Financial forecasting is all about being prudent and sourcing empirical data and analysing it in an unbiased manner, then using this data to underpin the forecasts, creating a sensible, achievable financial model.
The quickest and easiest way for an entrepreneur to fail, or lose control of their company is to overstate potential revenues and underestimate overheads. Either the capital is burnt at an unsustainable rate, or investors step in for a larger slice using ‘full ratchet’ provisions, marginalizing the entrepreneur.
An independent pre-money valuation can add real weight to your funding proposal and/or Terms Sheet. Indeed, most professional investors will expect you to provide a valuation as part of the negotiations.