Back in the day when I used to listen to lots of investor presentations I was sitting in a room one day listening to a pitch with a group of angels and VCs doing exactly that. The entrepreneur got to his financial projections slide. Everybody started shaking their head yes. They liked the numbers.
At that moment it dawned on me that every time I saw numbers in that range I would see the same reaction from investors. I wrote them down in my trusty Moleskin.
The other day I was helping an entrepreneur with his financial model. And like a flash those numbers came back to me. I did not remember them but I knew where to look them up. My notes from December 2008.
|Year 1||Year 2||Year 3||Year 4||Year 5|
|$350k||$1.5 million||$4.5 million||$15 million||$30 million|
While certainly not right for every startup these numbers seem to be pretty good guidelines for the type of ramp that early stage investors like to see in presentations. Fact of the matter is any number put together like this is purely a work of fiction and achieving them takes great execution and a little luck. Very few startups make it to revenue numbers like year four and five.
But if you are looking to pass the sniff test of early stage investors having a solid financial model with results somewhat in the range above will have you coming out smelling like roses.