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Financial Strategy & Guidelines

What's on this page

  • Core content for this topic in the Inkorporated enterprise OS.
  • Practical guidance, roles, or standards as applicable.

What this enables

  • Consistent enterprise operations and decision-making.
  • Shared language for humans and cyborg AI agents.

This document outlines the high-level financial principles and strategies that drive capital allocation, budgeting, and growth at Inkorporated.

1. Capital Allocation Framework

Our primary goal is to maximize long-term free cash flow per share. We allocate capital based on a 70/20/10 model:

  • 70% Core Business: Investment in proven revenue engines (e.g., Sales capacity, reliability engineering). Low risk, predictable returns.
  • 20% Adjacent Opportunities: Expanding existing products into new markets or adding complementary features. Medium risk.
  • 10% Moonshots: High-risk, high-reward R&D projects (e.g., AI research, new product lines). Most will fail, but one success can define the next decade.

2. The "Rule of 40" (SaaS Metric)

As a growth-stage technology company, we balance growth and profitability using the Rule of 40:

$$ \text{Growth Rate (\%)} + \text{Profit Margin (\%)} \ge 40 $$

  • Implication: If we are growing at 100% YoY, we can afford to burn cash (-60% margin). If growth slows to 20%, we must generate 20% profit.
  • Target: We aim to stay above the line, prioritizing growth in early stages and efficiency as we mature.

3. Unit Economics

We do not scale negative unit economics. Before aggressive GTM expansion, a product line must demonstrate:

  • LTV / CAC > 3.0: The Lifetime Value of a customer must be at least 3x the Cost to Acquire them.
  • Payback Period < 12 Months: We should recover the CAC within the first year of the customer contract.

Key Definitions

  • CAC (Customer Acquisition Cost): (Sales + Marketing Spend) / New Customers Acquired.
  • LTV (Lifetime Value): (ARPU * Gross Margin %) / Churn Rate.

4. Budgeting & Burn Rate

Zero-Based Budgeting

We do not simply add 10% to last year's budget. Every fiscal year, department heads must justify all expenses from zero, ensuring resources flow to the highest ROI activities, not just legacy programs.

Runway Management

We maintain a minimum of 18 months of runway (cash in bank / monthly burn) at all times to weather macroeconomic downturns without forced layoffs.

5. Procurement & Spending Authority

To maintain speed while ensuring control: * Software/SaaS: All new software subscriptions must undergo a Security & Compliance review. * Cloud Spend: Infrastructure spend is monitored daily. R&D engineering is empowered to spin up resources, but "zombie" instances (idle resources) are aggressively terminated. * Travel: We fly economy for flights under 6 hours. We invest the savings in product.

6. Equity Compensation Strategy

We view equity as a primary wealth creation vehicle for employees. * Grant Strategy: We target the 75th percentile of market data for equity grants. * Refreshers: Performance-based equity refreshers are granted annually to retain top talent and align long-term incentives. * Exercise Windows: We support extended exercise windows (up to 10 years) for vested options where legally feasible, acknowledging that liquidity events take time.