Pitching Angels 12: The Fictional 5-Year Revenue Projection (And Why It’s the Most Important Slide… - Deepstash
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The Fictional 5-Year Revenue Projection

The Fictional 5-Year Revenue Projection

For a pre-revenue company, a one-year revenue projection is a fiction. Demanding to see a 5-year revenue seems impossible. Yet it is vital.

When it's time for the Q&A session and the end of a pitch to an angel group, the slide that is on the screen is the revenue projections. This tells them everything there is to know. 

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What a 5-year revenue projection reveals

Revenues after 5 years tell investors if you're in the right room.

If you expect to get to $5 million in revenues after 5 years, even if it may be profitable, it won't work for venture funding. Unless you expect to be over $25 million ( ideally $50 million), there's no point to talk to angels.

For VCs, you need to target at least $100 million to $250 million.

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Observing your assumptions

Investors next focus on how much money you plan to lose at the beginning. It reveals your burn rate, your runway, and the amount of capital you'll need to raise. A short runway means you're likely to crash and burn or get stuck.

Then, investors see how realistic your assumptions appear.

  • Do you plan to take a large fraction of the market? How?
  • Are you showing $2 million in revenue for the year, but halfway through you have only reached a tenth?
  • Are you generating tens of millions in revenues but not increasing headcount and marketing costs?

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What is needed in a slide

In a simple table, your slide should contain the following information:

  • Gross revenue for the next five years
  • COGS (if significant)
  • Gross profits
  • Marketing expenses
  • Employee expenses
  • Other expenses
  • Net income

That is all you need on this slide to reveal what investors need to know.

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