038. Conservative

Don't say your pro forma financials are "conservative." They are complete fabrications! And that's OK.

VC Minute – quick advice to help startup founders fundraise better.

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Today you on things you should never say while fundraising is the word… conservative. 

Your pro forma financial statements are not conservative. Your revenue projections are not conservative. They are complete fabrications! And that’s okay. 

The point of your pro forma financials is not to accurately forecast how you’re going to get to $10 million MRR by year three. The purpose is in the name. Pro forma is Latin for “for form”. As in, something done for the sake of doing it. 

Whether or not I believe you are going to get to $10 million MRR by year three is kind of beside the point. The point is in the exercise of doing it. I want to see where you think that revenue is coming from, if your cost of sales is realistic, what’s your staffing plan is, and more. 

Show how you get from Here to There, and let me better understand the drivers of growth. 

When you say your projections are conservative, it says two things to me. First, it reinforces the fact that you haven’t been through this process before, because every first time founder says, “these are our conservative projections.” Second, if they’re your conservative projections, then why are you showing them to a growth investor? 

The lesson here is that you don’t need to label them at all because you have already done so: they are pro forma. And they should reflect the growth that you can reasonably expect to achieve with this round of financing and how that gets you from Here to There, so you can level up on the treadmill. 


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