Connecting Financial Modeling to the Pitch Deck

1. Connecting Financial Modeling to the Pitch Deck Whether you realize it or not, financial modeling is closely tied to a pitch deck. When you create a pitch deck, the last thing on your mind is probably Financial Modeling. Yet, it plays a very important underlying role in the pitch deck’s creation. Financial modeling may even be used to facilitate a conversation with a potential investor following a pitch deck presentation. Financial Modeling Defined The first step to understanding how financial modeling ties in with the pitch deck is to fully understand financial models. Unlike Financial Projections, which are static and do not change once set, financial models are dynamic, adaptable tools used to evaluate multiple scenarios. Financial modeling is a key component of decision making in everyday business as well as initial business planning. The Role of Financial Modeling in Financial Projections Financial modeling will be used to determine the final financial projections which will become part of

2. the business plan. The Pitch Deck, of course, is a presentation of the overall business plan. One of the main components of the pitch deck will be the financials. As expected, this is one of the main interests of potential investors. When determining the financial projections, they are not as concrete as many people realize. They are based on a number of assumptions. These assumptions must be supported but are open to interpretation and can usually be within a wide range. Pair that information with the number of variables and it’s easy to see how there could be thousands of possible outcomes. It is all about how you put the numbers together. When you set out to create a business plan and ultimately a pitch deck, you are doing it because you believe the business can be profitable. Financial modeling allows you to prove that to yourself and see under what circumstances it can happen. It also allows you to understand the potential, both the lower and upper limits, of your potential expenses and revenues. The process of financial modeling makes it possible to either confirm your decisions or, to make more informed decisions about your business plan. You may, for instance, decide to change the location of your office or decide to be fully remote. It allows you to eventually understand exactly how much money you need to launch or grow. It will also allow you to see where you can cut expenses or where you may need to focus your sales efforts or ramp up your sales goals. Facilitating Investment Conversations Ultimately, the Pitch Deck will hopefully lead to investor interest in your business. Often, potential investors will run numbers themselves after the meeting to determine their investment and potential return under various scenarios. However, if you can anticipate these questions, you can prepare financial models that you can use in real time to facilitate a preliminary conversation. This can help

3. speed things along and demonstrate you are prepared, thorough, and taking your business seriously. Financial Modeling may seem removed from the pitch deck but, as you can see, it actually plays a very imperative role. It forms the foundation of your financial projections, facilitates you making important business decisions, allows you to support and defend these projections and decisions and can even help you facilitate the investment conversation.