I'm Tired of Pie-in-the-Sky ROI

Having been through several hundred business plans and several dozen pitch presentations in the last three months, I hope I don’t see another pie-in-the-sky ROI projection for a while.

I like reading business plans, and I like listening to business pitches. I do it on purpose. I like judging business plan contests and I do it a lot. And I like being an angel investor (in a group, the Willamette Angel Conference). But Jeez! Where are the entrepreneurs getting the idea that their ROI projections matter to investors?

Way too many plans combine a completely unrealistic sales forecast with vastly underestimated costs and expenses plus a make-believe future formula for an incredibly high future valuation, then proudly announce to their readers or audience a resulting number, ROI (return on investment) of this or IRR (internal rate of return) of that, as if it were their winning time in a race.

Sorry, no sale. If your forecast is unrealistic then the promised returns are unrealistic. I choose the best product-market fit, the best management team, scalability, and defensibility; I want to see the financials, yes; but they don’t help the case unless they seem realistic.