Financial Plan
The Big Picture
We're building OurOtters to help co-parents work together better. Right now, we think the company is worth about $2.25 million and we need to raise $375,000 to keep building for the next 15 months.
Our business model is straightforward: we charge users $10 per month for our co-parenting tools. If we can get to 150,000 users by year two, we'll stop losing money and start making a profit.
Raising Money
What We're Offering
We're using a SAFE note with a $2.25 million valuation cap and a 15% discount for early investors. We've set aside 25% of the company for employee stock options, which is pretty standard for a startup our size.
Who We're Looking For
We're hoping to find one anchor investor who'll put in about $187,500 (half our round), plus several smaller investors ranging from $5,000 to $50,000 each.
The Reality of Fundraising
Based on what other founders have told us, fundraising is a numbers game. We'll probably need to contact over 200 potential investors to get 20-25 first meetings. Of those, maybe 6-8 will want a second meeting, and 3-4 will actually do due diligence. If we're lucky, we'll get 1-2 term sheets and close with 8-10 investors total.
How We Make Money
Pricing Strategy
We have three tiers: a free version with basic features, Plus at $9/month that adds analytics and payments for multiple kids, and Family at $15/month for complex co-parenting situations with legal templates and API access.
For launch, we're offering early bird pricing at $4.99/month for the first year (50% off), then moving to regular pricing at $9.99/month. Our goal is to average $10 per user per month across all tiers.
Growth Projections
These numbers are optimistic but based on our market research. In year one (2025), we're targeting 10,000 users and $1.2M in revenue, growing 15-20% each month. By year two, we hope to reach 50,000 users and $6M revenue as growth slows to 10-15% monthly. Year three should bring us to 150,000 users and $18M revenue with steady 8-12% monthly growth.
Based on industry benchmarks, freemium conversion rates are tough - most SaaS companies see 2-5% conversion from free to paid. For family apps, it's often even lower due to budget sensitivity and the need for both co-parents to agree. Realistically, we expect 92-95% of users to stay free, 5-7% to upgrade to Plus, and 1-2% to pay for the Family tier.
The Math That Matters
Customer Economics
We estimate it'll cost us $40-60 to acquire each new user, and each user should be worth $400-900 over their lifetime with us. That gives us a 10-15x return on our customer acquisition investment, which is pretty solid. We should break even on each customer within 4-6 months.
For retention, we're planning for 5-8% monthly churn (people who cancel), which means about 70% of customers stick around for at least a year. We also expect existing customers to spend more over time, growing revenue by 110% annually from our existing base.
Compared to most software companies that spend $100-150 to get a customer, we think we'll be more efficient because co-parents talk to each other and spread the word. Plus, our AI features let us charge premium pricing.
What We Spend Money On
Team Costs
Right now we're spending $300,000 per year on salaries for our small team. As we grow, we'll expand to 4-5 people in year one, 8-10 people in year two, and 15-20 people by year three.
Technology Infrastructure
Our technical costs will grow with usage, but we're being strategic about AI costs. We're budgeting $5K-$15K monthly for servers and hosting, $10K-$25K for AI services, and $3K-$8K for other software like payment processing and calendar integrations.
Critical for unit economics: Since 92-95% of users will stay free, we can't afford to run expensive AI models like GPT-4 for every interaction. We're planning to use Google's new Gemma 3n (released June 2025) for basic AI features for free users. Gemma 3n runs entirely on-device with only 2-3GB memory requirements, costs us essentially nothing per request, and supports multimodal inputs (text, images, audio) - perfect for features like OtterSnap document processing.
Free users get Gemma 3n-powered AI features running locally on their devices. Paid users get access to premium cloud AI models (GPT-4, Claude) for more sophisticated capabilities. This tiered approach is essential for a sustainable freemium model - we literally cannot afford to pay OpenAI $0.01+ per request for 95% of our users who never pay us.
Marketing and Sales
We plan to spend about 60% of our revenue on customer acquisition: 30% on digital advertising, 5% on content creation, 10% on community building, and 15% on sales operations.
Business Operations
The usual business expenses add up to about $70K-$160K annually: legal and compliance ($25K-$50K), accounting ($15K-$30K), insurance ($10K-$20K), and office equipment ($20K-$40K).
Financial Milestones
Pre-Seed Metrics (Current)
- Development Progress: 40% complete
- Team: Lean, experienced
- Market Validation: Early access signups
Seed Stage Targets (12-18 months)
- Users: 25,000+
- Revenue: $3M+ ARR
- Product-Market Fit: Validated
- Team: 8-10 people
Series A Readiness (24-30 months)
- Users: 100,000+
- Revenue: $12M+ ARR
- Market Position: Top 3 in co-parenting space
- International Expansion: Ready
Risk Analysis & Mitigation
Market Risks
- Competition: Mitigated by AI differentiation
- Market Size: Conservative projections used
- Regulatory: HIPAA compliance built-in
Financial Risks
- Fundraising: Multiple investor types targeted
- Burn Rate: Conservative spending plan
- Revenue: Diversified pricing tiers
Operational Risks
- Technical: Greenfield development reduces debt
- Team: Key person risk managed through documentation
- Customer: Early access program validates demand
Use of Funds
$375,000 SAFE Note Allocation
-
Product Development (40% - $150,000)
- Complete MVP development
- AI feature enhancement
- Mobile app optimization
-
Team Expansion (35% - $131,250)
- Senior developer hire
- AI/ML engineer
- Product designer
-
Marketing & Customer Acquisition (15% - $56,250)
- Early access campaign
- Community building
- Content marketing
-
Operations & Infrastructure (10% - $37,500)
- Cloud infrastructure scaling
- Legal & compliance
- Financial systems
Exit Strategy Considerations
Acquisition Targets
- Strategic Acquirers: Family law firms, legal tech companies
- Tech Acquirers: Microsoft (family services), Google (AI applications)
- Financial Acquirers: Private equity focused on recurring revenue
Valuation Multiples
- Current Stage: 3-5x revenue
- Growth Stage: 8-12x revenue
- Mature Stage: 15-25x revenue
Financial projections based on market research, comparable company analysis, and conservative growth assumptions. Actual results may vary.