Spreadsheets and analytical reports are quickly becoming a relic of the past. Not only are they difficult to read or compare, but after a couple of minutes of scanning, our eyes can start to glaze over. While a financial model may seem like a revamped Excel document, an investor will more likely believe in your business if you use visuals accompanied by a 24-month forecast.

How To Use a Financial Model to Impress Angel Investors

There is no one-size-fits-all financial model, so we encourage you to look beyond financial modeling templates when adopting the following points that can make your document readable.

Keep it Clear: Clarity and Formatting

You’ll lose your investors’ attention if your financial model is unclear, so it’s essential to read over the document once you’re done. Ask yourself if the terms you’re using are recognizable for the average person and whether or not the document flows in a logical order. If your financial model follows standard formatting procedure and the cells are readable, you’ve done your job.

Switch it Up: Color Distinction, Font Size, and Alternating

Color coding is a great way to draw eyes to metrics you want your investors to see, but it has to make sense to function appropriately. For example, if you use green to represent a negative, that will confuse your investors. Be sure to follow common color coding knowledge. Neutral colors can be used to show metrics that are neither bad nor good, like facts or calculations.

Font size and color are also important. Headings are typically 16 pts, while the text is 10 pts. While you can play with the heading size, don’t make your text too small or unreadable. Alternate between different sized rows and columns to prevent stagnation in the document.

Stay Consistent: Tabs, Styles, and Calculations

Establishing consistency in a document is just as important as switching it up, as some features should stay the same to remain rational. For example, every tab should have a meaningful name and use relevant data to support your claims. Small aspects of the sheet, like indentation, alignment, calculation, and style, should be the same for every document and page.

Highlight the Necessities: Key Factors, Outputs, and Mobile Usage

A business must highlight the key factors that drive growth so the investor can understand where you’re placing your focus. With those key factors listed, an investor can then filter out your financial model output, which will be made clear in your financial statements and valuation.

A table of contents can provide a lot of value for your clients, but a mobile equivalent with links to pages will impress your investors and make for a more streamlined meeting.

Design With Investors in Mind: Visual, Logical and Data

One of the best aspects of a financial model is its presentation. If a business provides a visual map of its analysis, investors will understand instantly where their money is going. However, it helps that these assumptions made from the visual maps are explained logically and that the math is correct. Use historical data to back your assumptions to prove growth is possible.

Expand on Your Data: Metrics, Analysis, and Explanations

Your financial model can’t just show the results of your data; you also need to provide how you came to this conclusion. Investors trust logical analysis over pipe dreams, so show the entire process and supporting evidence, like your balance sheet and inventory details.

Don’t just provide one possible outcome either. You’re more likely to impress your investors if they feel you’re accountable, and analyzing multiple roads that could lead to a similar goal or alternative objectives can do just that. While compiling this data, make sure it’s supported by output metrics, which can include lifetime valuation, acquisition costs, and cohort retention.