Technology company financial models
Technology companies are modelled from the objects their business runs on rather than from a growth rate. A subscription software company sells contracts: its revenue is annual recurring revenue moved by new sales, expansion and churn, constrained by the capacity of its sales team, billed ahead of service, and judged on retention and what a customer costs to win. A marketplace sells nothing of its own: buyers spend with sellers, the platform keeps a share of that gross merchandise value, and it is judged on whether buyer cohorts keep spending, what each order leaves after its costs, and when a buyer repays its acquisition cost.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: technology.Updated 2 October 2026
The models
Core · ~40 min
SaaS operating model
Build a subscription business from sales capacity to ARR to a quarterly P&L, reconcile cash to revenue through deferred revenue, and read the unit economics an investor will ask for.
Inspect the workbookCore · ~35 min
Marketplace model: GMV, take rate and contribution
Build GMV from buyer cohorts with retention and frequency by tenure, take it to net revenue through the take rate and incentives, to contribution per order and EBITDA, and judge a buyer’s lifetime value against its acquisition cost.
Inspect the workbookHow to work through it
Start with the marketplace economics lab, which works one order and one buyer cohort by hand. Then open the marketplace model to see cohorts become GMV, net revenue and EBITDA over five years. The SaaS model is the subscription counterpart: switch it to its downturn case and watch net retention, the magic number and the Rule of 40 move together. The unit economics and SQL cohort labs drill the customer-level arithmetic both models share. Each model has a starter workbook that leaves one schedule for you to build.
The mechanics they share
Each schedule is one reusable calculation, explained on its own page with the rows it occupies in every model that uses it.
Technology schedules
Sales capacity
Reps, ramp, quota: the new ARR a team can close
Technology schedules
ARR roll-forward
Opening, new, expansion, churn, closing
Technology schedules
Bookings, billings and deferred revenue
Cash before revenue, and the balance in between
Technology schedules
SaaS profit and loss
Gross margin, sales and marketing, R&D, G&A, cash
Technology schedules
Unit economics
CAC, payback, LTV, retention, magic number, burn multiple
Technology schedules
Cohort GMV
Buyer cohorts, retention, frequency, orders, GMV
Technology schedules
Take rate
From GMV to net revenue
Technology schedules
Contribution margin
What an order leaves after the costs it brings
Technology schedules
Buyer economics
One cohort: GMV retention, LTV to CAC, payback
Practise first
Unit Economics · 12 min
Build an LTV:CAC you could defend under questioning, and answer payback as its own question.
Product Metrics Tree · 12 min
Name the right north star for a product shape, and the guardrail your change would break.
Marketplace Economics · 12 min
Turn GMV into net revenue and contribution per order, read a cohort’s GMV retention from retention and frequency, and find the payback year on a buyer.
SQL Cohort Drill · 25 min
Write the cohort, retention and rolling-active queries interviews ask for, and read each result without misreading it.
Where this work is done
Minority stakes in companies that already work and need capital to scale. Between PE and VC.
Early-stage minority investing. Judgement about people and markets, far less modelling.
How to get in and prepareCover a sector, publish a view, defend it to clients. The best writing training on the map.
How to get in and prepareBuy companies for an operator. The modelling is banking; the judgement is not.
How to get in and prepareIn-house consulting with implementation attached. Half analysis, half getting it done.
How to get in and prepareRead
- SaaS Operating Models: ARR, Sales Capacity, Billings and the Metrics That Follow · How a SaaS operating model is built: sales capacity to new ARR, the ARR roll-forward, billings and deferred revenue, and the unit economics investors read.
- How to Build a Three-Statement Model That Actually Balances · The build order for a three-statement model: revenue drivers, working capital, fixed assets, the debt schedule, and making the balance sheet balance.
- Equity Research Interview Questions: The Coverage Mindset · The equity research interview question bank: stock pitches with price targets, estimate-building, earnings reactions, and how ER differs from IB.
- Financial Modelling Best Practices: The Conventions That Make a Model Auditable · The formatting, structure and formula conventions that separate a bank-grade model from a spreadsheet nobody else can open, and the anti-patterns to avoid.
The vocabulary
Questions
How is a marketplace modelled differently from a SaaS company?
A SaaS model starts from contracts: annual recurring revenue moved by new bookings, expansion and churn, with revenue recognised over the contract. A marketplace model starts from buyers and orders: cohorts of buyers, how often they order, the value of each order, and the share of it the marketplace keeps. One is judged on net revenue retention and CAC payback; the other on GMV retention, take rate and contribution per order.
Which metrics do technology interviews test?
For software: ARR, net and gross revenue retention, CAC payback, LTV to CAC, the magic number and the Rule of 40. For marketplaces: GMV against revenue, the net take rate, contribution per order, cohort GMV retention and buyer payback. The labs drill both sets, and each model page lists the mistakes a reviewer looks for.
Why do technology models use cohorts?
Because an average hides whether the business is getting better or worse. A blended retention rate can hold steady while every new cohort retains worse than the last, and a cohort view shows it. Both models build revenue from customers or buyers acquired in each period for that reason.