Insights
Raising Capital
Industry Insights

How To Create A Killer Equity Crowdfunding Pitch - Step 6: Your Financials

“Well, we’ve all made our predictions…”

The sixth in a ten-part series which addresses the steps you need to take in order to create an eye-catching equity crowdfunding campaign on GrowthFunders. You can find out more about the coming posts at the end of this one.

Can you really predict the future?

Unfortunately, we don’t all have a crystal ball lying around. Being able to see into the future is quite a specialised skill. However, the financial forecast is a key feature of your fundraising pitch; you won’t get anywhere without one. So it’s time to start opening your third eye.

The truth is that whatever you put in your forecast, most likely will be nowhere near the reality you and your business experience. There’s every chance that you could over-estimate the time scale associated with raising seed capital or reach milestones, and the market could either crash or fly. There isn’t really any way of really knowing what’s going to happen...

So why bother?

Because putting together a credible financial forecast indicates that you have a good understanding of the potential of your business. Investors want to see evidence that you have thought carefully about realistic profits and loss. If done properly, a forecast can also indicate how interesting your business opportunity could be to an investor.

Financial forecasts

Investors are looking for a qualified estimation of future financials. However, forecasting financials in a start up business is more of an art than a science. Therefore, use the information you have in the best way you can in order to predict. Revenues (incoming payments) are tricky to forecast, whereas outgoing costs are slightly easier, as they can be estimated by using historical accounting data.

A good forecast will cover: overheads, wages, gross profit, operating profit, net profit, corporation tax, profit after tax, direct costs, and miscellaneous costs.

It is always a good idea to consult an accountant or financial advisor for more in-depth information in this area.

Burn rate

The term “burn rate” refers to the amount of money you need to cover operating costs and salaries, before your business starts generating revenue. Consider the members of your team, the overheads you are paying on your building, your every-day stationery needs. Produce a realistic estimation of these costs for a year and then average out to show a monthly representation. 

Runway

The term “runway” refers to the length of time (pre-revenue) you can survive before you need more money. Here, you need to be considering things like when you will break even and when you will need the next round of funding. Being able to provide a credible time frame for key points such as these, indicates to the investor that you are aware of costs involved.

Again, give a credible calculation of this for investors.

Take a look at our blog that explains start-ups cash burn and runway in more detail here.

From the ground up

It is important to remember that investors are interested in the steps you need to take in order to reach your goal. This means, starting at the beginning. Show how you will (or have started to) build your business from the bottom up, employee-by-employee, etc.

If this all seems a little daunting, don’t worry; a financial forecast doesn’t have to be produced from scratch. You can model your business on real-world successes, which means that your financial projections can follow those of previously-successful companies. Show that it is a tried-and-tested format, but then also how your business is different, and ultimately better.

GrowthFunders: getting you started

If you’re looking to raise seed funding for your business, you’ll no doubt already know how difficult it can be. Spending time away from your business, travelling up and down the country to meet face-to-face with potential investors, can often be time-consuming and ultimately fruitless. Finding the right platform from which to pitch to many investors, all at once, is a great solution. GrowthFunders, the online equity-crowdfunding and co-investment platform, is the right one. Now, what do you need in order to make your pitch the best it can be?

  1. Idea

  2. Using Social Media

  3. Your Team

  4. The Lean Start-up Method

  5. Your Revenue Plan

  6. Your Financials

  7. Your Investor Presentation

  8. Your Business Plan

  9. Making A Video

  10. Setting A Valuation

  View our live tax efficient investment opportunities

Driving Growth.
Creating Value.
Delivering Impact.

Backed by

Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.