Neil Patel

I hope you enjoy reading this blog post.

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Are you wondering how to pitch your financial projections to investors?

Financial projections can be one of the most pivotal parts of your presentation and pitch as a startup entrepreneur. They definitely have the power to trip you up and sabotage your startup fundraising campaign if you get it wrong. There is a lot of misinformation and misconceptions about financial projections and pitching investors. Here’s what you need to know when preparing and delivering your pitch to get the funding your venture needs.

The Importance Of Financial Projections

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The Ultimate Guide To Pitch Decks

Aside from the numbers themselves, and doing the math for yourself, there are several reasons why you not only want to understand how to pitch your financial projections to investors but also how to nail it when doing so.

Shows You Know Your Stuff

Many aspiring entrepreneurs have big ideas. They’ve encountered friction or inefficiencies in their daily lives and want to do something about it. Or they believe that they can do better than the companies they’ve worked at already. We do need innovation and progress. Though many end up venturing into new industries they don’t really have experience in.

There are ways to bridge these gaps through advisors and great hires. Yet, many obviously haven’t, and it really shows that they don’t know their industry when it comes to presenting financial projections. Their profit margins, market size, and customer acquisition costs can be way off from industry norms.

Shows You’ve Invested In Research

When you are fundraising, you are asking others to bet their reputations, financial futures, incomes, jobs, and life savings on you. If you haven’t taken a few minutes or invested a few dollars to bother to do any market research, why on earth would they trust you with hundreds of thousands or millions of dollars of their hard-earned money? The effort you’ve put in, and how solid this startup idea is really shown in your financial projections and supporting metrics and assumptions.

Shows You Are Balancing Reality & Optimism

When figuring out how to pitch your financial projections to investors, keep in mind the numbers themselves aren’t nearly as important as the trust and confidence earned with investors from credible financial projections. 

They do want you to think big. Be aggressive. Yet, they also want to see that you are grounded in reality. The impossible may become possible with your technology and innovations. Yet, there may be some laws of business and startup physics you are unlikely to break. This is especially true when it comes to traction and growth projections. Be sure your numbers are based on facts, not some delirious rants and false claims online.

Shows You Can Deliver Acceptable Returns To Investors

Even if you don’t hit your financial projections, investors want to know that this opportunity is big enough to warrant getting into. It has to have the potential to earn them 10x or 100x returns. It may not do that, but it is better to shoot high and come in okay than to gamble on something which only has a maximum potential return of 5x.

Pitching financial projections is a lot about giving savvy investors all the ingredients that they can connect in their minds and see the opportunities themselves, even without your projections. If you’ve got the metrics right, they may see the opportunity as being even bigger than you think.

Remember, it’s not just about what you and your founding team can do yourselves. It is about what can be achieved with teams of the best talent in all areas, investor capital, and the connections and influence your investors can add. 

Financials: One Of The Most Important Slides In Your Deck

It hasn’t always been necessary for early-stage startups know how to pitch your financial projections to investors. Especially, when they are still at the idea stage or are pre-revenue. 

Still, they can help. They give investors the full picture and answer some very important questions for them. Besides, you should be creating these same financial projections as a part of your business plan and internal game plan anyway.

When you do include financials in a pitch deck, the data shows investors will spend more time reviewing these slides than any others.

When it comes down to fundraising keep in mind that it is all about storytelling. For a winning deck, 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.

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

Again, while there are reasons to include them, poorly presented financials can be risky and do more harm than good. Perhaps, most importantly, make sure to keep it simple and avoid being too complicated. The last thing you want is to raise more questions or concerns and stall their decision. Just make sure you are prepared to answer obvious questions that will come back to you. 

Key Metrics To Support Your Financial Projections

Some of the most important key metrics and supporting data points that will determine how to pitch your financial projections to investors are the ones below. 

Unit Economics

More important than your projections of fantastic growth and large scale takeovers of market share is that you have your unit economics down. If you can lay out your unit economics well, it is easy for investors to deduce breakeven point, returns, and potential for profitability themselves.

Market Size

Be sure you are showing realistic addressable market metrics and trends in industry growth, not just big hopes of fantastical scale.

Gross Profit Margins

Profit margins show whether you really know your space, and are building a sustainable business which is insulated from price wars and inflation, and again make it easy for investors to do the projections themselves. It is also a key factor for showing how you can be better than the existing incumbents.

Credible Traction

One of the most common newbie mistakes is projecting big customer numbers, sales, and grow out of the gate. The truth is that as an early-stage startup if you don’t already have a great number of users and sales, you just don’t know. It can take a lot longer than you think. Especially, if you haven’t started selling yet. 

Revenue Per Employee

This is a common metric that experienced investors, business analysts and acquirers look at. It says a lot about your business, profitability, and sustainability. You should be competitive in this area. You also need to be realistic. It may take more hires than you think to achieve the sales you claim you can make. Be sure you are benchmarking or basing these figures on some believable existing statistics. 

Pitching Your Financials

Don’t overthink it or doubt yourself. Do the research, and present the financials in a matter of fact way, and keep moving through to the ask. 

Deliver your pitch with charisma and conviction. Investors should be far more excited and swayed by how you deliver the problem, solution, vision, and team slides than financial projections. 

Explain your ask well. Explain how much you need, why, what it’s for, and the time it will buy you to get to the next milestone or raise, and how you’ll use these funds to prove your financial model.

Then before you rush into an investor meeting, practice, and get feedback from someone with industry and fundraising experience.

Hopefully, this post provided some perspective on how to pitch your financial projections to investors. Also in the video below I cover in detail how to create a pitch deck which will show you where exactly to include the financial projections and at one point investors expect for you to present them as part of the pitch.


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Neil Patel

I hope you enjoy reading this blog post.

If you want help with your fundraising or acquisition, just book a call

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