Projections: What should be in the slide deck for your fundraise?

It’s time for the projections slide. Find more helpful tips from Brett: Demystifying the Go-to-Market slide. This is a guest post from Brett Brohl, Managing Partner at Bread & Butter Ventures. View the original post here.

We’re continuing our series that deep dives into the individual slides that comprise a seed stage pitch deck. In today’s post, I’m going to dissect the projections slide — an important element that offers visibility into how you believe your startup will scale.

This slide tends to be all over the place! I have seen everything from a screenshot of an excel spreadsheet (pro tip — don’t do this) to decks that omit projections entirely! In general founders tend to overthink the projections slide while somehow simultaneously forgetting to put enough strategic thought into it. When done effectively, the projections slide provides investors real insight into your ambition and business acumen as they gauge your growth potential.

Deciphering the Purpose of Projections

This may seem obvious, but the projections featured in your pitch deck should originate from a broader financial model you’ve built. It is crazy how often the projections in a deck don’t match up with the same company’s financial model when we dig in! However, your deck should NOT showcase every minute detail; instead, highlight core KPIs such as user growth, revenue growth, and margin progression through simple, visually engaging graphs. Generally speaking, it is great to see the most recent year’s actual results and then your high-level projections for the next 4–5 years.

To reiterate — do not directly copy and paste an Excel spreadsheet into your slides. I hate this. First of all, it never looks good and is tough to follow. Second, in a first meeting we aren’t going to do a deep dive into your financials, so why show them? Finally, when you throw too much info on a slide investors will stop paying attention to what you are saying and start trying to figure out what the heck is going on in your slide! If someone is reading, they’re not listening. Through your projections slide you are demonstrating when you think your company will start to show that “J-Curve” accelerated growth a startup needs to have. In some ways, it can show an investor how you think about your company’s potential.

Aim for aggressive yet reality-anchored growth assumptions. Assume you will be able to raise realistic amounts of capital in the future and then put those to work. If you present numbers too diminutive or exponentially sky-high, you’ll raise red flags. The goal is to have an investor want to dig into your projections & financials further. You want questions! With that in mind, be ready to provide context to back up all of the assumptions you have made.

Evolution of the Projections Slide

As you progress through seed, Series A and beyond in your fundraising journey, expect increasing complexity in your projections slide. Early on, high-level customer numbers, revenue growth, and perhaps margin profiles are probably enough. As you get later in your journey, investors will want to see more detailed economic projections backed by operating data — things like retention rates, sales cycles, margins, unit economics, conversion benchmarks, churn metrics and more.

At these later stages, the type of metrics you will need to show depends largely on the type of company you’re building. A b2b SaaS company will be different from a direct to consumer CPG startup. Either way, at the later stages you can no longer just pitch team and a dream.

Reading Between the Lines

While important for summarizing your venture’s growth story, avoid fixation on the perfection of each numerical figure in your projections. Keep in mind that these are assumption-driven and wrong 100% of the time. Accentuate certain metrics to showcase business model strengths or the potential for company progress. For example, show expanding margins as you scale because of more efficient operating leverage. Or emphasize improving usage metrics as your product has improved.

It is the directionality and messaging behind the trajectory that matters. What takeaways do you want investors leaving with?

Common Projection Pitfalls

A few places that I often see founders trip up:

• Not linking projections to key assumptions in your financials. First — make sure your slide matches numbers from your detailed financial projections! Then, be ready to explain the rationale behind the assumptions you chose and why they are feasible. Avoid falling into the trap of conjuring up arbitrary hockey stick graphs without tying numbers to operating drivers.
• Too high, too low. Unrealistically quick and giant growth is a red flag. So is straight-line, slow growth. Find the happy medium. One of these shows a lack of vision, the other may indicate that the founder is out of touch with reality.
• Presenting conflicting market sizes. Make sure your total addressable market claims match the scope of what you have in your projections slide! Owning 50% of any market within a few years is tough and miscalculations are obvious red flags.
• Not delineating between revenue streams in the graphs. In other words, don’t try and take your service revenue, onboarding fees, or physical product sales and combine them with your SaaS revenue in one graph. Separate them out. Investors want transparency into the revenue makeup. Own your business model with integrity.

Final Thoughts

The projections slide requires a balancing act — lofty enough to showcase ambition but grounded in assumptions demonstrating savvy strategic thinking. Resist the temptation to worry excessively or over-engineer your financial model. The projections slide is ultimately a reflection of how you conceive navigating the market opportunity and scaling your startup.

Nail the messaging behind the trajectory and treat this slide as a window for investors to look into your plan to conquer the market.

View the original post here.

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