How to build a forecast that goes beyond numbers and what is the best way to articulate it?

Every fundraising story needs solid financial projections containing logical and defendable values. However, just showing the numbers is only one side of the story. In reality, investors want to know your overall business strategy, the “how” and “why” behind the numbers, and whether the numbers really reflect your business strategy.

In this article, we’ll outline the three pillars of financial modelling every founder should know to win investors over.

Let’s dive right in!

Pillar 1: Ensure your strategy and numbers are closely aligned

Most founders repeat the same mistake when preparing their financial projections for a startup: the financial model ends up completely out of kilter with the strategy described in the actual pitch documentation. Basic mistakes like this can cost you entire fundraising campaign. So let’s cover what founders need to include in their models to raise your fundraising game and (increase your chances of) closing the round.

Know your customer acquisition strategy

Customer acquisition is a major expense for most businesses. That’s why you should pay very close attention to it in your financial model, ensuring it’s accurately reflected. Before going out to investors, ensure your model answers the following questions:

  • What direct and indirect channels will you use to find potential customers?
  • How are you currently onboarding and nurturing new and existing prospects?
  • What is your strategy for converting leads into clients?
  • How many employees or contractors do you need to fulfill your strategy?
  • How much will all this cost you?

Consider taking a step-by-step approach. For example, start from your sales and marketing budgets and then move to your newly onboarded customers etc., breaking down into intermediate steps along the way. As you go, keep making sure that your calculations closely align with your overall business strategy. For example, pay particular attention to the size and type of your customer acquisition funnels or any specific sector or industry peculiarities.

Having all this information in place will allow you to build an impressive, bullet-proof defense of your project when investors start to poke holes in your project at the due diligence phase. against investors’ questions and due diligence and they always do.


A year ago, we had a desperate startup aspiring to become the #1 marketplace in the world. It was a really fantastic idea and a cool concept with great founders behind it. But surprisingly, they achieved zero success in their fundraising efforts. The real culprit was hidden in their forecast: 1M+ monthly active users in Year 1 with ZERO marketing budget!

Let’s break it down a bit. Any investor looking at the customer acquisition strategy will always double-check your calculations. To do this, they’ll take the average cost per acquisition (CAC) for the market (which cannot equal $0) and then multiply it by the number of users. In this way, investors gain a more accurate picture of upcoming marketing expenses.

Now let’s apply this knowledge to our case. Let’s assume that the startup was planning to attract 1M monthly active users with, say, an average CAC of $10. This means they would need ten times more marketing budget than they originally predicted. Bam! The whole original argument is blown out of the water, since in reality the startup needs TEN times more funding to make its dream come true.

In this case, the team’s mistake was as follows. Not only did they fail to dig down into their customer acquisition strategy, but they also failed to specify the average CAC and what marketing channels should be involved. As a result, the founders ended up fooling both themselves and investors and they ended up without a cent of funding – at least the Waveup team intervened to rebuild the financial model and develop a full-scale marketing strategy.

acquisition funnel for startups slide
B2B customer acquisition funnel for startups, example

Explain your business model

Since every company has a business model and revenue streams, it goes without saying that every startup forecast should provide a detailed explanation of how it generates revenue. Here’s the list of the common business models:

  • monthly subscription
  • one-time payments
  • a commission or flat fee
  • price per unit, etc.

In addition, founders should wrap all their numbers into a strong narrative that really reflects their business strategy. For example, if you mention in the business plan that your objective is to switch from SMB to Enterprise clients, then the financial model should reflect that in the customer & revenue breakdown. Also, if you’re planning to add new revenue streams—consider integrating this information into your forecast.

Include incurring and future expenses

Since every business incurs expenses, then every well-developed startup financial plan should provide a detailed picture of all the costs involved. Think very carefully about EVERY expense when creating your financial model and take into account all your future strategic moves too. Investors will always want to know this.

Let’s illustrate through examples how to do this:

  • Are you planning to enter new markets in the next five years? Don’t forget to show your country-roll-out schedule and include all the costs related to it (e.g., new offices, talent acquisition, licenses, state fees, and taxes for each country).
  • Planning to scale operations for your manufacturing company? Make sure to include all the necessary capital expenditures.
  • Have you communicated any major product development initiatives? Then you should display future R&D expenditures and the corresponding team growth in your operating expenses.

Here’s a great example of how to visualize your operating expenses (OPEX) to include in your pitch deck.

OPEX calculation slide
OPEX calculation with multiple countries, template

Pillar 2: Consider the strongest sides of your business

All investors strive to find companies that can grow quickly and sustainably. However, dynamic growth has its costs. That’s why it’s imperative to include in your projections all factors that can contribute to your company’s growth for relatively low or no cost.

Mention free revenue boosters in your financial model

Customer acquisition costs are one of the most critical metrics for all investors and reflects the level of efficiency in your sales & marketing strategy. If you have a source of free and high-quality organic leads – reflect it in your financial model. Businesses with low-cost acquisition channels tend to attract more investors.

An example of free organic traffic can be an affiliate program that has proven to be successful. If every user brings you one or two users for free, then don’t hesitate to mention it. Also, if your business benefits from word-of-mouth and SEO, then consider showcasing your organic and direct traffic growth.

In both examples, the customer acquisition costs are significantly reduced and this really throws a spotlight on the efficiency of your S&M efforts. That’s why it’s vital to reflect such free revenue boosters in your financial model.

Showcase revenue expansion

As revenue is another crucial indicator of how successful your business is, you should especially highlight the revenue generated from your existing customers, as any additional customer acquisition costs will be much lower (if any at all).

Investors are always looking for companies that have successfully managed to leverage the revenue generated per customer through upsells, cross-sells, and upgrades. This really helps investors predict future revenue projections for a startup. Irrespective of whether the percentage of your customer base upgrading their plans or purchasing add-ons is, always consider reflecting it in your revenue sheet.

No matter how large or small your percentage of customers upgrading their plan or purchasing add-ons is, always reflect it in your revenue sheet.

revenue slide
The monthly recurring revenue breakdown for SaaS companies

Present any economies of scale

As the number of customers and sales grow, so too will your operating expenses. But remember that in some cases, any scaling your business has the potential to make your revenue/expenses ratio more efficient. For example, if your business produces physical goods, the price for raw materials can decrease when your sales volume increases. You can also get a discount for raw materials from partners when you reach a specific purchase volume. The same applies with SaaS businesses: your data infrastructure most probably will take a smaller percentage of your revenue over time.

It’s critical to include and highlight all these details in the financial model since they will improve your margins over time. Better margins lay the foundation for better unit economics, and better unit economics lead to an improved go-to-market fit. All this has the potential to really knock the socks off your potential investors.


One startup that recently came across our desk was in the business of producing physical goods. At first glance, their three-year forecast and unit economics which they had produced themselves looked to be in good shape. But their margins were decreasing alongside their sales growth. This really puzzled the founders since they had made the extra effort of double-checking all assumptions.

Upon closer inspection during our research, we found that economies of scale hadn’t been considered at all, and the cost of raw materials and packaging should actually have decreased along with the sales volume. We made some quick changes to the assumptions, and Voilà! Everything turned out as it was supposed to!

Pillar 3: Use the right metrics

Most financial models include such metrics as gross profit margin & EBITDA margin. Indeed, these are an absolute must-have in all your projections. However, if you really want to capture the investor’s attention, you should dig much deeper and build your financial forecast for a startup around industry-specific metrics. This will not only help you explain the benefits of your strategy. It will also have investors licking their lips.

Feature more relevant financial metrics

While revenue growth rate and margins are important, make sure they are complemented by other “deeper” metrics. For instance, show investors:

  • MRR breakdown (new / lost / expansion / total revenue)
  • Retention metrics (net revenue retention, gross revenue retention)
  • Unit economics (CAC, LTV, CAC payback)
  • Sales efficiency (SaaS magic number)

Investors love data, so the more you represent, the more trusted you will become.

Include operational metrics

Operational KPIs shouldn’t be ignored either. The number of customers, the percentage of the market covered, the size of your team or partnership network, the number of points of sales launched or markets entered are all indicators of your scaling ability. Make sure they’re included in your financial model to let investors see your short-term and long-term horizons.

Here is a list of essential financial and operational metrics that should be mentioned. Adjust it to your own business model, skip the line, and really impress investors with an effective pitch!

KPI list slide
Essential financial and operational metrics to include in a pitch deck

Summary: Checklist from Waveup

There’s a lot more to your financial projection than just the numbers and you should take the time to really tell the story behind them. Winning over investors is all about first gaining their trust, and that goes back to the numbers. If you can show them you really know how to run your business, you’re already halfway there. Even if you don’t have some numbers yet, or they’re beyond perfect, just DO NOT hide them. It’s far better to be open and transparent by presenting strategies that can improve the numbers.

Lastly, we’ve put together a short checklist for a proper financial model strategy check-up so you can avoid the most common founder pitfalls. Double-check your financial model before showing it to investors on the following:

While revenue growth rate and margins are important, make sure they are complemented by other “deeper” metrics. For instance, show investors:

  1. Does the forecast reflect ALL the details of your global strategy? Think about each and every aspect of your business, starting with customer acquisition and ending with paying taxes.
  2. Did you show ALL the advantages of your model? How about your ability to tap into a large percentage of cheap leads? What about significant revenue increases from your existing customers? Any benefits from partnerships? Economies of scale?
  3. Have you already analyzed your financial and operational metrics and added them to the model?

Investors love data, so the more you represent, the more trusted you will become.

Huge congrats if you scored “yes” to all three! You’re well on your way to winning over investors with an outstanding financial pitch. You were shaky on any of these and got less than three? If so, there’s still room for improvement. Just implement what’s missing so that you can get to the front of the investor line and line up a successful investment pledge from investors.

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Hi! I’m Alyona, Associate at Waveup. For the last three years, I’ve been diving deep into the world of startups and VC fundraising, helping lots of amazing businesses prepare for their next investment round – it’s incredible to see how cool ideas are transforming into strong businesses! I’m happy to share my expertise and thoughts here to help even more success stories become a reality