guideFinancial Modeling
Revenue Projections: What Investors Expect
How to build credible, bottoms-up revenue projections that pass investor scrutiny. Covers growth rate assumptions, cohort modeling, and how to present a range of scenarios without losing confidence.
What Investors Actually Want
Investors don't expect your projections to be accurate — they know they won't be. What they're evaluating: the logic of your assumptions, your understanding of business drivers, and whether you think like a CEO.
Bottoms-Up vs. Top-Down
Top-down: 'The market is $5B and we'll capture 1%.' This approach rarely impresses investors — it doesn't show how you'll actually get there.
Bottoms-up (preferred): Start with your sales capacity, conversion rates, and ACV. How many deals can your team close per month? At what price? Build from that.
Building a Bottoms-Up Revenue Model
Month 1–3: Model your acquisition channel(s) with realistic conversion rates.
Layer in cohorts: How much does each month's new customer cohort contribute over time?
Build in churn: What % of customers leave each month?
Project expansion: Do customers expand over time (upsells, seat growth)?
Result: MRR/ARR that compounds realistically.
Presenting Scenarios
Show 3 scenarios: Conservative, Base, and Upside. Your base case should be achievable — not a stretch goal. Investors will ask what assumptions change between scenarios. Be ready to defend each one.
Key Assumptions to Document
Monthly new customer acquisition (by channel)
Average Contract Value (ACV) and pricing tiers
Gross and net churn rates
Sales cycle length
Headcount growth required to hit projections
Key hires and their timing