I was speaking with an early stage entrepreneur the other day about what type of financial info to include in a pitch deck. It is a question I hear often. It does depend on what stage you are at (and thus how much real financial data you truly have). For purposes of this article, I am going to focus on an early stage startup that has minimal financial traction and is preparing for their first raise. There are three key areas I would cover: Initial/unit economics, scaling economics/plan, and key sensitivities.

Initial Unit Economics

For an early stage company, you do not have hundreds of customers from which to produce endless financial data cuts and trends. However, you do have some base customer knowledge to articulate how unit economics work. This could be for one customer segment, one store, one of [whatever your product is]. What does it cost to acquire that customer, what does it cost to serve them (variable/fixed), how much revenue do they bring, how do you think about churn/lifetime value, etc. Obviously a lot will change as you start to grow but the main goal here is to give the best representation that shows you believe you can have profitable unit economics.

Scaling Economics/Plan

I have seen countless pitch decks that show the classic hockey stick projections. I think most investors would agree that those figures are quickly discounted. What is important to show here though is how your business would scale. As you scale, how big is the market opportunity, what is the cost structure of your business, how would gross/net margins evolve over time, and how would you scale the business up/down to meet demand. You want an investor to walk away thinking this is a big market, economics would scale, and there is a plan to go after it.

Key Sensitivities

The one certainty about financial forecasts is that they will be wrong. Thus, I would focus more on which variables are most sensitive to success in your model. How many customers does it take to breakeven? How much does pricing affect margins? What happens if customer acquisition costs are double your projections? The main thing here is to prove that within certain realistic guardrails, your model will still work. Furthermore, you can talk about your specific plans to test and prove out those key assumptions and sensitivities.

While you should always be prepared and have a robust financial model with different scenarios, I think at an early stage the most important things are proving what the economics could look like, the business has the potential to scale, and that if key assumptions are nailed within certain guardrails you can achieve a positive outcome.

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