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On the topic of the content for pitch-decks much has been said.
On the topic of what your financial plan should look like barely anything has been said.
In this thread I will go through why you need to get your financial plan in order and outline what should be included:
On the topic of what your financial plan should look like barely anything has been said.
In this thread I will go through why you need to get your financial plan in order and outline what should be included:
1/10. Plans fail, but planning is good
Yes your plan will be wrong.
The earlier you are the more wrong it is likely to be.
BUT creating a plan lets you think about the big picture and break it down into smaller pieces.
These small pieces will be the actions you take today.
Yes your plan will be wrong.
The earlier you are the more wrong it is likely to be.
BUT creating a plan lets you think about the big picture and break it down into smaller pieces.
These small pieces will be the actions you take today.
2/10. Show insights on industry drivers
Investors want to bet on a team with a competitive advantage.
Either because they worked in an industry OR because they have observed it & have deep insights of what needs changing.
By using the right lingo you can show this in your FP.
Investors want to bet on a team with a competitive advantage.
Either because they worked in an industry OR because they have observed it & have deep insights of what needs changing.
By using the right lingo you can show this in your FP.
3/10. Understanding your prioritisation
Will you put emphasis on organic growth or paid growth? How large share of your organisation will be in tech?
Questions such as these can be target in other forums but it is often in the FP that your prioritisation becomes really clear.
Will you put emphasis on organic growth or paid growth? How large share of your organisation will be in tech?
Questions such as these can be target in other forums but it is often in the FP that your prioritisation becomes really clear.
4/10. A good fundraising financial plan incl:
• 12-24 month historicals (if relevant)
• Forecast for the coming 3-5 years
• Clear display of assumptions, both for revenue and cost
• Hiring plan and estimated salary levels
• Other business critical KPIs (if relevant)
• 12-24 month historicals (if relevant)
• Forecast for the coming 3-5 years
• Clear display of assumptions, both for revenue and cost
• Hiring plan and estimated salary levels
• Other business critical KPIs (if relevant)
5/10. 12-24 month historicals
Naturally this does not make sense if your company doesn't have any data.
But if you do, it should be presented down to a monthly level.
Preferably in a different sheet OR clearly formatted so one easily sees what are actuals and what is forecast.
Naturally this does not make sense if your company doesn't have any data.
But if you do, it should be presented down to a monthly level.
Preferably in a different sheet OR clearly formatted so one easily sees what are actuals and what is forecast.
6/10. Forecast for the coming 3-5 years
This should be your output sheet and presented on a monthly basis.
Be sure to also include cash-flow to make it clear how the money you are raising is correlated with your capital needs.
This should be your output sheet and presented on a monthly basis.
Be sure to also include cash-flow to make it clear how the money you are raising is correlated with your capital needs.
7/10. Clear display of assumptions
There are several ways of doing this.
Either you "hard code" the output sheet and have a sheet where you present assumptions.
Or you have a "drivers sheet" where you build up the assumptions and link to the output sheet.
Consistency is key.
There are several ways of doing this.
Either you "hard code" the output sheet and have a sheet where you present assumptions.
Or you have a "drivers sheet" where you build up the assumptions and link to the output sheet.
Consistency is key.
8/10. Hiring plan and estimated salary levels
This is a part of cost assumptions and a very important one - which is why it deserves a separate sheet.
It both gives insights on how you are building out the organisation, and about the ideal ratios for different functions.
This is a part of cost assumptions and a very important one - which is why it deserves a separate sheet.
It both gives insights on how you are building out the organisation, and about the ideal ratios for different functions.
9/10. Other business critical KPIs
Here you might want to highlight:
• MRR retention
• User retention
• Sales pipeline and conversion rates
• CAC development over time
• Revenue concentration
etc.
Whatever captures the essence of your business the best.
Here you might want to highlight:
• MRR retention
• User retention
• Sales pipeline and conversion rates
• CAC development over time
• Revenue concentration
etc.
Whatever captures the essence of your business the best.
10/10. Formatting
Some guidelines:
• Use neutral colors
• Be clear on historical vs forecasted numbers
• Use different formatting for hardcoded numbers, formulas, and assumptions
• Don't be afraid to leave rows empty and create space
Some guidelines:
• Use neutral colors
• Be clear on historical vs forecasted numbers
• Use different formatting for hardcoded numbers, formulas, and assumptions
• Don't be afraid to leave rows empty and create space
+ Final comment
Preparing material is as much about creating the actual decks / sheets as it is learning about what you and your potential co-founders see the company grow into.
Irrespective of how "correct" the plan turns out to be, aligning on future goals is time well spent.
Preparing material is as much about creating the actual decks / sheets as it is learning about what you and your potential co-founders see the company grow into.
Irrespective of how "correct" the plan turns out to be, aligning on future goals is time well spent.
