Decoding the Pitch Deck: What Investors Really Want to See in Your Financial Plan
By Nada Nasri
Many entrepreneurs err by believing investors seek flawless figures or endlessly optimistic projections. The truth is simpler and more profound: investors aren’t looking for a fairytale, but for a compelling and logical financial narrative that can be defended with numbers and assumptions.
1. The Story Behind the Numbers
Before even glancing at the bottom line, investors seek a deep understanding of how you arrived at those figures. Your financial plan should narrate how your business model operates and why you believe these numbers are achievable.
- Underlying Assumptions: Clearly articulate your core assumptions. For instance, what is your customer acquisition cost? What is the average customer spend you anticipate? These granular details build trust and demonstrate a thorough understanding of your business.
- Unit Economics: This is the secret language investors speak fluently. Explain how you generate profit from a single sale or a single customer. The ability to prove your business is profitable at the unit level is the strongest indicator of its scalability.
2. Metrics That Can’t Be Ignored
While full financial statements are important, investors typically focus on specific metrics that reveal the company’s health and scalability:
- Burn Rate: This metric measures the rate at which your company is spending its cash. Investors want to know precisely how much runway your current funding provides.
- Cash Flow: Cash is the lifeblood of any business. Demonstrate how you plan to manage your cash inflows and outflows effectively.
- Customer Lifetime Value (LTV) vs. Customer Acquisition Cost (CAC): This ratio is the ultimate indicator of your business’s sustainability. If the cost to acquire a customer is significantly lower than the value that customer will bring over their lifetime, you possess a viable business model.
3. Multiple Scenarios to Earn Trust
Don’t present a single, perfect scenario. Investors favor pragmatic leaders who prepare for all possibilities. Develop your plan with three scenarios:
- Pessimistic Scenario (Worst Case): What if things go wrong? What if sales decline? This scenario demonstrates that you’re aware of the risks and have a contingency plan in place.
- Most Likely Scenario (Realistic): This is the scenario you should anchor on. Its projections should be realistic and based on solid assumptions.
- Optimistic Scenario (Best Case): What if things go better than expected? This showcases the significant growth potential for investors.
In short, a strong financial pitch deck is evidence that you thoroughly understand your business and that you are not merely selling a dream, but are a leader capable of transforming that dream into a measurable reality.
