Neil Patel

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How detailed should the financials in a pitch deck be? How much financial detail should startups provide in a pitch deck when fundraising?

How much is too much detail? How little is too little?

Financials are clearly a core part of any business and fundraising campaign. Securing funding for a startup is a financial transaction for both sides. All though there may be a lot of dressing that goes on top of that. It still comes down to the numbers.

Of course, financial transactions, from buying a cup of coffee, to new clothes, where you vacation and invest your own funds, are also very emotionally driven. Even if we don’t always realize that.

This is where getting just the right balance of financial detail in your pitch deck will make all the difference between success and failure in fundraising. As well as, which investors you are able to onboard, and on what terms.

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The Ultimate Guide To Pitch Decks

    Financials & The Pitch Deck

    The financial slides are the longest viewed by investors in a pitch deck.

    On average, investors dedicate less than three minutes to view a pitch deck. A great deal of that time can be on the financials slides.

    That can be both because they are often made too complex, as well as their importance. You want to show attractive financials. Though, you don’t want them to derail your flow and ability to carry investors through to taking action and taking the next step toward funding you.

    They can be a great trigger to help prospective investors see that this is a no-brainer. Or they can be a stumbling block that holds you back.

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    Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

    Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

    The Purpose Of Financials In A Pitch Deck

    There are two distinct types of financials in a pitch deck. Each has its own place and purpose in fundraising.

    Historical & Current Financials

    This slide shows your current financial position and your financial performance over the past couple of years.

    If you are a brand-new startup, which hasn’t been operating or selling yet, you can skip this slide, and go right into your financial forecasts.

    If you have been operating and include this slide, it shows how strong of a financial position you are in, or not.

    If you have a high burn rate, and little runway due to limited cash in your bank account, then investors are in a stronger negotiating position. They know you need the money. If you only have a couple of weeks of payroll left in the bank, then you are going to have to take whatever money you can, on any terms offered. Or you’ll have to shut down.

    On the other hand, if you still have a lot of capital in the bank from your last round, and you have sales and some income, you may not only have a stronger startup but be in the power position for negotiating the terms of the investment. Including valuations, board seats, voting rights, and other clauses.

    Your financial track record will also be the basis of some valuation methods, and show the growth trajectory your company is on. Which shows the potential returns, and what investors can expect from you in the future.

    Financial Forecasts

    Financial forecasts also have their own purposes when pitching investors.

    The most obvious is to paint a picture of the future and what’s possible. While there is a danger of underselling yourself and your business here, many need you to create that vision for them.

    In turn, that directly shows the potential return on their investment, and impact this investment can have.

    This is also an exercise and text of your ability to think big, plan, and focus. In reality, both experienced entrepreneurs and investors know that, at least when it comes to the financial forecast, this is often the least tangible information in your pitch deck.

    So, much can and will change on the journey ahead. Perhaps even including your products, target market, types of customers, and how you make money. Not to mention all the fun curve balls life likes to throw. Such as COVID lockdowns, new regulations, hurricanes, hyperinflation, and more.

    So, this slide is often more of a test of you, than about exactly how much the line items are.

    If your numbers just don’t work, that can be the end of it. Though, if they are at least close, this can be an area that an investor may see they can come in and add a lot of value. Such as increasing operational efficiency, or plugging you into new supersized distribution channels.

    Where Do The Financials Belong In A Pitch Deck?

    The financials belong just about smack in the middle of your pitch deck slides.

    That is right after your business model slide, and right before your amount being raised and use of funds slides.

    How Detailed Should Financials Slides In A Pitch Be?

    You need to give prospective investors enough data to show that you know what you are doing to enable them to check their boxes and move to the next step.

    At the same time, the number one, overarching principle of creating an effective pitch deck is to keep it clean and simple.

    This absolutely applies to your financial slides too.

    Remember, the whole goal of the financials in a pitch deck is to excite investors, compel them, and speed them through to taking the next step toward funding you.

    Be very, very wary of slowing them down with these slides.

    Historic & Current Financials

    If you have any meaningful sales and financial history, this justifies a slide here.

    Still, keep it simple. Just the main line items and categories, presented in a simple spreadsheet format.

    The only justification to expand here is if you already have multiple products and business lines, or have acquired other companies under your umbrella.

    Another major consideration here is that you want your pitch deck to be shared as freely as possible. You do not want to put concrete boots on your own fundraising efforts by putting in sensitive information that you are not going to want to put out there. If you think investors are going to sign an NDA to be able to look at your pitch deck, you are in for a big wake-up call.

    We’ll address how to share this additional detail in a moment.

    Financial Forecasts

    The same applies here. Only be even more concise and simple.

    You just need one slide. A simple spreadsheet, with the main categories on it.

    These will most likely be sales volume in units, gross income and revenues, expenses, gross profits, and profit margins.

    You may also include the one main metric you are highlighting throughout your pitch deck and are basing your traction on, and the next milestones on.

    Some like to include the number of customers, how much of their income is recurring revenues, and employee headcount.

    How To Provide More Detailed Financial Information

    Many entrepreneurs really struggle with keeping their pitch deck this simple. Especially technical founders. This may also be a big part of the reason that so few startups get funded, and it takes so many so long to get funded and to perfect their pitches through lengthy rounds of pitching and presenting.

    So, what are some of the ways that you can convey additional details that you think are important, and, more importantly, are of interest to investors?

    Virtual Data Room

    The virtual data room is the place to host most of your additional information that doesn’t fit in an effective pitch deck. This certainly includes your financial information.

    Among these documents may be:

    • Profit and loss statement
    • Income statement
    • Cash flow statement 
    • Balance sheet
    • Audited financials
    • Tax returns

    Your Business Plan

    As a new startup, your business plan can also contain a lot of financial information. From market research, with the basis for your assumptions, industry benchmarks, and your more detailed budgets, and forecasts.

    If, instead of having too much information to squeeze into your pitch deck, you are struggling to come up with the numbers to complete your financial forecast, you can go back to this document. Or pause and take the time to complete a real business plan if you have not already.

    Financial modeling software tools can also help you run various forecast scenarios.

    This document and its executive summary can also be added to your virtual data room.

    Q&A Time

    When you get the opportunity to pitch your investment opportunity live, online, or in person, or get to the point of an investor meeting, after sending your initial deck, you should always have time reserved for Q&A.

    This is a great opportunity for investors to ask for more detail about your financials, without you having to clutter your slides with it.

    It also enables you to shine by being prepared to answer these questions swiftly and well. Such as your customer acquisition costs, split of how your revenue is coming in, churn rates, prototype costs, and more.

    Let Them Start Due Diligence

    If investors need deeper financial detail before wiring you money but say that they are interested, let them provide you with a real term sheet.

    After that, you can give those few serious investors that have invested in this step access to your virtual data room, and all of your additional financial details. And that’s how detailed the financials in a pitch deck should be.

    Even as you’re reading up on how many details to add in the financials section of the pitch deck, you should also prepare for a possibility. One where your startup is not making sales as yet. So, how would you present the financials for a startup with no revenue? Check out this video to find out.

    Other Slides Where Data Matters

    These other slides also contain important data points, metrics, and financial indicators that all come together to make a fundable pitch deck.

    • Market Size – Investors want to see a really huge market. One that is growing in the right direction. As well as how much of that you are targeting and hope to win.
    • Traction – How fast is your startup growing? What are the one main data point and metric that you are laser-focused on improving, and are winning at?
    • Business Model – If there is a specific data point that really makes your business model stand out from anything else created in this space before, you may want to highlight that on this slide.
    • Competitive Advantage – What tangible data point can be used to show a clear competitive advantage, and one that is defensible?
    • Use Of Funds – What buckets are you going to spread this investment across? How will that drive your financials? What milestones will that enable you to achieve before you need more funding?
    • Team & Advisors – What financial achievements have your team members and advisors been able to put up on their resumes? Have they managed a certain amount of sales? Taken a company to a big valuation and exit?

    Summary

    Getting the right level of detail in your pitch deck is critical to a successful fundraising campaign. This especially applies to your financial slides.

    This is not just about having the right numbers that investors are looking for. It is also a test of you, and your team. Including your ability to simply put together an effective sales pitch and plan.

    When it comes to financial details, you do need to check the boxes of information that investors have on their lists. You also need to be sure this doesn’t hinder your campaign. Nor prevent them from having the time and momentum to take the next step in funding your startup.

    Get this right, know-how and where to provide more detail when needed, and your fundraising campaigns will be much more efficient and successful. And, that’s how detailed the financials in a pitch deck should be.

    You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.

     

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    Neil Patel

    I hope you enjoy reading this blog post.

    If you want me to help you with your fundraising, just book a call.

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