Sweat Your Fundamentals

Something weird is happening in startup land as of late. For some reason, I see more and more pitch decks asking for money, whilst completely ignoring any and every explanation of how the startup expects to make money. No explanation of the revenue model. No financial modeling. No profit & loss calculation. Not even one of the all-to-common revenue slides showing exponential growth resulting in world domination (and gazillion dollars being made). At best you find a slide listing a single number such as the expected profit margin per unit sold.

I have no idea where this comes from or how founders believe they can get away with it. But let me tell you — it is nuts. I have never met a (serious) investor who wouldn’t discuss your business metrics with you prior to investing. Not including a few slides in your pitch deck demonstrating you have a grip on your financials is the quickest way to not even get a meeting.

Don’t be that person.

Sweat your fundamentals, develop a solid understanding of your business model, stress test your P&L, create scenarios and gain a deep understanding of what it takes to make your business succeed (and what might get in your way). Of course you won’t know until you know — every startup’s financial model is a fantasy. But there is a huge difference between those who have spent time and effort with their models and those who don’t.

This post is part of the “The Heretic”, Pascal Finette’s insights into leadership in exponential times. For entrepreneurs, corporate irritants and change makers. Raw, unfiltered and opinionated — delivered straight to your inbox. You will like it. → https://theheretic.org