So your argument is.. what exactly? 90% of startups fail, so let’s not make any attempts at understanding the trade offs inherent in decisions such as whether to hire, what price to put on things, which sales channel to pursue, what debt instrument (if any) makes sense?

JESUS TAKE THE WHEEL!

Couldn't have said it better myself. To justify that financial models are a waste of time by saying "90% of startups fail" is aken to saying that professional athletes shouldn't train because "99.9% of athletes don't become pros".

Do you think that the remaining 10% of successful startups aren't utilizing forecasts and testing their assumptions? People love to be contrarian just to be contrarian on this site sometimes.

I think the argument is that financial forecasts for startups are equivalent to wearing a business suit; they are both anachronisms that signal our desire to succeed but have no causal relationship to the nuts and bolts of succeeding.

I’m of both minds. We need a rough business model (a type of Fermi Estimate ) and metrics to help track and validate our assumptions. At some point these estimates become detailed enough to gain predictive power but assuming they begin that way is a recipe for failure.

You don't need to jump to conclusions and put religious faith into your investment decisions, but a lot of investors do and probably haven't yielded worse performance for it.

My argument is that the financial model presented during the pitch is a waste of a great deal of effort because it is inaccurate and futile. As someone running a seed-funding business, you are relying on a piece of financial fiction to make a decision about whether to fund. Do you really care about the forecasts or just the metrics that are more difficult to fudge? Could the model be distilled to something more useful that isn't even a model?

I suggest the following exercise: among your investments that survive, reconcile the early financial model with current performance and market analysis. How accurate were the estimates?

This is ultimately an exercise in creating an illusion of certainty and competence: can an entrepreneur sufficiently obfuscate a business opportunity so that the investor doesn't look bad?

I /think/ this is less for VCs and more for entrepreneurs to quickly get a better idea of if a market is viable before exploring an idea further.

And if it's not the intention, this would be useful to me for that reason.