A Financeable Equation is a business story supported by demonstrated positive unit economics, stated precisely enough that a lender or investor can underwrite capital against it.
The story says how the business turns capital into value; the evidence is the data that proves it. Positive 📝Unit Economics are demonstrated with the ratio of 📝LTV:CAC: when each customer returns more than it cost to acquire, more capital produces more value, and the equation can be financed.
The 📝Assembled Brands Financeable Equation is the worked example. Its equation reads: “With some probability over some period of time DTC inventory will set a price.” The story is that inventory held by direct-to-consumer brands will eventually sell, so it can serve as collateral. The evidence came from Integrated Financial Models built for 150 emerging consumer brands from QuickBooks, Shopify, Google Analytics, and Facebook data and benchmarked against each other, which showed that repeat purchasers and positive unit economics separated successful brands from cash-consuming ones. That equation supported tangible asset-backed loans to brands and, in turn, a dedicated credit fund.
We defined characteristics that made some brands successful and some brands infinite cash suckers. Chief among them were repeat purchasers and positive unit economics.