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Why we picked it Before you touch a spreadsheet, this essay reframes what the model is even for, and it answers your exact worry: at pre-seed and seed, accuracy is not the job. It argues investors are underwriting the mechanics and the quality of your reasoning, not buying your year-three number, so your model should make your assumptions honest and traceable rather than impressive. It is the piece that tells you what to aim the model at.
What Are Startup Financial Projections Actually For?
From Equidam by Daniel Faloppa long-form essay
- Early-stage projections are judged on coherent, honest assumptions, not on whether the numbers come true, so stop optimising for a precise three-year figure.
- A traceable model built on pricing, conversion, and churn reveals that you understand your funnel, which is what actually builds investor confidence.
- Wildly optimistic numbers do not sink deals by being wrong (everyone expects inaccuracy), they sink deals by signalling you do not understand your own business.