When you're seeking funding for your startup, the financial projections slide is one of the most critical elements of your pitch deck. This slide shows investors how your business expects to grow financially. It plays a significant role in influencing their decision to invest.
Why financial projections matter
Financial projections give investors a clear idea of how you expect your business to perform financially. They want to see:
- Revenue Expectations: What will your income streams look like as you scale?
- Cost Structures: Your significant costs and how they’ll evolve.
- Profitability: When you’ll move from loss to profit, and how long it’ll take.
These projections show your growth potential and reveal your understanding of key financial drivers.
Investor expectations
VCs and angel investors focus on scalability, break-even points, and long-term viability. They typically ask themselves:
- Scalability: Can the business grow quickly and effectively with additional funding?
- Break-even point: How soon will the company stop losing money and start making a profit?
- Viability: Can the startup thrive in the long run, even after scaling?
What this article covers
A solid financial projection slide will answer these questions, helping investors assess whether your business aligns with their investment strategy. In this article, we’ll discuss the following key areas to help you craft a compelling financial projections slide:
- What is a financial projections slide, and where does it fit in your pitch deck?
- The key financial metrics you should include.
- How to present your projections convincingly.
- Common mistakes to avoid and best practices for a high-impact presentation.
- Real-world examples of effective financial slides.
Who this article is for
This article is specifically for startup founders, entrepreneurs, and business strategists seeking funding. Suppose you want to build a persuasive pitch deck that will attract investors. In that case, the insights provided here will guide you in creating an impactful financial projection slide that communicates your business's growth potential.
What is a financial projection slide?
A financial projections slide is a key component of your pitch deck. It outlines your startup’s expected revenue, expenses, and profitability over the next 3 to 5 years.
This slide is sometimes referred to as the financial summary slide, financial overview slide, financial analysis slide, financial forecast slide, revenue growth slide, sales forecast slide, financial report slide, path to profitability slide, financial highlights slide, and revenue breakdown slide.
It shows investors your business's financial path and sustainability, giving them a glimpse into the future and how their investment will grow.
Where it fits in a pitch deck
The financial projections slide is often one of the last ones investors review in a pitch deck. It is placed after the market adoption and competitive landscape slides and before the team slide. This sequence is because the projections bridge the market opportunity you're addressing and your startup’s financial sustainability.
What investors expect to see
Investors are looking for key details in your financial projections. They use this to gauge your startup's viability and growth potential. The key details include:
1. Projected revenue, expenses, and profitability: Projected Revenue refers to the forecasted income your business expects to generate, while expenses are the costs your business incurs to operate, grow, and achieve its objectives.
Profitability refers to how much a business or investment makes compared to the resources it uses. These metrics are essential to investors as they show whether you understand your business's financial aspect.
2. Growth Assumptions: Investors want to know the assumptions behind their projected growth, such as customer acquisition, market expansion, or new product launches. You should include market trends and insights into customer behavior to make your projections credible.
3. Financial Milestones: Investors expect you to highlight key milestones, such as achieving specific revenue targets or reaching profitability. These milestones help investors track your progress and gauge whether you're on the path to long-term success.
Why the financial projections slide matters to investors
Financial projections are crucial to investors as they give them a glimpse into your business's potential. They help show that you've thought through the numbers and have a clear growth plan.
A well-thought-out forecast can build investor confidence, making them more likely to believe in your ability to achieve your goals. This can directly impact their funding decisions, as they want a solid investment return.
This slide can answer critical questions for investors that will influence their funding decisions.
Key investor questions the slide must answer
1. How will the startup generate revenue and become profitable?
Investors need to understand how you plan to monetize your product or service. Are your revenue streams diverse and sustainable? Will you rely on one-off sales, recurring subscriptions, or a licensing model?
2. Are the financial projections realistic and data-driven?
Overly optimistic projections are a red flag. Investors want to see numbers based on market research, historical data, and logical assumptions. Unrealistic growth projections may make investors skeptical of your business’s ability to deliver on its promises.
3. How do the revenue and cost assumptions align with market conditions?
Your revenue projections should reflect the broader market conditions. If your business is in a highly competitive space, expect slower growth. However, if you're in a rapidly growing market, your projections should account for this growth.
4. When does the startup expect to break even?
Investors want to know when they can expect the startup to cover its costs and begin generating profits. Being able to demonstrate when and how you will reach break-even is critical.
5. How will funding impact financial growth?
Your projections should show how the capital from investors will fuel growth. Will the funds be used for hiring, marketing, R&D, or expanding into new markets? Investors want to see that their investment will impact scaling your business.
Common Investor Concerns
Investors commonly have concerns when reviewing financial projections. These include:
- Overly optimistic projections without justifiable data: Investors may doubt their validity if your projections seem too good to be true. Always back up your projections with credible market data and solid assumptions.
- Ignoring burn rate and cash flow sustainability: If your startup is burning through cash without a clear plan for how it will eventually generate profits, investors may be wary. Cash flow is a crucial metric that investors use to evaluate a company’s financial health.
- Failing to show scalability and revenue predictability: If your financial projections don’t show a clear path to scaling the business or sustaining revenue growth, investors may hesitate to fund your startup.
Main elements of a financial projections slide
You must cover several key financial metrics to build a persuasive financial projections slide. These metrics will give investors a comprehensive view of your business's financial outlook. They include;
- Revenue Projections
- Expense Forecast
- Profitability & break-even analysis
- Cash flow projections
- Financial Ratios &KPIs
Revenue projections
Revenue projections are crucial for showing how much money you expect your company to generate over the next 3-5 years. This section should be broken down into clear and measurable points:
- Expected Sales & Growth: Provide a forecast of your revenue growth year-over-year. Break it down into increments, usually annually, showing how you anticipate your sales will evolve.
- Revenue Streams Breakdown: This section should detail how each component of your business will contribute to overall revenue, whether through subscriptions, product sales, licensing, or other models.
- Growth Assumptions: Transparency is key. Explain the assumptions behind your growth forecast, such as market expansion, customer acquisition, or increased average revenue per user (ARPU). These assumptions help investors understand the rationale behind the numbers and increase credibility.
Expense forecast
A clear understanding of your expenses shows that you plan effectively for future growth. This forecast should outline both your fixed and variable costs:
- Fixed vs. Variable Costs:
Fixed Costs: Salaries, rent, utilities, insurance, etc.
Variable Costs: Marketing, customer acquisition, production costs, etc.
This breakdown highlights how scaling your business will affect operational expenses.
- Burn Rate & Runway: Investors want to understand your cash usage. Burn rate refers to how quickly you spend capital, and runway tells how long you can keep operating at your current rate without raising additional funds.
- Key Investments: Identify significant expenditures, such as product development, hiring, or infrastructure upgrades. These investments will require upfront capital but should help generate long-term returns.
Profitability & break-even analysis
This section should help investors visualize the point at which your business becomes profitable:
- Break-even Point: When will your revenue cover your expenses? A break-even analysis shows where your income equals your costs, meaning you no longer lose money.
- Margins: Investors will want to know your expected gross margin (sales minus cost of goods sold) and operating margin (profit after operational expenses). These metrics are key for assessing your company's financial health.
- Profitability Metrics: Use metrics like EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), net profit, and contribution margin to demonstrate profitability and operational efficiency. Investors will use these to gauge your long-term stability.
Cash flow projections
Cash flow projections are vital for showing your business’s liquidity:
- Cash Inflows & Outflows: This projection shows the timing of cash entering and leaving your business. Include revenue, incoming investment, and payments for payroll or operational costs.
- Fundraising Impact: Show the effect of fundraising rounds—how they contribute to your business’s financial health and enable your operations. What will the raised funds be used for? Will it be for growth or covering short-term expenses?
- Self-Sustainability: Outline when (or if) you expect the business to become self-sustaining, meaning it can operate profitably without needing additional external funding.
You can use a financial slide designer to help you develop this section.
Financial ratios & KPIs
Key financial ratios and KPIs will help investors assess the efficiency and profitability of your business. Some of the most critical ratios include:
- Customer Acquisition Cost (CAC) vs.Customer Lifetime Value (LTV): Investors love to see businesses with a low customer acquisition cost (CAC) and a high customer lifetime value (LTV). This ratio shows how much value you generate per customer and whether your marketing spend is justified.
- Margins: Gross, net, and EBITDA margin are essential profitability ratios. These metrics help investors understand how efficiently you're operating and if there's room for scaling.
- Growth & Retention: Revenue and retention rates show how fast your business grows and how loyal your customers are. A high retention rate and strong growth signals that your business is building lasting customer relationships, which is crucial for long-term sustainability.
These metrics provide insight into how effectively you’re acquiring customers, how profitable your business is, and whether your revenue is growing at a healthy rate.
How to present VC pitch deck financials effectively
Now that you’ve compiled your financial projections, it’s time to present them clearly and compellingly. Here are a few best practices for structuring your financial slides for maximum impact:
Best practices for presentation
1. Use tables and graphs
Investors process data more effectively when it's presented visually. Therefore, including easy-to-read tables, charts, and graphs is essential. These visuals simplify complex financial data, making it more digestible and engaging.
For example, bar charts can illustrate revenue growth, pie charts show expense breakdowns and line graphs depict trends over time. Ensure your visuals are professionally designed and free from clutter.
Work with a financial slide designer to create visuals that communicate your financial story while maintaining visual appeal. A well-designed graph can often say more than a slide full of numbers, leaving a stronger impression on investors.
2. Show realistic growth curves.
When creating financial or user growth projections in your pitch deck, it's essential to show realistic growth curves rather than overly optimistic "hockey-stick" projections.
A "hockey-stick" curve depicts flat or modest growth followed by an abrupt, steep upward spike, suggesting exponential success. While ambitious growth can be appealing, projections like these often raise red flags with investors.
3 Keep it investor-focused
The ultimate goal of your financial presentation is to show investors how their funding will contribute to your company's success. Focus on metrics that matter most to investors, such as scalability, profitability, and return on investment.
Highlight key points, such as when the company is expected to break even, how funding will be allocated, and how this will accelerate growth.
For example, you can outline how a specific portion of the financing will be used for product development, marketing, or expanding into new markets.
Use bullet points or infographics to emphasize how your financial strategy aligns with investor priorities. Demonstrating that the investment will drive growth and profitability, you'll leave investors confident in your financial acumen.
Common mistakes to avoid
When creating and presenting the financial slides, avoid these common pitfalls that can weaken investor confidence in your startup:
1. Unrealistic projections
Overly optimistic revenue or growth forecasts are one of the biggest red flags for investors. The exaggerated projections suggest a lack of understanding of market realities or an intentional overstatement of the company's potential.
Investors are experienced in assessing growth trajectories, so projections that appear too good to be true may lead them to dismiss your pitch.
2. Ignoring cash flow management
Cash flow management is crucial for investors, especially startups with limited resources. Failure to address cash flow concerns, such as burn rate and the length of your current funding, can make investors question your financial planning skills.
3. Lack of explanation
Simply presenting numbers without context can leave investors confused and unimpressed. Even well-designed charts and tables need accompanying explanations to clarify how the figures were derived and why they matter.
How to justify financial projections with data
Investors won't take your financial projections at face value. They'll expect you to back them up with credible data. You can justify your forecasts by:
1. Market Research and Industry Benchmarks: Use research and benchmarks to validate your revenue assumptions. This shows that your projections align with the broader market.
2. Historical Performance: If your startup has traction, use past performance to support your growth estimates.
3. Comparable Companies: Compare your projections to similar businesses in the same industry, highlighting how your financials align with those companies’ trajectories.
4. Customer Acquisition Strategies: Show how your marketing and sales strategies will help you reach your revenue goals.
Pitch deck financial projection examples
Example 1: Shopify
This financial slide from Shopify's pitch deck successfully conveys strong and consistent revenue growth through clean, well-labeled visuals and segmented revenue streams. It showcases the diversification between Merchant and Subscription Solutions.
The slide combines historical data with forward-looking projections (a +86% growth forecast for 2015), reinforcing confidence in future performance.
Example 2: Airbnb
This financial projection slide from Airbnb's pitch deck as seen here is effective due to its simplicity and directness. It presents the funding ask ($500K Angel Round) alongside a clear business goal of achieving 80,000 transactions.
This translates to $2M in revenue over 12 months. This clarity and focus on outcomes make it a compelling slide for securing funding.
Example 3: Uber
The financial project on Uber's pitch deck is practical due to its simplicity. It shows investors the revenue it expects. By projecting substantial revenue growth, Here Uber aims to show investors its services' long-term profitability.
It also shows the profit they expect and when they expect it. The simplicity of the slide makes it a compelling financial projection slide.
Final checklist for an investor-ready financial projections slide
Before finalizing your financial projections slide, use this checklist to ensure it's investor-ready:
- Are revenue, expense, and profitability projections clearly outlined?
Ensure your slide provides a concise but detailed overview of expected revenue growth, key expenses, and profitability metrics like gross margin, operating margin, and EBITDA.
- Is the growth rate realistic and supported by market data?
Ensure your slide provides a concise but detailed overview of expected revenue growth, key expenses, and profitability metrics like gross margin, operating margin, and EBITDA.
- Are key financial metrics and break-even points presented?
Present essential metrics like the break-even point, gross margins, and operating margins. Ensure they are easy to spot and understand, as these figures are key to investor decision-making.
- Does the slide use charts and tables instead of dense text?
Investors are looking for clarity. Display key data using visual aids such as charts, tables, and graphs. This will help them grasp your financial outlook at a glance rather than wading through long paragraphs of text.
- Have assumptions behind the financial projections been explained?
Include a section briefly explaining your financial projections' assumptions, such as market growth, customer acquisition, or operational scaling. Investors want to know the "why" behind your numbers.
- Do cash flow and funding need to be addressed?
Be sure to show how cash inflows and outflows will look over time. Clarify how much funding you need and how you plan to allocate it. Also, explain whether the business will rely on external financing or become self-sustaining.
- Are financial ratios and KPIs Ppresented?
Include critical KPIs such as customer acquisition cost (CAC), lifetime value (LTV), and retention rate. These metrics help investors to gauge efficiency, growth potential, and long-term sustainability.
Final remarks
The financial projections slide is a vital pitch deck tool showing your startup's potential. It clearly outlines your revenues, expenses, profitability, and financial sustainability.
By focusing on scalability, data-driven projections, and realistic growth assumptions, you'll increase investor confidence and maximize your chances of securing funding.
If you need professional help with your pitch deck, hire our pitch deck financial experts to ensure your financials are presented most compellingly.
