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.
No, financials and/or projections belong the body of a business plan.
The ES should be limited to a brief overview of the entire project.
The only reference to financials in the ES should be limited to the status of business today and future growth in the particular industry.
I think it is very important to include this data, because it shows that the NEW company management is thinking about funds and how it will be spent. Including many other factors that are used for, gaining a funding loan(s) or V.C. funding as well.
I think of Ex. Summary as the 1 to 1 1/2 page introduction in front of a business plan. And, the first main section of the plan is the Narrative, the second is the Appendix and that is where financial projections are usually found.
A few select #'s may be mentioned in the Ex. Sum or Narrative, but the "meat" of the financials is in the Appendix or in a 3rd section labeled Financials.
All plans MUST have a Cash Flow foecast by the month for 1 to 3 years. A Narrative alone is only part of a business plan. A Cash Flow provides the best guess if the company needs an infusion of money, when and how much.
I have received tremendous coaching on raising capital or even seeking board advisors, and they certainly ask for financials. That is the only way they compare what their investment is. Now, I have only been asked for 3 years and yes they know they are going to change, but they need to see that you have a plan, because financials are also about - do you have a product/service portfolio, what is the pricing model, where is the profit coming from, etc.... A VC may not go deep into all of that, but they want to know you have.
Also, the financials I would provide would read like -
Revenue Forecast Year1 Plan Year2 Plan Year 3 Plan
Without Funding $60K $250K $325K
With Funding $674M $2.8M $6.2M
EBITDA $114K $440M $2.7M
Exit 7-10 years through acquisition
Hope that helps