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Business Case

Cost Structure Breakdown

B2G businesses have a more complex cost structure, and getting it right matters for understanding your actual unit economics. Implementation isn't free — there are often subcontractor costs, partner fees, setup labor that varies by customer segment. Third-party licenses might be billed annually per user or per transaction. Delivery costs might include SMS notifications, payment processing with different rates for different payment types, or API calls to government systems.

When most founders think about cost of goods sold, they think about hosting costs and maybe payment processing fees. It's a simple mental model that works for straightforward SaaS businesses: you pay Amazon some money for servers, you pay Stripe some money for transactions, and whatever's left is gross profit. Clean, easy to calculate, easy to explain.

B2G businesses have a more complex cost structure, and getting it right matters for understanding your actual unit economics. Implementation isn't free — there are often subcontractor costs, partner fees, setup labor that varies by customer segment. Third-party licenses might be billed annually per user or per transaction. Delivery costs might include SMS notifications, payment processing with different rates for different payment types, or API calls to government systems.

The challenge is that these costs don't all behave the same way. Some are truly fixed — you pay them once regardless of usage. Some scale with customers, some scale with transactions, some scale with users within a customer. A cost that's fixed per contract but variable per user creates different margin dynamics than a cost that's a percentage of revenue. Most templates force you to pick one model and apply it everywhere.

The Verter Studio framework supports seven different cost calculation methods, and you can apply different methods to different products and different customer segments. Fixed one-time costs for setup. Fixed annual costs spread over the contract. Fixed monthly costs that recur regardless of usage. Annual costs per seat. One-time costs per new user. Monthly costs per active user. Percentage of sales for transaction-based fees.

This granularity matters because it lets you see gross margin by customer segment, by product, and by revenue type. You might discover that your enterprise segment has great margins but your small-government segment is underwater once you account for implementation costs. You might find that your transaction fee revenue has much worse margins than your license revenue because of payment processor costs. These insights are invisible if you're using a simple "hosting plus processing" cost model.

→ Fixed One Time: Setup, implementation, onboarding
→ Fixed Annual: Partner licenses spread over contract
→ Fixed Monthly: SaaS fees, hosting, recurring services
→ Fixed Annual Per Usage: Per-seat annual licenses
→ Fixed for New Users: Onboarding cost per user added
→ Fixed Monthly per User: Per-seat cloud costs
→ % from Sales: Payment processing, commissions

How granular is your cost modeling, and what might you be missing?

hashtag#COGS hashtag#UnitEconomics hashtag#B2G hashtag#B2B hashtag#SaaS hashtag#FinancialModeling

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Cash is a king

VENTURE CAPITAL, ACCELERATORS, AND B2G STARTUPS - The Infrastructure Gap in Financial Planning for Business-to-Government Companies

$183.5 billion. That's how much the US federal government awarded to small businesses in FY 2024 — an all-time record. The GovTech market is projected to hit $2.9 trillion by 2033. Funding is surging. Accelerators are multiplying. Government innovation offices are actively seeking startup partners. And yet, B2G startups keep dying. Not because their products fail. Not because the market isn't there. Because the financial tools they rely on — the same MRR-based templates, SaaS churn models, and linear growth projections that work beautifully for consumer software — are structurally incapable of modeling how government contracts actually work. Net-90 payment terms. Milestone-based invoicing. Multi-year commitments. S-curve adoption with 12–24 months of "Death Valley" before revenue accelerates. Working capital gaps that can exceed $500,000 before a single dollar arrives. Standard financial models hide all of this. The result: founders make spending decisions based on phantom revenue. Investors misprice risk using metrics designed for a different business model entirely. Accelerators evaluate companies with scorecards that don't match the operating reality those companies will face. We analyzed 50+ financial planning tools across four market segments. The finding: zero specifically address B2G revenue recognition, contract-based churn, or government payment cycle modeling. Not at the $150K enterprise tier. Not at the $300 template tier. Nowhere. We also examined regulatory requirements from the US GAO, UK Cabinet Office, and OECD — all of which mandate vendor financial viability assessment but offer no standardized framework for early-stage companies. The full report, "Venture Capital, Accelerators, and B2G Startups: The Infrastructure Gap in Financial Planning for Business-to-Government Companies," is a 20-page analytical deep-dive covering the VC blind spot, the accelerator paradox, the regulatory dimension, and what contract-aware financial infrastructure should actually look like.

Cash is a king

VENTURE CAPITAL, ACCELERATORS, AND B2G STARTUPS - The Infrastructure Gap in Financial Planning for Business-to-Government Companies

$183.5 billion. That's how much the US federal government awarded to small businesses in FY 2024 — an all-time record. The GovTech market is projected to hit $2.9 trillion by 2033. Funding is surging. Accelerators are multiplying. Government innovation offices are actively seeking startup partners. And yet, B2G startups keep dying. Not because their products fail. Not because the market isn't there. Because the financial tools they rely on — the same MRR-based templates, SaaS churn models, and linear growth projections that work beautifully for consumer software — are structurally incapable of modeling how government contracts actually work. Net-90 payment terms. Milestone-based invoicing. Multi-year commitments. S-curve adoption with 12–24 months of "Death Valley" before revenue accelerates. Working capital gaps that can exceed $500,000 before a single dollar arrives. Standard financial models hide all of this. The result: founders make spending decisions based on phantom revenue. Investors misprice risk using metrics designed for a different business model entirely. Accelerators evaluate companies with scorecards that don't match the operating reality those companies will face. We analyzed 50+ financial planning tools across four market segments. The finding: zero specifically address B2G revenue recognition, contract-based churn, or government payment cycle modeling. Not at the $150K enterprise tier. Not at the $300 template tier. Nowhere. We also examined regulatory requirements from the US GAO, UK Cabinet Office, and OECD — all of which mandate vendor financial viability assessment but offer no standardized framework for early-stage companies. The full report, "Venture Capital, Accelerators, and B2G Startups: The Infrastructure Gap in Financial Planning for Business-to-Government Companies," is a 20-page analytical deep-dive covering the VC blind spot, the accelerator paradox, the regulatory dimension, and what contract-aware financial infrastructure should actually look like.

Cash is a king

VENTURE CAPITAL, ACCELERATORS, AND B2G STARTUPS - The Infrastructure Gap in Financial Planning for Business-to-Government Companies

$183.5 billion. That's how much the US federal government awarded to small businesses in FY 2024 — an all-time record. The GovTech market is projected to hit $2.9 trillion by 2033. Funding is surging. Accelerators are multiplying. Government innovation offices are actively seeking startup partners. And yet, B2G startups keep dying. Not because their products fail. Not because the market isn't there. Because the financial tools they rely on — the same MRR-based templates, SaaS churn models, and linear growth projections that work beautifully for consumer software — are structurally incapable of modeling how government contracts actually work. Net-90 payment terms. Milestone-based invoicing. Multi-year commitments. S-curve adoption with 12–24 months of "Death Valley" before revenue accelerates. Working capital gaps that can exceed $500,000 before a single dollar arrives. Standard financial models hide all of this. The result: founders make spending decisions based on phantom revenue. Investors misprice risk using metrics designed for a different business model entirely. Accelerators evaluate companies with scorecards that don't match the operating reality those companies will face. We analyzed 50+ financial planning tools across four market segments. The finding: zero specifically address B2G revenue recognition, contract-based churn, or government payment cycle modeling. Not at the $150K enterprise tier. Not at the $300 template tier. Nowhere. We also examined regulatory requirements from the US GAO, UK Cabinet Office, and OECD — all of which mandate vendor financial viability assessment but offer no standardized framework for early-stage companies. The full report, "Venture Capital, Accelerators, and B2G Startups: The Infrastructure Gap in Financial Planning for Business-to-Government Companies," is a 20-page analytical deep-dive covering the VC blind spot, the accelerator paradox, the regulatory dimension, and what contract-aware financial infrastructure should actually look like.

Scenario planing

B2G fundraising process and common questions

→ "What's your sales cycle?" — Have the real data, not the optimistic version → "How do you handle payment delays?" — Show your working capital strategy → "What's your renewal rate?" — Explain why it's different from monthly churn → "Show me the downside scenario" — Have it modeled and ready → "When do you hit cash flow positive?" — Know the date and what drives it

Scenario planing

B2G fundraising process and common questions

→ "What's your sales cycle?" — Have the real data, not the optimistic version → "How do you handle payment delays?" — Show your working capital strategy → "What's your renewal rate?" — Explain why it's different from monthly churn → "Show me the downside scenario" — Have it modeled and ready → "When do you hit cash flow positive?" — Know the date and what drives it

Scenario planing

B2G fundraising process and common questions

→ "What's your sales cycle?" — Have the real data, not the optimistic version → "How do you handle payment delays?" — Show your working capital strategy → "What's your renewal rate?" — Explain why it's different from monthly churn → "Show me the downside scenario" — Have it modeled and ready → "When do you hit cash flow positive?" — Know the date and what drives it

Scenario planing

Government Customer Segments

Customer segmentation is one of the most underappreciated aspects of B2G financial modeling. Government customers aren't interchangeable — a municipal contract and a federal contract might both involve the same product, but they have completely different sales cycles, payment terms, pricing ceilings, and renewal dynamics. Treating them as one bucket hides the real economics of your business.

Scenario planing

Government Customer Segments

Customer segmentation is one of the most underappreciated aspects of B2G financial modeling. Government customers aren't interchangeable — a municipal contract and a federal contract might both involve the same product, but they have completely different sales cycles, payment terms, pricing ceilings, and renewal dynamics. Treating them as one bucket hides the real economics of your business.

Scenario planing

Government Customer Segments

Customer segmentation is one of the most underappreciated aspects of B2G financial modeling. Government customers aren't interchangeable — a municipal contract and a federal contract might both involve the same product, but they have completely different sales cycles, payment terms, pricing ceilings, and renewal dynamics. Treating them as one bucket hides the real economics of your business.