Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

Your five-year revenue projection is fiction.

Angels know this. You know this. Everyone knows this.

So why do investors still ask to see financial projections? Because they're not evaluating whether your numbers will be accurate. They're evaluating whether you understand your business model. Whether you've thought through your unit economics. Whether you grasp the math that needs to work for your company to succeed.

Most founders get projections wrong. They either make them too optimistic (hockey stick graphs that show 10x growth every year) or too vague (we'll hit profitability "eventually"). Neither approach works.

Here's what angels actually want to see.

Show Your Thinking, Not Your Fantasy

The purpose of financial projections isn't to predict the future. It's to demonstrate you understand the key drivers of your business.

When Elizabeth Yin reviews financials from early-stage companies, she's not checking whether the company will actually hit $10M ARR in year three. She's looking at the assumptions behind those numbers. Do they make sense? Are they grounded in reality? Has the founder thought through what needs to be true for those numbers to happen?

If your projection shows you'll acquire 10,000 customers in year two, angels want to see how you'll acquire them. What channels? At what cost? What conversion rates are you assuming? What's the math?

When you show your work, projections become a tool for demonstrating strategic thinking rather than just wishful guessing.

Focus on Unit Economics First

Before you project five years of revenue, get your unit economics right.

This is the foundation. If your unit economics don't work, nothing else matters.

Here's what angels care about:

Customer Acquisition Cost (CAC): How much does it cost you to acquire one customer? Include all marketing spend, sales salaries, tools, everything. Be honest.

Lifetime Value (LTV): How much revenue will you generate from one customer over their entire relationship with you? Factor in churn. Factor in expansion revenue if you have it. But be realistic about retention.

LTV:CAC Ratio: This is the metric that tells you if your business model actually works. You need LTV to be at least 3x CAC for most SaaS businesses. If you're spending $300 to acquire a customer who only generates $400 in lifetime revenue, you don't have a business.

Show these numbers. Explain the assumptions behind them. This is where you prove you're not just making stuff up.

Keep Projections Short

Don't project five years out. It's a waste of time.

Project 12 to 18 months. Maybe 24 if you're feeling ambitious. But beyond that? It's fantasy.

Angels investing at pre-seed know you'll pivot. They know market conditions will change. They know your business model will evolve. Trying to forecast what your business looks like in year five is pointless.

What matters is showing you understand what needs to happen in the near term. How much runway do you need? What milestones will you hit? What does success look like in the next 12-18 months?

This timeframe is tangible. It's something you can actually plan for. And it's enough to show angels you've thought through the path forward.

Break Down Your Assumptions

The difference between projections that build confidence and projections that raise red flags? Transparency about assumptions.

Don't just say "We'll grow from $10K to $100K MRR in 12 months." Show how.

"We're currently at $10K MRR with 50 customers at an average of $200/month. We're acquiring 15 new customers per month at a CAC of $400. We expect to increase acquisition to 30 customers per month by Q2 through these three channels: SEO (10 customers/month), paid ads (12 customers/month), and partnerships (8 customers/month). We're assuming 5% monthly churn based on our first six months of data."

Now angels can evaluate whether those assumptions are reasonable. They can push back on specific numbers. They can ask about churn or acquisition costs or channel mix.

That's the conversation you want. It's way more productive than arguing about whether you'll really hit $100K MRR.

Address the Burn Rate Directly

Angels care deeply about how long their money will last. Don't make them dig through your spreadsheet to figure out your burn rate.

Put it front and center. "We're currently burning $25K per month. With this raise, we'll have 20 months of runway. Our plan is to extend that to 30 months by hitting $15K MRR within six months, which will cut our net burn in half."

This shows you're thinking about capital efficiency. That you have a plan to make their money last. That you're not just going to blow through the raise and come back asking for more in six months.

And be honest about what happens if things don't go to plan. What if growth is slower than expected? What's your contingency? Angels respect founders who've thought through the downside scenarios.

Skip the Perfect Hockey Stick

You know that chart where revenue is flat for a while and then suddenly shoots straight up? The classic hockey stick?

Stop using it. Angels are tired of seeing it.

Growth is almost never that smooth. And pretending it will be makes you look naive.

Show a more realistic curve. Growth that accelerates but has bumps. Quarters where you might plateau while you figure out a new channel. Honest projections that reflect the messy reality of building a company.

Shiyan Koh has seen countless pitches at Hustle Fund, and the ones that stand out aren't the ones with the most aggressive growth curves. They're the ones where founders have clearly thought through the assumptions and can defend them with real data or solid reasoning.

Use Actual Data, Not Industry Benchmarks

If you have six months of data, use it. Don't just pull industry averages from a blog post.

"Our average customer pays $150/month" is way more credible than "The typical SaaS ACV is $1,800 according to a survey we found."

Angels want to see that you're building your projections on your actual experience, not generic assumptions about what companies in your space usually do.

If you don't have data yet because you're pre-launch, be upfront about that. "We don't have customers yet, so these assumptions are based on our pilot conversations and what we learned from 50 customer interviews." That's honest. It shows you've done your homework even if you don't have hard numbers yet.

Model Different Scenarios

Don't just show the base case. Show a range.

What if customer acquisition costs are 50% higher than you expect? What if growth is slower? What if churn is worse?

You don't need to build out full models for every scenario. But showing you've thought about the variables and how they impact the business demonstrates sophistication.

"If our CAC comes in at $500 instead of $400, we'll need to extend our payback period by two months or reduce customer acquisition volume in the short term while we optimize conversion rates."

This kind of thinking shows angels you understand the business isn't going to play out exactly as planned. That you're prepared to adjust.

Be Conservative on Revenue, Aggressive on Costs

Underestimate revenue and overestimate costs.

This approach does two things. First, it makes you look realistic rather than overly optimistic. Second, if you actually outperform your projections, you look like a hero.

Founders who project aggressive revenue growth and minimal cost increases set themselves up for disappointment. When you miss those projections, angels lose confidence. But when you beat conservative projections? That's momentum.

Don't Forget About Hiring

Your financial model needs to account for team growth. This is where a lot of founders mess up.

If you're planning to go from two founders to a team of 10 people in 18 months, your costs are going to explode. Angels know this. If your model doesn't reflect it, they'll assume you haven't thought it through.

Be specific about when you'll hire and for what roles. "We'll hire a senior engineer in month 3 at $150K total comp, a customer success person in month 6 at $80K, and a second engineer in month 9."

This level of detail shows you've actually planned how you'll deploy capital. That you're not just making up numbers.

Address Profitability, Even If It's Far Out

Angels investing at pre-seed aren't expecting you to be profitable. But they do want to see that you understand the path to profitability.

"At our current unit economics, we need to reach $200K MRR to break even. That's roughly 1,000 customers at our current average revenue per user. Based on our acquisition model, we expect to hit that in month 24."

This shows you've thought beyond just raising money and growing. You understand the endgame. You know what the business needs to look like to stand on its own.

Keep the Spreadsheet Simple

Your financial model doesn't need to be a 47-tab Excel masterpiece with complex formulas and color-coded scenarios.

Keep it simple. One or two tabs. Key metrics clearly labeled. Assumptions documented.

Angels don't have time to decode your elaborate spreadsheet. They want to see the most important numbers at a glance. Revenue. Costs. Runway. Unit economics.

If they need more detail, they'll ask. But start with the essentials.

Talk About What You've Learned

The best financial projections aren't just forward-looking. They incorporate lessons from what you've already done.

"Our initial CAC assumption was $200, but after three months of testing paid ads, we learned it's actually closer to $350. We've adjusted our projections to reflect this."

This kind of honesty builds trust. It shows you're not just projecting what you hope will happen. You're incorporating real data and adjusting as you learn.

Angels appreciate founders who can admit when their assumptions were wrong and show how they've course-corrected.

Bring It Together

Financial projections at the pre-seed stage aren't about accuracy. They're about demonstrating you understand your business model, your unit economics, and the path forward.

Focus on the next 12-18 months. Show your assumptions. Be transparent about burn rate. Use real data when you have it. Model different scenarios. And keep everything grounded in reality rather than fantasy.

Do this well, and angels will see what they're looking for: a founder who understands the math behind the business and has a realistic plan for deploying capital.

For founders serious about learning how to present financials that actually resonate with angels, Angel Squad offers direct access to investors who've reviewed thousands of financial models. You'll get feedback on your projections, learn what red flags to avoid, and understand what actually matters to investors evaluating early-stage companies.