Pro Forma Gut Check
“Hey, Alex, would love your feedback on this, we’ve got an investor pitch tomorrow afternoon”.
I open the spreadsheet: revenue rockets, headcount flat.
“Who sells this?” I ask. Silence. And then we get to work so they’re ready for their presentation.
When I released the Build It Better Kit (updated recently, especially finance), I hoped it would help. I didn’t expect the messages from founders asking for hands-on help turning “organized” into investable. Thank you all who reached out for more help, stoked that it’s happening and that I can help so many founders make their lives easier.
And the challenges we’ve been solving are everything from GTM, to hires, to investor relations, etc. Today, I want to focus on one pattern I keep seeing: the Pro Forma Trap—two mistakes that slow raises across industries, and in the last 2 months I’ve seen at least 4 different companies do this in some form or another.
1) Revenue hype without a path
Pressure about today’s revenue = fantasy curve tomorrow. Pre-rev → $3M ARR in 12 months… with no hires, ramp, or pipeline math. Investors read that as inexperience, not ambition.
Fix: Tie every jump to headcount, channel, and conversion math. Make growth aggressive but plausible. $0→$100k ARR is the hardest; $100k→$1M requires repeatability, not miracles. If you’re going from 0 to $5M in one year, you better have a very good story as to how that’s happening.
2) Micro-lean costs that break execution
To look scrappy, founders starve the model: big revenue, tiny costs. On paper it “wins”, but in reality it cannot ship.
Fix (directional guardrails):
R&D: high early; % of revenue trends down with scale.
GTM: rises with bookings; efficiency improves over time, not day one.
G&A: keep lean ≤ 20% of OpEx at this stage.
COGS / GM: margin should expand with volume and learning.
3) Investor gut-check (60 seconds)
Do hires + GTM spend explain revenue?
Do unit economics improve with scale?
Do R&D% and G&A% move the right direction?
Is there a clear chain: hire → pipeline → conversion → cash?
Could a reasonable outsider rebuild your model from your assumptions?
If you hesitate, you don’t have a model: you have a wish.
Why this matters
A credible model isn’t just numbers, it signals you can build a company, not just a product. That’s what shortens diligence and strengthens your leverage. Let me know if I can help on your journey, always happy to jump in. Feel free to respond to this email, we can find some time to chat.
Let’s build it better,
Alex
P.S. If your growth curve looks like a hockey stick, be ready to show the stick factory—hires, channels, conversion, and ramp.
