Founders often pitch their best-case numbers and hope investors will believe them. That’s usually the wrong move.
You know what happens in most investor meetings?
(Let me explain with a story of two founders)
The story of two founders
Two founders pitched the same investor. Same market, similar product, and nearly identical revenue projections.
Founder A: So gentlemen, we plan to do $400K in year 1, and scale operations to $1.2M by the time we reach the end of year 3.
The numbers are clean, delivery is confident, and everything is lined up on paper.
Founder B showed the same $400K target, then flipped to a slide titled “And here’s what happens if we only hit half of that.”
She walks through which costs she’d cut, when she’d cut them, and how the business survives on $200K (if not $400K).
No surprise, Founder B got the check. But why?
Not because her numbers were better, but because the investor had already assumed financials were optimistic, she just admitted that.
What’s actually happening on the other side
Most founders think showing the worst case makes them look uncertain.
Investors see the opposite. A downside scenario is the strongest signal that you’re ready to operate the business, not just pitch it.
Said differently: confidence isn’t claiming nothing will go wrong. Confidence is showing you’ve already planned for when it does.
What do downside (or worst-case) scenario signal?
Having interacted with a bunch of investors and lenders, here’s roughly what runs through their heads when they see a downside scenario:
- You know which assumptions are weakest
- You’ve identified which costs are flexible and which aren’t
- You have a decision-making framework for when things get tight
- You won’t burn their money waiting and hoping for a turnaround
- You’ve stress-tested your numbers before they had to
That last one matters more than it sounds.
They don’t want to be an investor pointing out your weak spots in a first meeting. When you do it yourself, you’ve saved them the awkwardness.
The Framework: The Downside Test
Don’t worry, if you haven’t considered different scenarios, use this framework to build a downside scenario in less than 30 minutes.
Step 1: Cut your Year 1 revenue by 40%.
Not 10%. Not 20%. Forty percent. That’s the realistic downside — the one investors are already mentally running in their heads while reading your plan.
Step 2: List your costs in two columns.
Column A: Fixed costs you can’t cut quickly (rent, core salaries, software).
Column B: Flexible costs you can cut within 30 days (marketing spend, contractors, new hires, discretionary).
Step 3: Answer three questions in writing.
- If revenue drops 40%, which costs do we cut first, and by when?
- What’s the lowest monthly burn we can run at without breaking operations?
- How many months of runway does that give us to course-correct?
Step 4: Add one section or one paragraph to your plan.
Title it “Worst Case Scenario.” Show the 40% lower revenue. Show the cost cuts. Show the runway. That’s it.
Why this works
Investors know things will go wrong. What they’re trying to figure out is whether you’ll know what to do when it happens.
A downside scenario shifts the conversation from “will this work?” to “how does this founder think?”
And the second question is the one that actually gets funded.
The bottom line
Investors don’t fund optimistic projections. They fund founders who’ve already answered the question “what if you’re wrong?”
Open your forecast in Upmetrics. Cut Year 1 by 40%. Build the downside scenario this week — before the investor asks for it.
P.S. Did you consider the downside scenario for your plan? Hit reply and tell us what the 40% cut revealed. We read every response.
