Hi, everyone. This is Alejandro Cremades, and today we’re going to be talking about
how to present financials for a startup with no revenue. Before we get started, make sure
that you hit that Subscribe button, and this way, you will never miss out on any of the
videos that we roll out every week. The financials are supercritical. When you’re
raising money, it is without a doubt one of the things that the investor is going to zoom
in on the most. In today’s video, we’re going to be walking you step-by-step to how
to address it, how to tackle it and really do it on a positive note and come out strong.
So with that being said, let’s get into it.
The financials always have a very important place in the pitch deck. Typically, you’re
going to be putting them toward the end of the presentation. But, remember, there are
studies that have determined that investors, on average, spend 2:41 reviewing a pitch deck.
By the way, you can use the pitch deck template below, which founders are using all over the
world to raise millions. But here’s the thing, out of those 2 minutes and 41 seconds
that investors spend on every presentation, the one slide where they spend the most amount
of time is the financials page. Here’s the thing: we don’t know where
we’re going to be tomorrow because things change rapidly, and, obviously, you may not
have revenue – your company does not have revenue today. But the investor wants to know
how you’re going to be able to monetize tomorrow, in the future? That’s why it is
very important to really give them an understanding that you’ve done your homework, that you
have a good grasp on the numbers, and that you know when money would come in and money
would go out. Having those numbers in place really makes a difference.
Again, on the pitch deck, the last thing that you want is to just take a screenshot and
just copy/paste it in your presentation. Be more diligent. Create a nice summarized version
of that with a beautiful graph and very nicely designed, so that it is easier for them to
digest because the investors don’t want to read; they don’t want to spend time;
they want to skim through the presentation. For that reason, you want to make it stupid
simple for them so that they’re able to get it right away.
When we’re talking about what financials to show, ultimately, this is like everything.
There are going to be some investors that are going to expect that you show them up
to three-year projections or maybe historicals. Then other people may want up to five years.
Now, some of the things where you’re going to be putting an emphasis on are the following.
Gross revenues Net income
Cash flow Profit margins
Rate of growth Those types of numbers are going to give them
an understanding of how to benchmark you against other players in the market. Then, also, how
they can potentially multiple the outcome with a potential investment either on the
business or ultimately on their investment because they’re going to be doing their
numbers to estimate what potential returns they can make out of investing in your business.
For this, ultimately, you want to make it easier for them. You want to give it in a
way in which they can digest it easily. This is not unnormal or the type of thing
that doesn’t happen. It happens all the time, startups that don’t have revenue during
the early stages. Obviously, you’re not going to be focusing as much on the way that
you would engineer those numbers if you were a little bit farther along on the execution
of your business. Some of the things that you can talk about
are the following: Unit economics
User count Profit margins
Retention rates Most of your numbers are going to be projections,
so just keep it simple and go straight to the point.
There are other metrics that you can rely on when you are pitching investors, and perhaps
you don’t have those revenue numbers. One of them is the market size – if the market
is big enough, and investors want the market to be $1 billion-plus so that it justifies
the risk that they’re encountering by investing in your business, and that needs to be big
enough. And as they say, investors would prefer investing in a mediocre team or average team
that is executing in a super-big market versus an amazing team that is executing in a very
short market because the market is really going to be determining their returns that
they get on the investments that they placed on you.
Now, the other thing that you could also talk about is the customer acquisition. You can
talk about the cost. You can talk about the channels that you’re using, the distribution
that you have access to. But this is another incentive to showcase to the investor that
you know what you’re doing, that there is clear growth, and that there is a great future
and a lot of possibilities if they were to invest in your business.
Financials are incredibly important. You ultimately want to nail it on the financials. Keep it
simple and straight to the point. And always remember, if the investor is asking you for
anything related to the financials, maybe in a meeting, and you’re not sure as to
how to respond, don’t make it up. Just thank them for the question, and say, “If it’s
okay, I will follow-up via email with that answer. And that’s pretty much it.
So, hit a Like on this video. Subscribe to the channel so that you don’t miss out on
any of the videos that we’re rolling out every week, and leave a comment and let me
know what you’re up to nowadays. If you’re raising money, as well, shoot me an email
at alejandro@pantheraadvisors.com. We love to help out. Thank you so much for watching.