The press loves to tell us how investors are compelled to invest by the company’s vision or mission, the founder’s “charisma” or the personal experience that drove her to build the startup.
In my experience that’s not entirely true.
Yes, mission and passion are important, but sadly they’re additional, not primary, reasons to invest, and the reality is way more mundane: financial returns. Driving massive financial returns is the compelling reason.
That’s why investors love numbers. They devour them, crave, and love hard data. Yet, let’s face it, even though financials are critical (they can make or break your funding round) most founders dislike presenting numbers and typically hate Excel modelling. It’s tedious, time-consuming, and frustrating, it pushes them outside their comfort zone (product, features, vision etc) and worse, it can expose their obvious weakness with numbers. So what do they do? Copy/Paste the entire P&L spreadsheet into one page, close their eyes and hope investors skip as it’s so complicated and boring. Wrong. You fail.
Thankfully, there is a solution and it doesn’t require you to become a Master Jedi.Continue reading →