Most founders approach investor financial models as a storytelling exercise — build a model that shows strong growth, reasonable margins, and a path to profitability that's exciting without being implausible. The problem with this approach is that experienced investors have seen thousands of models, and they know exactly what a model built to impress looks like. The founders who get the most traction are the ones who build models that prioritise credibility over optimism.

Understanding what investors are actually evaluating when they look at your financial model changes how you build it.

What investors are really looking for

When an investor opens your financial model, they're not primarily evaluating whether the numbers are big enough. They're evaluating whether you understand your business. Do your unit economics make sense? Are your growth assumptions rooted in something real? Do the cost assumptions reflect what it actually takes to build and operate a business like yours? Is the model internally consistent — do the headcount assumptions match the revenue growth, do the sales and marketing costs scale in line with the customer acquisition model?

A model that passes this test builds confidence even if the projected numbers are modest. A model that fails it — because the margins are suspiciously high, the costs scale implausibly slowly with growth, or the revenue assumptions aren't connected to any identifiable growth driver — undermines confidence even if the headline projections look exciting.

The assumptions tab is the most important tab

Experienced investors go to the assumptions tab first. This is where the logic of the model lives — where you state explicitly what you believe about customer acquisition costs, conversion rates, average contract values, gross margins, and the other inputs that drive everything else. If the assumptions are clearly labelled, individually justifiable, and sourced where possible to real data, the model earns credibility before the investor even looks at the output.

If the assumptions are buried in cell formulas, mixed with outputs, or simply absent — if the revenue growth is a hardcoded percentage rather than a product of identifiable drivers — the model looks like it was built to produce a desired answer rather than to represent a genuine view of the business. That's the opposite of the signal you want to send.

Three scenarios, not one

A model with a single set of projections is a model that an investor cannot fully trust. The future is uncertain, and a founder who presents only an upside case is either not being honest about the downside or hasn't thought about it carefully. A model with base, upside, and downside scenarios demonstrates that you've stress-tested your assumptions and that you know what happens to the business if things go slower than planned.

The downside scenario is particularly important. Investors want to know that your business survives a slower-than-expected growth trajectory — and specifically that your runway is sufficient to reach the next value-creating milestone even in a scenario where things don't go perfectly. If your downside scenario shows you running out of cash before reaching your next milestone, that's a problem that's worth solving in the model before you share it, not after.

The use of funds

Your model should explicitly connect the capital you're raising to the assumptions that drive your projections. If you're raising $2M, the model should show where that $2M goes — what headcount it funds, what marketing investment it enables, what infrastructure it builds — and how those investments produce the revenue growth in the projections. This use-of-funds logic is often missing from early-stage models, and its absence is a gap that investors notice.