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The Role of Assumptions in Startup Pitching

More than truthfulness of the numbers, investors evaluate the assumptions underneath a pitch. They are not asking “Are these numbers real?” but “Could they be real?”.

The assumptions reveal the logic of thinking by the founders. When examining them in detail, one should get logical answers to questions like:

  1. How many sales people are needed to hit the sales goals?
  2. How much will it cost to achieve the sales target?
  3. How much is the cost for acquiring a new customer?
  4. How long is the average sales cycle?

(Assuming an enterprise sales case; the questions in a B2C market would be different, so you need to consider the circumstances.)

The investors are looking for “intellectual rigor” and “completeness of thought” from the founders. Therefore, the pitch needs to show that you understand how to run the business, and how those actions are linked with growth within a defined timeframe. Like one investor said, it is better to be roughly right than exactly wrong.

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