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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Mistakes VCs Make

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

Venture capitalists make mistakes just like every other investor.

Here’s a list of mistakes VCs make:

Not investing consistently through the market's ups and downs.

Valuations are better in down markets, and good deals are hard to find in up markets.

Treating venture capital funding as a one-size-fits-all.

There are some sectors of the market that do well with VC funding, while other sectors only waste it.

Quoting returns without taking into account the management and carry fees.

Fees are a cost of investing and should be counted in the return metrics.

Not taking into account the overall portfolio structure.

Time to exit, sector position, and other factors can help build a solid portfolio.

Investing in overvalued startups.

During frothy markets, one can get carried away by stellar startups even though they have outsized valuations.

Not scanning the overall industry for the best deal.

Some VCs choose startups because they are accessible, but this may fail to find the best startup in the industry.

Funding too many deals in a specific application.

Diversification is still a key factor in successful startup funding.

Consider these mistakes VCs make.

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.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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The Dark Side of Venture Capital

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

While venture capital brings many benefits to the startup ecosystem, it also has drawbacks.

Here’s a list to consider:

The venture model generates a high number of startup failures.

By pushing the business to the extreme, many fail.

The standard for venture-backed businesses is very high.

The cost of venture funding is expensive, so losses to the investor are also high.

The pressure to succeed at all costs drives some founders into mental and physical health problems.

Venture capital is still a long way from being an inclusive and diverse group.

Women and minorities are still woefully underrepresented.

The pressure to find and join successful startups can drive investors to overvalue startups.

The emergence of new technologies can turn into market bubbles driven by irrational exuberance.

Venture capital brings many benefits to the startup ecosystem, including capital, innovation, and expertise.

It’s important to keep these challenges in mind.

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.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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The Introductory Version of the Pitch Deck

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

For the first pitch to an investor, build an introductory pitch deck.

The introductory version of the pitch deck simplifies your deal into its most basic presentation.

The pitch deck should focus on one problem, one solution, and one application.

It should have one product, one channel, and one monetization model.

It should have one fundraise, one outcome, and one exit.

The introductory version avoids the many things your business can do.

Investors have a difficult time managing multiple scenarios and outcomes.

Your pitch deck should not go into the many markets and applications it can cover.

Instead, keep it simple and focus on the core elements of the deal.

There will be time later to discuss the options.

Keep it to one thing on each element of the pitch deck.

The goal of the introduction is to convince the investor that this is a fundable deal worth digging into.

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.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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In this episode of Investor Connect, host Hall Martin sits down with Earle Hager, Managing Partner of The Neutrino Donut, a consulting firm specialized in transforming scientific research into commercial solutions. Earle shares his extensive experience in technology evaluation, market planning, and commercialization strategies, highlighting his work with startups, universities, and government-funded projects supported by SBIR/STTR programs.

He discusses his journey from business development roles in Texas to founding Neutrino Donut and working on global projects at the University of Texas at Austin and UC Irvine's tech transfer office. Earl reveals the challenges and successes in helping science-based startups bring their innovations to market, focusing particularly on medical devices. He shares insights on balancing technical rigor with practical market demands, the importance of SBIR funding, and his extensive network of industry contacts.

Earle also explains the meaningful name behind his consulting firm, 'Neutrino Donut,' and emphasizes his commitment to fostering innovation across regions like Austin, Los Angeles, and beyond. To wrap up, Earl outlines the importance of building relationships and continually learning in this dynamic field. For more details, visit Neutrino Donut's website or contact Earl directly on LinkedIn.

Visit The Neutrino Donut at neutrinodonut.com/

Reach out to at ehager@neutrinodonut.com

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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The Role of Venture Capital

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

Venture capital brings innovation and growth to many industries.

The VC model provides funding to startups to innovate and provide new products and business models.

VC funding seeks out innovative ideas that are scalable.

Scalability enables startups to transform the industry.

The tech industry uses venture capital to fund new ideas and disrupt existing business models.

The biotech and healthcare industry use VC to find new drugs and medical devices that improve efficacy and reduce cost.

The consumer product industry uses it to create new products and build brands.

The cleantech industry uses it to transform the economy into a more sustainable future.

Venture capital brings funding that enables a transformation for growth, fostering innovation.

By providing a high return to investors in successful startups, the VC model transforms economics at scale.

The key to venture capital is high growth coupled with a scalable business model.

Any industry with that potential is a candidate for the VC model.

Consider how venture capital can bring growth to your industry.

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.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
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Key Factors Investors Use To Evaluate a Startup

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

Investors review the startup founder’s pitch to determine if it's worth pursuing or not.

Most startup pitches follow the same model of problem, solution, and how it works.

The team, traction, competitive advantage, and business model follow.

The pitch closes with the financial forecast, the investment ask, and the exit strategy.

The team and their track record on launching and exiting startups are the most important factors.

If your team has experience with startup launch and exit, then make that known up front.

Other factors of lesser importance include the following:

The business model.

If you have a recurring revenue business model, then that will positively impact the investors' consideration.

The size of the market and its growth rate are interesting.

The target market has some impact, as some industries are known to be quite profitable, such as healthcare.

The lowest consideration goes to the financial forecast, exit strategy, and investment ask.

These are envisioned numbers and will most likely change over time.

In building your pitch deck, consider these factors and their level of importance to the investor.

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.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
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How To Organize Your Pitch

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

The pitch deck is the key communication tool in startup fundraising.

Here are the key steps on how to organize your pitch:

Start with a one-liner on your business.

State what the business does in a short and concise sentence.

This provides the basic context for the presentation.

Next, identify the key value proposition of the business.

The value proposition shows the startup's unique solution to solving the problem.

Next, identify the key values in the business.

Show the team you have built and how they have the right skills for the task at hand.

Show the revenue traction of the product to demonstrate market and product validation.

Outline the target market, making the case that it’s big enough to provide a venture outcome.

Finally, outline the fundraising ask which invites investors to participate in the business.

By providing a core context to the business, one can then show how the value proposition and values in the business point to a successful startup.

Consider these steps in organizing your pitch.

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.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

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