Biggest problem with your projections? Maybe you.

I’ve made one mistake every fundraise I’ve ever done.

And this has been ongoing—even up until recently.

It was only through a conversation with my cofounder Zack recently that I realized how badly I’ve screwed this up over the years.

Throughout my time as a founder, I have let way too many people’s opinion on my projections impact how I view my projections.

If you’re early stage—and possibly, even if you’re not—this one is for you.

A problem since the beginning

First, let’s just acknowledge what a model is in this case. When you found your company, you’re going to build in your profit and loss projections, and this document effectively shows how you project your company will scale and take over the world. When you’re raising on aspirations, this model is everything.

I don’t have an MBA and had never built a financial model when I founded GoWild. Heck, I was inept with Microsoft Excel. The whole journey with me Googling “how do you raise money for an idea?” then hacking together projections from templates I found online.

So it’s possible if not downright likely that this fault stems from my weakness in finance. I have since earned a hard knocks MBA through trial and error, as well as being mentored by some amazing CFOs and CEOs. But I’ve seen even brilliant finance folks fall victim to being self conscious about their projections.

I remember what was likely my first formal investor pitch for GoWild. My model was a few rows at best, and I remember getting laughed at—literally laughed at—for my projections and my desired valuation. Looking back, this moment probably only made my propensity to not trust my gut on projections even worse.

In 2019 we were accepted into a prominent sports accelerator, and this was the first time we started using a proper financial model. Our numbers became more realistic, being grounded in some baseline of historicals. But even still, it was a lot of aspiration with a pinch of reality.

Accelerators put you in front of a ton of investors in a short time period. This has a benefit, in that you get really good at pitching and get a lot of feedback all at once. The biggest challenge for me was the varying feedback. In one pitch I’d hear our numbers were insane (in a bad way) then we’d turn around and hear they were too conservative. I was always monkeying with the numbers to try and appease an investor, thinking if I listened, I could win them over.

In hindsight, this is absolutely a horrible way to approach a fundraise.

Fit the investor to your model, not your model to the investor

All in the last year, I’ve been told my company is worth anywhere from $5M to $40M. I’ve been told our revenue projections were weak and once again insane (too aggressive, which is still bad).

When you’re pitching for investors, you are telling a story, and that story has to be believable so in some sense, you have to listen to some amount of feedback if you’re getting consistent talking points that this isn’t going to work. The challenge comes when you get too reactionary and try to appease every investor you meet.

Sometimes, the investor is dead wrong and you have to shake that feedback off just as a dog shakes off a dip in the pond.

Instead of constantly evolving your numbers based on individual feedback, the best thing to do is get feedback from industry experts about what is feasible, and build the model YOU think is possible. You’re the one who has to deliver, so if you let an investor talk you into juicing your numbers, you’re the one who will be to blame when it falls apart. Similarly, letting a Debbie Downer investor talk you into deflating your numbers can kill the interest from others.

It took me way too long to realize this in fundraising. It’s not about tweaking the model, it’s about tweaking your investor criteria. The interesting thing is once you start qualifying investors with this lens, you’ll change you who go after altogether. And similarly, when you’re getting feedback that the model doesn’t look right, you’ll see this as a bad investor fit. It’s not a problem with your company.

This mindset shift is everything. It takes you from imposter syndrome to being selective about who you invite to the party.

3 ways to rethink projections

1) Trust your gut

This is the key. A smart founder will digest feedback, but it’s weak to be impressionable with everyone’s feedback. The fact is, you’re going to pitch a lot of investors who don’t know what they’re talking about. Don’t think that because they have the cash that they’re necessarily right when they’re ragging on your model. Build a model you believe you can achieve, and stick with it.

2) Trust industry experts

The term “investor” should not be synonymous with “he or she who knows all” but many founders get in this mindset. It’s easy to think, “well, they’ve exited a company and invest in startups, they must know.” It’s not always the case—many investors you will pitch come from wildly different backgrounds, and those backgrounds often create biases and blindspots. However, there is a lot of value in finding people who have done something similar to what you’re doing, and getting their opinions.

3) Push yourself and find people who believe in you

Your numbers should make you feel slightly uncomfortable, but they shouldn’t be impossible. If part of your model depends on the stars aligning, you don’t have a financial model, you have a wish list. If a pandemic and the current economic landscape has taught us anything, it’s that you can’t build a company this way. The unexpected will happen. But you should be chasing numbers that are going to require you to push yourself for greatness. After all, no one wants to invest in mediocrity. Just be sure that no matter what you land on, you have a plan on achieving the numbers that is more than some BS like “organic growth” or virality. That’s not a plan, that’s a dream.

Who I’m listening to: Jobi Riccio

What I’m reading: “Southernmost” by Silas House

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