Preparing detailed financial statements, budget, and long-range forecast

by 0x11cbb078596e5100f4cbb999c5c9b69ca2ff6477 (Bronstein)

Should the following Tier 4: up to $60,000 USD, 6 months vesting (1 month cliff) grant in the Community category be approved?

Abstract

A financial model is the foundation for which TradFi companies make decisions around revenue, expenses, partnerships, M&A, etc. We believe that Decentraland would benefit greatly from having a financial model that they could reference when making operating decisions. The financial model would include historical financial statements, a monthly budget for 2022, and a detailed forecast out through 2025.

As a first step, we would propose preparing financial statements for January – May of 2022, and a strawman for what a 2022 budget and long-range forecast would be. We would share our report with the community, and to the extent they were interested, we would propose a new grant to develop a fully-detailed and dynamic financial model.

Grant size

20,000 USD

Beneficiary address

0x11cbB078596E5100F4cbB999c5C9b69cA2FF6477

Description

As DAOs mature, we expect to see more sophisticated financial frameworks emerge in the operations of DAOs.

The three pieces of this are historical financial statements, a near-term budget, and a long-term forecast. These are three things that TradFi companies have entire teams dedicated to building and maintaining. They form the basis for key operating decisions that companies make around revenue, expenses, cash management, etc. and also serve as a helpful launch point when making key strategic decisions around partnerships, fundraising, and M&A.

MakerDAO is a DAO that has detailed financial reporting in place and they use it inform a variety of these operating decisions: https://drive.google.com/file/u/1/d/14U-3xlXC59zmFCd2u42CAFc7uw-NSKaJ/view

Putting together these three things is a material undertaking, so we would propose as a starting point to put together monthly financial statements for January - May of 2022, and a strawman of a short-term budget and a long-term financial forecast. Upon completing that, we would share our report with the DAOs, and would then propose a subsequent grant to build out all years of historical financial statements, in addition to a detailed budget and long-range forecast.

The financial statements and forecast would sit in google sheets, but ultimately we would drive towards having a presentation with visuals so that the community would be able to get monthly / quarterly reports on financial performance and the implications on the long-term financial forecast for Decentraland.

Currently, Jordan and I are charging $500 / hour to do similar FP&A work for web2 companies. Even the initial step of this exercise is a material undertaking, and for $20k, our hourly rate will come out out well below that. We are proposing this initial step because we believe strongly that once the community sees an initial output, they will see the value in what we are doing and be supportive of further grant work for Jordan and I to continue supporting the Decentraland community.

Ultimately, we want to drive towards having a sophisticated FP&A function for Decentraland, and this grant is the first step we would take towards getting there.

Specification

The initial report would be presented in google slides, with the underlying analysis being done in google sheets. The main tools we would leverage to retrieve data would be Etherscan, Apeboard, and Dune.

Personnel

Sam Bronstein: 7 years of investment banking experience at Qatalyst. Worked on $125Bn+ of M&A transactions including the sales of Slack, LinkedIn, Qualtrics, Glassdor, and others.

https://www.linkedin.com/in/sam-bronstein-683b1350/

Jordan Stasnty: 7 years of investment banking experience at Qatalyst and Citi. Worked on $35Bn+ of M&A transactions including the sales of Mailchimp, Five9, Salesloft, and others. Also worked on the IPO of Roku at Citi.

https://www.linkedin.com/in/jordan-stastny-78160461/

All of the above transactions included material amounts of financial modeling and analysis during the valuation and diligence process.

Roadmap and milestones

We would propose sharing our 2022 historical financials and strawman for the budget and forecast no later than 4 weeks after being approved for the grant, with the aim of finishing sooner

Vote on this proposal on the Decentraland DAO