What Investors Look For

Here's a quick reminder of what investors will look for in your EZ Numbers performance metrics:

But most investors won't pay much attention to the metrics your plan produces. Why not? Because these metrics rest on so many assumptions; it's really hard to know what will happen. Then why go through all this? Because you need to know how investors think. And it's even more important that investors see you're not just thinking about getting money from them, but also about paying them back.

I guarantee you: an investor may not believe all your projections, but if you ask them what IRR they look for in startups like yours, they'll look at you in a whole new way, and be a lot more likely to invest.

Frequently Asked Questions

How do I calculate these metrics? EZ Numbers calculates ROI, NPV and IRR for you. We got you.

Will VCs believe the ROI, NPV and IRR in my plan? Nope. Their analysts will run their own numbers. But knowing the concepts will work out really well for you.

What discount rate should I use for NPV? Try a few, all above 10%, the stock market's long-run average. Don't worry too much about it; the point is showing investors you speak their language.

If NPV is the best metric, why do VCs often use IRR? It's a bit easier to say. With NPV you say something like "I show a positive NPV at a 45% discount rate." With IRR you just say "The IRR is 45%," and the investor checks it against their hurdle rate.

What if there are several future cash flows? Find the Present Value of each year's amount and add them up, then subtract the investment.

What if the deal is super secret double dog risky? Do we make the discount rate 99%? Yikes. If you think the discount rate should be over 90%, it's most likely not going to work out. That's a whole lotta risk, amigo.