VC4Africa Crash Course: writing a financial plan that will convince investors – Introduction

VC4Africa is Africa’s largest online community connecting entrepreneurs and investors. To support  entrepreneurs registered on VC4Africa we have created an easy to use format for the financial plan. Financial coach Arnout Kroezen will go through the key points In a series of articles on the VC4Africa blog. Below is the introduction.

The financial plan is one of the most challenging parts of the business plan. Most entrepreneurs can convince investors of their product and the need in the market of their product, but when it comes to the financial plan they have to convince investors too, and this time in their own field of expertise: finance.

In this series I’ll introduce the easy to use format we created to support the VC4Africa entrepreneurs. It gives a good insight for the investor into the costs structure, the expected revenues and the need for capital.

The investor is looking for Return on Investment (RoI)

The investor is reviewing the financial figures because they are already attracted to the product and/or idea. But now the investor is looking at the quality of the figures and the estimations.

– Are they correct?

– Are they reasonable?

– Are they interesting?

– Are they supported by good research?

In the following parts of this series, we’ll take a closer look into the process of analyzing the figures; as outlined in the following sections:

– Costs & Revenues

– Summary

– Calculations of the Net Present Value

– Creating a deal

Figures can be presented in a Budget or in a Cash Flow prognosis. The Budget gives a better view about profitability and RoI (Return on Investment), but the Cash Flow statement gives a better overview of when the investment is needed. To keep things easy to use and focus on the investment needed, we will use a Cash Flow prognosis in the following posts, showing cash inflow and outflow.

Looking for a mentor to progress on the 5 steps to fundraising on VC4Africa? Also check out VC4Africa’s Mentorship MarketplaceThe next post in this crash course series on writing a financial plan  Next: first steps – costs & revenue

What are your own experiences regarding financial planning? VC4Africa welcomes you to share comments below!