Do you recommend including financial projections in a startup's executive summary?
I have heard some VCs say they don't care about the projections at an early stage since it is so uncertain, but other investors want to see them.
I'm not sure which VC would say they don't care about the money. I would like to meet them though because I have a great idea of selling air in a box. Anyway, when I write business plans for clients, I estimate I spend about half the time just doing the financials/pro forma. Absolutely necessary to do as an exercise. At the very least, you begin, as an entrepreneur, to really think through your idea.
I agree with the comments here - it is a good planning step to create these financials and you will certainly want to have them ready if the VC conversations move forward. However, detailed financials are not required in the Executive Summary deck. I usually suggest that you add a slide around "comparables" so that your industry fit and growth goals are obvious to investors. Happy to talk more if you'd like.
I never do, personally. That said, it is very business dependent. For very high growth businesses, the financials they want to understand generally elate to customer acquisition costs and overall market size which are not the projections you are talking about.
For consumer product companies, financial projections are very important to the executive summary.
The summary should not speak tot he plan so much as to the advantages and why you (above all others) will win this battle.
First, I think building the financial projection is a good thing. It brings you down to earth and help you understand the flows (in and out). What is important is to do some reflection and identify potential risks - use Five Forces model to document them for you own critical review - this will help you to document the perspective. Now, when it comes to projection, showing it as a simple graph with few simple bullets on R/I and Impact/Capability would help communicating your message and demonstrate your sincerity to any VC whether they ask for it or not - that does not matter. Advantages and benefits of doing it are immense in my personal opinion.
I don't include financials in an executive summary. Although you may want to state what your expected revenues will be in the first year and how long you think it will take to get to profitability.
Full financials are only shared with your business plan and with someone who has signed an NDA or MNDA.
Hope that helps.
hi Mary Alice
Firstly a financial proforma is a very important aspect of the business plan period. Your question is confusing because the one page executive summary is just that a concise summary of the business plan and not a stand alone document. I'll assume you are on track and agree with Bernadette about a short little note
yes one way around financials is to say that they will get a piece of the market in the first year and 3% more in the second year and market is 1 b
I would include financial projections in the executive summary, even if some say they don't care about. Including them shows that you are concerned with cash flow, which is what investing is ultimately about.
Yes include financial summary in executive summary. It helps you define, size and defend the opportunity and the valuation with would be investors. The investors will scrub and recalculate your projections and valuations, which is expected - but make it a two way game, and hold your ground based on possibilities, justifications and performance.