Denice R. Preston
Toptal Finance has a rigorous screening process that only allows 3% of candidates to pass. How do the most effective financial consultants become so successful? Jeffrey Fidelman is one of Toptal’s most in-demand financial consultants. He shared with us his proprietary methods to ensure success for his clientele and how he has grown exponentially his own business.
Toptal Finance has the best financial advisors in the world. (Toptal only accepts the top 3% of applicants). How did they get so good? What makes them different from their peers? Jeffrey Fidelman, one of Toptal’s most sought-after financial consultants, was a guest on our show to share his wisdom. Find out why his clients love him, what resources he uses, and how he developed a repeatable system. His proprietary guide to creating a pitch deck is available here and has a high success rate.
Expanding the Services Offered
Toptal projects that I am currently working on have changed since I first joined the platform a little over a year back. At first, I was able to categorize projects into three categories. Some projects were modeling or revising models. The third group included presentation construction, narrative advice, funding, and collateral. Another bucket included a variety of business advice. The business advisory group included questions like: “I run a semi-profitable company, and I have revenue. How can I grow?” Do we use financing or debt? Do we raise money? What structure will we use if we raise money?” I was essentially playing the role of a banker. We would look at raising money under convertible debt or pure equity. I would create convertible note calculators.
Since then, Toptal has evolved on its own. Jobs seem to require a bit more of my entire service offering. This could be because Toptal is focusing more on mid- and later-stage companies, or my experience with Toptal allows me to offer my full range of services now.
Today, I am a consultant for many things. It’s now reviewed, revised, and advised. When I assist with a presentation, it will include a pitch deck and a narrative (how the client tells their story). It involves financial modeling. Of course, being a good business advisor is also important.
For more information about the different types of consultants Toptal offers (e.g., part-time CFOs), visit our resource pages. Includes job descriptions, interview questions, and hiring guides.
Prepare Your Clients: Do Not Be Afraid of Stress-testing
I ask many questions. Consultants should not be afraid to challenge their client’s ideas or ask questions.
Pressure testing is the first thing I do before I ask the person I am calling, “What’s your goal here?”. I take 30-40 minutes to understand the business they are in. Some people love it. Some are surprised. It’s my job to make sure that when you are done with me, and you’re sitting before an investor, you won’t be asked any questions I haven’t already asked.
A lot of my work is also in financial modeling. This is often not a complete rebuild but rather a review of an existing model or stress testing. If a company claims that it will sell to a billion people by the end of Year 1, I ask, “What is the market size?” and “What makes you believe you can reach this entire market?”
Research and Data Deliverables to Arm the Executive
My #1 responsibility in fundraising is to ensure that the CEO can answer any question. Market research, valuations, etc., are all used to support this. I am not trying to make them give a quick answer. We are working to get the right answer.
When asked why $10 million is a good valuation, most people will respond with something vague like “it just feels right” and “that’s what similar companies have done.”
I present to the CEO both a bottom-up and top-down approach to valuation. Every client that I work with leaves with a document – several pages of research on valuation. Top-down, I look at what comparable software or fintech firms (if this is the benchmark industry that you’re looking for) have traded in the last year or so. If it’s relevant, I will look at the average size of a seed range. Lots of macro work.
I’ll then take a micro perspective. I conduct market research to determine the multiples that similar or competing companies have traded recently. These multiples are derived from a wide range of transactions, including an IPO or another investment round. I spend a lot of time digging into numbers that other people can’t find and figuring out how they are backed up to revenue or EBITDA multiples or volume. I apply those to the client’s business and create a well-founded valuation.
Client collaboration is key to creating successful pitch decks
Someone says that they are interested in fundraising, and they require a presentation. I’ll give them two options in this case.
Option 1 – Ask for all of their materials, and I will try to learn everything about their company. I’ll then create a new presentation. It usually takes a week to complete this task.
Option 2 – Ask for their materials again and review them, but this time, I will send back a customized outline of the presentation I would like to see. I will then let the client put it together themselves. Then I’ll go line-by-line and review.
Option 2 is clearly less expensive, but the success rate is much higher. It’s because the client knows every detail on every page, every icon, every graph, and where data is coming from. It’s much more natural.
Pitch Decks: The Three Most Important Slides
A presentation should tell an interesting story. There should be a flow to it. It should make sense when someone reads it or when you present it. The first page, ignoring the cover, should always show the problem. The second page must always state the size of that problem. The third page is your solution.
This setup was designed to get the audience to recognize the problem and identify with it immediately. It also encourages them to become invested in finding solutions.
The next page (page 3) shows how big and deep the problem is. The investor now agrees that there is a problem. They can also see its magnitude. The investor’s mind is currently working overtime to figure out how to fix this problem.
By the time you reach the page with the solution (page 3), your answer will already be aligned with what the audience thinks is needed.
I approach these presentations from a psychological perspective. I’m trying to convince the investor that there is a problem and that it’s serious. Then, “Ah-ha!” Here’s how to solve it.
