Almost every VC with a blog will, at some point, write an amazing
post on how to prepare the best VC presentation. I guess that it makes
sense – every venture capitalist would like to see his own wishes
implemented in the material he gets from entrepreneurs. (For some
examples, check Jens Lapinski, Guy Kawasaki, and David Hornik).

This post is not another VC presentation guide. Well, not a complete
presentation guide. I am going to focus not on the full VC
presentation, but only on a single (and probably most important) slide
– the financial slide.

In the past 7 years, I have seen many presentations. Some are
amazing, some are just ok. But one thing is beyond me – even though
entrepreneurs are coming to see VCs for money, they don’t put enough
effort in presenting their financial forecast in a way that makes sense
and that is VC compatible. Below, I have listed 6 tips on how to create
the financial slide. I also included an example of a financial template
that can be used (I think) when making VC presentations (Will be
interesting to see how many entrepreneurs will use this in their
presentations to Gemini…)

#1: You need a financial slide. I guess this is obvious. I
have met many entrepreneurs that come to a VC meeting with no
financials. That’s like coming to a rock concert without a ticket. In
other words: YOU HAVE TO HAVE FINANCIALS.

#2: The Excel file is not enough. One of my favorite quotes
is "We didn’t prepare a financial slide, but we will be happy to show
you our highly complex excel-based model". Usually, the 1-page summary
slide is more than enough.

Just a few days ago I had a meeting with an experienced entrepreneur
that I appreciate and trust. He was proud of his highly sophisticated
financial slide (Copied/paste directly from Excel). He said that a
sophisticated financial slide gives all the answers required AND shows
strong understanding of the business. I actually agree with those
points, but I think that the sophistication should come AFTER a simple
summary. Bottom line: THE EXCEL STAYS HOME.

#3: Will you make 68 cents in year 4 of the business? Since
financials slides are outputs of sophisticated models, the outputs are
always a bit funny. Almost every plans that I see shows that in a few
years the company will generate (For examples…) $55,283,189.45. I think
that numbers should always be rounded, especially when the budget goes
beyond year 2 & 3. In the example above, $55M forecast is more than
enough. In other words: ROUND NUMBERS.

#4: No graphs. This one is probably subjective. I think most
VCs don’t really care for the graphic presentations and are happy to
read through a simple financial summary. I always ask the entrepreneur
to skip through the graphs directly to the actual table summary. In the
same words: NO GRAPHS.

#5: Take the top-down approach (as well as bottom up).
Similar to the previous point, many entrepreneurs don’t bother to check
if the business model they created actually makes sense. This is beyond
the rounding errors. Is it really possible in your vertical to triple
the revenuers every year? Taking a quick glance at the final summary
helps in making big changes that should have been created in the
internal process.  In other words: DOES THIS MAKE SENSE?

click http://coheda.typepad.com/israel/2008/06/preparing-the-f.html to see the slide.