Startup Funding Espresso – Tips for the Startup Financial Pro Forma

Tips for the Startup Financial Pro Forma

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Part of the fundraising documentation is the financial pro forma.

Investors want to know what the founder proposes will happen if they raise the target fundraising amount.

The financial pro forma shows this projection.

Here are some tips on building your startup financial pro forma.

The pro forma should be a bottom-up analysis, not a top-down.

This means each revenue and expense comes from history.

Use historical dates such as 2024, 2025, rather than year 1, year 2, etc.

This helps the investor understand what will happen and when.

For hires, include the full overhead that comes with each one.

For revenue, start with a realistic amount and then apply a growth rate to it.

This will give a steady ramp to the revenue and can be changed easily when the assumptions change.

Model the sales funnel in the pro forma by showing the cost to generate the lead, qualify it, set up a pilot, and close the sale.

Include churn as a part of the financial pro forma.

Build the pro forma with each month listed, but be able to roll it up into quarters for use in the pitch deck.

The investor understands the entire forecast is based on receiving funding, and that is a moving target.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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