer (high, expect this)
  • Year 2: €1,600 per paying customer (improving)
  • Year 3: €1,200 per paying customer (efficient)

Lifetime Value (LTV):

  • Average subscription: €7,200/year
  • Average customer lifetime: 3.2 years (18% churn)
  • LTV: €23,040

LTV:CAC Ratio:

  • Year 1: 9.6:1 (excellent, but small sample)
  • Year 2: 14.4:1 (very healthy)
  • Year 3: 19.2:1 (outstanding)

Target: >3:1 for venture viability. You're hitting that easily.

Capital Requirements

Total needed: €2M over 24 months

Use of funds:

Technology Development €700K (35%)
Team (Salaries + Benefits) €1,015K (51%)
Sales & Marketing €135K (7%)
Infrastructure & Tools €90K (5%)
Legal & Compliance €60K (3%)

The Model Has Optionality

Most startups have one revenue stream. If it fails, they're done. You have four: subscriptions (stable), transaction fees (upside), premium services (margin expansion), and API licensing (future optionality).

If subscriptions underperform by 30%, you still break even. If transaction fees disappoint completely, you're still viable. That's good risk management. That's what investors want to see.

  • Four revenue streams, multiple paths to profitability. Subscriptions provide stability. Transaction fees offer upside. Premium services expand margins. API licensing creates future optionality.
  • Conservative projections with room for error. Even at 70% of plan, you're near breakeven by Year 3. Base case reaches profitability with €930K net. Model is stress-tested.
  • Unit economics are strong. LTV:CAC ratios of 9.6:1 to 19.2:1 across three years. Target is >3:1. You're exceeding benchmarks significantly.
  • €2M gets you to profitability. Breakeven at Month 33-34. Capital allocation: 35% tech, 51% team, 14% growth. Realistic burn rate, achievable milestones.