How to Present Your Financial Model to Investors: A Strategic Guide for Startups

It’s one thing for your startup to have a robust financial model. It’s another thing to present it effectively to investors to secure funding so your startup can continue to grow and evolve.

In today’s environment, having a well structured financial model simply isn’t good enough when prepping for fundraising rounds. In fact, it’s estimated that about 85 percent of all startups have developed solid financial models. Yet studies indicate that only 15 percent of all startups present them effectively to investors. It’s indicative that while accounting is important, so too are presentation skills and the ability to turn technical accuracy into investment success. Founders shouldn’t downplay the importance of communication and presentation ability when leveraging their investment-grade financial models, as both are important to the evolution of your startup.

The Psychology Behind Investor Financial Storytelling

Investors use various methods and tools to evaluate information and make informed investment decisions. While they assess numbers and financial metrics, they also weigh a startup’s financial narrative to learn more about the story behind the historical data. They often do this by assessing market conditions, trends and strategic initiatives. They’ll also work to identify key themes and verify that any narrative is backed by sound financial data.

Investor cognitive biases can also shape how they evaluate financial information. They seek information that supports their existing beliefs and often prefer a compelling narrative over objectivity. Understanding and leaning into investor psychology is a key strategy. A good financial narrative can evoke emotion and further influence investors’ decisions.

What Investors Really Look for in 30 Seconds

In reality, investors are likely to weigh many different investment opportunities and scan your financial model and narrative quickly. If you’re able to hook an investor within 30 seconds to 1 minute and make a good first impression, your chances of working together rise significantly. So what are investors looking for in that initial 30-second scan? They’re looking for key metrics and a compelling narrative that includes:

• The problem you’re solving in the industry.
• Market opportunity and the success you’ve achieved.
• Key performance indicators such as MRR, operating expenses, revenue growth, customer acquisition costs and user engagement rates.
• Revenue goals and profitability timelines.

Learn with compelling data and a narrative that can capture an investor’s attention and make them want to learn more. Common presentation mistakes include overloading investors with information, failing to articulate the problem and your startup’s solution, or presenting obviously unrealistic financial projections.

Pre-Presentation: Setting Up Your Financial Model for Success

Your startup’s financial model should be structured according to its purpose and audience. For instance, for internal use, your model should help facilitate internal decision-making, scenario analysis, budgeting and performance tracking. Structuring your model for investors, however, should be different and clearly convey financial highlights and key insights to an external audience.

Setting up a financial plan for external use should consist of the following:

• A high-level summary of the model.
• Emphasis on key metrics that are important to potential investors, such as revenue growth, profitability, cash flow statement, balance sheet, and more.
• Visual aids to help tell your startup’s financial story, such as dashboards and summaries.
• Simplified scenario analysis of different situations and the impact on your startup.

An external financial model should also aim to avoid jargon and use clear and concise language that’s easy for investors to understand and digest.

The Art of Financial Model Simplification

When pitching to investors, less is more. Early stage startups should aim to simplify their business models and data so investors can quickly and easily digest key information that can aid in their decision-making. Consider creating visuals that guide investor attention and focusing on the main assumptions that can drive your entire financial model. Some of the main drivers in a financial model include:

• Revenue growth
• Cost of goods sold
• Revenue growth
• Financing costs

Remember, a comprehensive financial model includes a high level of detail, while presentation models are much simpler and help visualize key financial information.

The Strategic Financial Storytelling Framework

Good financial model presentations follow a five-act structure:

1. Introduction and Stage Setting: Introduce the need your startup’s product or service aims to satisfy, while providing context and background on your startup, market, revenue streams, and what investors can learn from your presentation.
2. Outline your Financial Model: Describe the major assumptions that are driving your financial model’s revenue projections.
3. Present Results: Clearly and confidently detail the most important results from your financial model and how they’re derived based on different scenarios.
4. Interpret the Results: Explain the meaning of your model’s results and what they mean for your startup.
5. Call to Action: End your presentation with a compelling call to action, briefly recapping key findings and defining next steps.

Opening Strong: Your Financial Story Hook

A good presentation starts with a compelling opening. You should lead with your most compelling financial metric in an attempt to “hook” investors and entice them to learn more about your startup. Consider an opening that directly addresses a pain point and then introduces your solution. Present it in the context of comparative benchmarks to help level set expectations for the depth of your financial discussion.

The Build-Up: Layering Your Financial Narrative

A good narrative is about a lot more than just presenting numbers — it involves digging into data to tell a story that can truly resonate with investors and highlight the potential of your startup. A good way to present this is by layering your narrative to focus on the underlying reasons behind your financial performance and what it means for your startup and its future. Your core narrative should detail a problem, solution and long-term vision, while ensuring that each part of your presentation builds in a way that contributes to your overall story.

Industry-Specific Financial Storytelling Strategies

How you tell your financial story will vary based on your startup’s industry. For instance, if you’re an SaaS startup, you’ll want to emphasize unit economics and scalability in your presentation and narrative. An eComm startup will want to focus on inventory, seasonal trends, customer lifetime value, and pricing strategies. HealthTech presentations should blend regulatory details along with their financial projections. Throughout any presentation, there should be a mix of general financial principles combined with industry-specific emphasis on finer details.

SaaS Financial Model Presentations: Beyond the Metrics

A SaaS financial model presentation is unique in that you’ll want to focus on key metrics (i.e., MRR, ARR, CAC, LTV, etc.) while also presenting cohort analysis to help reveal insights into your customers’ behavior, retention and growth potential. Be sure to detail acquisition cohorts, behavioral cohorts, size-based cohorts and plan-type cohorts, then select the right metrics to tell your story based on the audience that you’re presenting to.

Mastering Visual Financial Storytelling

Crafting a compelling narrative can be even more impactful if you include visual elements in your presentation to investors. Visual storytelling helps translate complex financial data into digestible and engaging narratives that go beyond the spreadsheet or basic report. It can help enhance investor understanding, increase engagement and information retention, and build trust. Some of the visuals you may consider include:

• Line charts
• Pie charts
• Infographics
• Videos and animations

Visual storytelling is also a way to reinforce your brand identity. Present your visuals using your startup’s colors, typefaces and other creative assets to maintain consistency and connect your brand more with your audience.

From Spreadsheets to Stories: Visual Storytelling Techniques

How can you go beyond basic financial charts to create a compelling financial narrative and tell your story in a visual manner? Here’s a look at some suggestions:

• Use the right visual to convey the appropriate metric. For example, line charts should convey time-series data and trends, while infographics can simplify financial concepts, analysis and reinforce key takeaways.
• Be consistent in your visual storytelling. Use the same colors, fonts and style throughout your presentation. Avoid cluttering your visuals with excessive data or unnecessary details.
• Use whitespace effectively: Whitespace, or negative space, is empty space around design elements. However, it plays a critical role in enhancing clarity and impact by reducing clutter and helping to guide the eye to key data or imagery. Intentionally incorporating an appropriate amount of whitespace helps enhance readability and can make your presentation more impactful.

Handling the Investor Q&A: Advanced Financial Model Defense

You should be prepared to field questions from investors following your presentation. However, these Q&A sessions shouldn’t be dreaded, but instead viewed as an opportunity to help further demonstrate your financial prowess. It’s also likely that investors will challenge some of your assumptions, underscoring the importance of being prepared.

The Top 10 Financial Model Questions Every Investor Asks

How did you arrive at your growth assumptions? What happens if your metrics are off? Did you conduct a sensitivity analysis?

It’s only right for investors to do their due diligence. It’s up to you to have good, thoughtful responses prepared so you can increase your chances of securing funding. While you can never fully anticipate everything that an investor is likely to ask, answering their questions based on your data and market research can help reinforce key points made during your presentation and continue to build a rapport.

Turning Challenges into Credibility Builders

Investors may ask questions that make you feel uncomfortable or that play into any of your startup’s uncertainties. By being honest, transparent and answering questions with confidence, you can continue to demonstrate your expertise and build trust with investors and other key stakeholders. Some ways to build credibility as you respond to questions include:

• Showcasing your understanding of market trends.
• Back up your insights with data and show your work when making key assumptions.
• Reiterate long-term vision when discussing challenges or detailing negative metrics.
• Be accessible and responsive. Be sure to let investors know how to reach you if they want to discuss opportunities further— especially if they’re seriously considering raising capital for your startup.

Adapting Your Presentation for Different Investor Types

Financial model presentation should be tailored to specific investor types and their respective level of sophistication. For instance, angel investors tend to be less sophisticated than venture capitalists. Additionally, seed-round funding tends to be more based on your startup’s overall potential, while investors want to see more robust financial reporting during Series A fundraising rounds. On this note, it’s a good idea to create several versions of your business plan and financial presentation that you can use when presenting to the appropriate group.

Reading Investor Signals During Financial Presentations

“Reading the room” is important during your financial presentations to investors. It can help you adjust your approach on the fly and better connect with your audience. For instance, positive signals like eye contact and attentive gestures convey that your presentation is hitting all the right notes. However, negative signals like fidgeting, lack of eye contact and cynical postures may indicate a need to adjust your presentation.

If you detect negative engagement, take a step back and consider inviting questions to help clear the air and address concerns. From here, you can reinforce key points and even shift to an area of interest that’s more engaging to your investors.

Additionally, be sure to practice your presentation with mentors or select groups to help anticipate non-verbal signs and what to do when you encounter them.

Common Financial Model Presentation Mistakes That Kill Deals

Even the most well-prepared presentations can contain their share of mistakes. Some of the pitfalls you’ll want to avoid include:

• Overwhelming investors with too much data and not enough of a narrative around key metrics.
• Making inconsistent assumptions.
• Not connecting financial projections with strategic initiatives.
• Overly optimistic projections that can erode credibility.

The Credibility Killers: Subtle Mistakes with Major Impact

Some of the key credibility killers that can derail any presentation include misaligned units and poor presentation formatting, obviously unrealistic projections that don’t include realistic operational constraints, a failure to address seasonal trends or market cycles, and math errors that indicate a lack of professionalism and attention to detail.

Advanced Presentation Techniques for Sophisticated Investors

Some of the more advanced presentation techniques to consider incorporating into your financial model presentation include interactive financial modeling, live scenario modeling, discounted cash flow analysis, and sensitivity analysis. State of the art financial modeling software can aid in the sophistication of your presentation.

Live Financial Modeling: When and How to Model in Real-Time

Focusing specifically on live financial modeling can serve as a dynamic and responsive way to utilize real-time data amid changing conditions. It can help demonstrate financial agility and expertise while focusing on the key metrics that are important for your startup. It can also help demonstrate your depth of knowledge and understanding while proactively addressing investor concerns.

Live modeling is a bit more technologically complex, which requires more preparation and potentially even more advanced software.

Post-Presentation: Following Up with Financial Intelligence

Your work isn’t over after the presentation ends. Keep investors engaged by following up with them and addressing any questions or feedback they had after viewing your startup’s presentation. Think of presenting to investors like a job interview. Following any interview, it’s best practice to follow up and thank the interested company for their time, while expressing your interest in the position. Do the same with investors, while providing additional data and further responding to any questions that surfaced during your presentation. This helps continue the conversation.

Building Investor Confidence Through Ongoing Financial Storytelling

Follow-up communications with investors also help reinforce your financial narrative and build further trust. These communications can also help prepare investors for the all-important due diligence stage, a period of several weeks when investors carefully assess your startup and its financial statements before making an investment decision. Working with a fractional CFO can help with ongoing investor support.

Building Your Financial Presentation Capabilities

While startup founders are likely able to do much of the financial presentation legwork themselves, working with a fractional CFO can help add an expert touch. A fractional CFO can help build and refine your financial model, while also assisting with developing the narrative and presentation. Fractional CFOs are designed to serve as a strategic financial partner and provide expert guidance to help your startup meet its investment goals. As expert financial professionals, their skills often go beyond what startup founders are capable of doing on their own— especially during a complex fundraising process.

When to Bring in Professional Financial Presentation Support

So, when should you consider bringing in professional presentation support? Consider seeking professional help during high-stakes situations, when your communication needs to be significantly elevated, or when your startup’s leadership is lacking in both time and resources. At Graphite Financial, our fractional CFO plans start at $1,250 per month, making this an attractive opportunity with the potential for significant payoff.

The Future of Financial Storytelling to Investors

The future of financial storytelling is likely to be shaped by technology, presenting real-time data and dynamic modeling. When you work with a professional financial services firm like Graphite, your startup can get ahead of these trends and better position to meet its investment goals.

Ready to Transform Your Financial Presentations?

If you’re ready to transform your financial projections, contact Graphite today. As an accomplished accounting services firm that works with startups across every industry, our track record speaks for itself. We have experience working with various investor types and can help leverage our technical financial expertise with a more robust communication strategy. Contact us today for more information and to schedule a consultation.