Introduction

Financial models rarely fail because of formulas.
They fail because they crumble under minor stress.

Investors expect you to understand how your business behaves when assumptions shift, because real life never follows your base case.

Sensitivity analysis shows whether your business is resilient or fragile.
Most founders avoid it.
Investors rely on it.

This article breaks down how investors stress-test your model, and what they learn about you in the process.

1. CAC Increase Scenario

If CAC rises by 15–20% and your economics collapse, investors know:
your model cannot survive real market conditions.

Marketing efficiency almost always degrades at scale.
If your model doesn’t reflect that, it loses credibility.

2. Churn Increase Scenario

Even a 5% increase in churn can destroy LTV.
If your retention is fragile, your business isn’t ready for scale.

Investors look for resilience in:

• Renewal cycles

• Cohort health

• NRR stability

Weak retention is a major funding blocker.

3. Pricing Pressure Scenario

If your business cannot withstand a slight drop in pricing, the model is brittle.

Competitive markets rarely reward aggressive pricing early.
Discounting, negotiations, and market corrections are real risks.

4. Growth Slowdown Scenario

Growth almost never follows the straight curve founders assume.

Investors check whether:

• Cash burn becomes unsustainable

• Runway collapses

• Future rounds become impossible

If slower growth breaks the model, your strategy is too optimistic.

5. Cost Escalation Scenario

Hiring, operations, and acquisition costs often exceed founder expectations.

If inflated cost assumptions destroy your runway, investors assume poor planning.

Final Message

Your base case doesn’t get funded.
Your resilience does.

Sensitivity proves whether your business can survive reality, not just Excel.