Do you by any chance have a sample spreadsheet format that is typically used to present projected financials to VCs?

A: VC’s don’t expect your projections to be accurate, but they will look to them to understand if you understand the drivers of your business. When VC’s look at your financial projections in a pitch, their eyes and minds will gravitate to a few things:

* Revenues: How big does this get? In 4-6 years, does it grow (under reasonable assumptions) to an exit that meets the need of my fund?

* Metrics: Do the key operating metrics required to hit those revenues seem realistic? How do they need to grow to get to those numbers?

* Gross Margins: What are they? High gross margin (typically 50% or higher) are required for most VC funds. High margin businesses scale in capital effecient ways, and command higher multiples.

* Cash Flow and Cash flow Positive point: When does the company hit cash flow positive? How much cash is consumed to get there? Total Cash consumption will be different than your cash flow (since your low cash point may be in the middle of a period and not captured just by cash flow). And it will be different from your income statement. You will often consume more cash than your net income would suggest, so plan this out carefully. This will also give VC’s a check on how much you are raising, and how much they should realistically reserve for follow-on financing. If you are asking for more money than you need to get to cash flow positive, a VC may push back on why you need to raise so much. Conversely, a VC may ask you to raise more if the cash needs seem to be greater than what you’re raising for.

* How far does the current round take you? The rule of thumb is your current round should take you out 18 months at least, and hopefully 24. 

You projection chart should detail out:

* An income statement with quarterly columns for the next 6-8 quarters (18-24 months) and then annual columns after that to take you out at least 3 years, and up to 5 years