“What revenue projections should I put in my pitch deck's financial forecast slides?”

This question comes up again and again in my FundraisingCOUP program, and this is something that almost every early-stage startup struggles with. There is so much uncertainty about the future that coming up with financial projections feels like looking into a glass ball… and seeing pure blur.

First of all – you’re not alone. All early-stage startups have to operate in an environment with a huge amount of uncertainty, nothing is promised or guaranteed, especially when it comes to projected revenue. The good news is that VCs are aware of the uncertainty, and very well know that most of the startups never hit the projected financial milestones. Not even close…

What is better: conservative or aspirational?

First - from my perspective, I would never recommend saying that a forecast is “conservative”, because even if you think it’s conservative, most of the time it’s far from realistic, and VCs know it. Also, avoid being too aspirational to a point where it’s obviously unachievable.

What I’d do instead as a rough guideline: present a bullish forecast that is achievable with outstanding performance.

So what do VCs want to see?

Attractive projections: The numbers should stress that you’re building a highly attractive, big business with venture returns.

Understanding business variables and mechanics: Much more important than the concrete numbers for VCs is to see that you know the variables that will have the biggest influence on your financial performance. What are the determining factors that will make you earn $5 million or $50 million? What are the biggest factors determining your margins? Showing that you understand the mechanics of your business is what truly matters.

Confidence in uncertainty: As a CEO, your job is to navigate uncertainty confidently. Show that you understand the risks, have made smart assumptions, and are prepared with mitigation strategies. VCs want to see that you are capable of dealing with uncertainty in a confident manner. Don’t let VCs feel that you’re overwhelmed by the task of coming up with projections given the one million uncertainties.

But, it’s okay to admit what you don’t know and what you’re not sure about. Just don’t say it in an “excuse-like” tone, be confident about the things you’re uncertain about.

So: Set aspirational goals that are achievable with a stellar execution, show that you made your projections based on smart assumptions and that you know the main drivers of your business case, and convey that you’re a leader who can navigate with confidence in uncertain environments, that you know the risks and how to mitigate them.

In other words: It’s less about hitting precise numbers in your slide, and more about demonstrating your confidence, and understanding of business dynamics. Your financial projections should convey a clear understanding of the key drivers of your business and your ability to manage them effectively.

Conclusion: In your pitch deck, the financial forecast is your opportunity to showcase that you have a well-thought-out approach to your business’s future. Confidence, clarity, and a solid grasp of your startup's mechanics are what will make your financial projections stand out to VCs.

Story twist: Sometimes it’s better for very early-stage companies not to have a financial slide and financial projections in their pitch deck at all. It’s better to have no financial slide than a slide that is not helpful (e.g. because the assumptions behind the projections are extremely unreliable) and does not convey the right messages. I wrote about the idea of having the courage to leave slides out of your deck in my newsletter #3: link