Pitch Deck Numbers That Don't Add Up: Checking ARR, Runway and Valuation

A pitch deck can be checked before you open a single public record. Its figures have to agree with each other: annual recurring revenue with monthly revenue, runway with cash and burn, the post-money valuation with the pre-money and the round. When they don't, you have found a question worth asking, usually in the first ten minutes.

This guide walks through the arithmetic an investor can run on any deck, what a mismatch does and doesn't mean, and the red flags that deserve a direct question to the founder.

Why the arithmetic comes first

Most deck figures can't be confirmed from public records. A US private company generally doesn't publish its accounts, and in the UK small companies can currently choose not to file their profit and loss account at Companies House, so revenue is often not on the register. What you can always check is whether the deck is consistent with itself.

Consistency isn't proof. A deck can be internally perfect and still wrong. But inconsistency is cheap to find, and it tells you exactly where to dig: which figure, which slide, and which document would settle it.

Work from one sheet. Copy every number in the deck onto it with its slide and, crucially, its date or period. Most false alarms come from comparing figures from different months.

ARR and MRR

Annual recurring revenue (ARR) and monthly recurring revenue (MRR) describe the same thing at different scales. For subscription revenue, ARR should be close to MRR × 12.

The check: if the deck says MRR of $85,000 and ARR of $1.4M, that is a gap of about $380,000, because $85,000 × 12 is $1.02M. Something else has been counted in the annual figure.

The usual explanations, roughly from innocent to serious:

• Different dates. The MRR is from last quarter and the ARR from this month. Ask for the dates.
• Annualised best month. "ARR" is the strongest single month multiplied by twelve, not the current run rate.
• Non-recurring revenue in the total. Setup fees, implementation work, consulting or one-off licences have been added to ARR. They are revenue, but not recurring.
• Contracts signed, not live. Bookings from customers who haven't started paying are counted as ARR.
• Pilots counted as customers. Paid or unpaid trials are annualised as if they had converted.
• Usage revenue treated as fixed. Revenue that depends on volume is multiplied out as though it were a subscription.

A second check: customers × average contract value should land near ARR. Forty customers at an average of $12,000 a year is $480,000, not $1.4M. If the deck gives a customer count and a typical price, multiply them. A large gap usually means a few big contracts carry the total, which is a concentration risk worth knowing about, or that the customer count includes accounts that don't pay.

Growth rates

Growth claims are often stated as a monthly rate and an outcome, which makes them easy to test.

The check: compound the rate. Monthly growth of 20% held for a year multiplies revenue by about 8.9 (1.2 to the power of 12). If the deck claims 20% month-on-month growth for twelve months but shows revenue going from $50,000 to $150,000 a month, that is threefold growth, which works out to roughly 10% a month.

Also check:

• The period behind the rate. "Growing 30% month-on-month" may describe the last two months, not the year.
• The base. High percentages from a tiny base say little. Ask for the monthly figures behind the chart.
• Charts without axes. A curve with no scale or no dates can't be checked. Ask for the numbers.

Runway and burn

Runway is cash divided by net monthly burn: what the company spends each month after the revenue it collects.

The check: if the deck says $1.8M in the bank and net burn of $150,000 a month, runway is 12 months. If it says 24 months, the claim rests on an assumption the deck should state, such as the new round closing, revenue growing, or costs falling.

Common sources of a gap:

• Gross burn and net burn mixed up. Gross burn is total monthly spending; net burn subtracts revenue. Using one in the burn slide and the other in the runway slide changes the answer.
• Cash at different dates. Cash from six months ago with today's burn overstates runway.
• Runway "after the raise". Counting money not yet committed as cash.
• Burn before the hiring plan. The use-of-funds slide plans to double the team, but the runway sum uses today's payroll.

Run the sum both ways: runway on today's cash and today's burn, then runway on the raise and the planned spending in the use-of-funds slide. The second figure tells you when the company expects to raise again.

Valuation, the round and dilution

In a priced round, the arithmetic is fixed:

• Post-money = pre-money + new money. An $8M pre-money valuation and a $2M round give a $10M post-money valuation.
• The new investors' stake = new money ÷ post-money. $2M of $10M is 20%.

The check: if a deck says "raising $2M at a $10M valuation, offering 15%", one of the three figures is wrong or the word "valuation" is doing two jobs. $2M for 15% implies a post-money valuation of about $13.3M, or a pre-money of about $11.3M. Ask which figure is pre-money and which is post-money; it is a common source of confusion, and the difference is the investor's ownership.

SAFEs and notes. Many early rounds are raised on SAFEs or convertible notes rather than priced equity. Y Combinator's post-money SAFE states its valuation cap after all the SAFE money is counted, so, broadly, a $500,000 SAFE on a $5M post-money cap converts to about 10% of the company before the new shares of the next priced round. Older pre-money SAFEs and convertible notes don't work this way, and stacked SAFEs on different caps add up quickly. When a deck lists past rounds, ask for the cap table, including all outstanding SAFEs, notes and the option pool, and check that the ownership stated for the founders survives the sums.

Past rounds. If the deck says the company has raised $3M to date, add up the rounds it lists. Then compare with any public record of those rounds. For US companies, a Form D on SEC EDGAR shows the total offering amount and the amount sold at the time of filing; our guide on how to read an SEC Form D explains what that record can and can't show.

Market size

TAM, SAM and SOM (the total, serviceable and obtainable market) have one rule: each must be smaller than the one before. A SOM larger than the SAM is a typing error at best.

The check: build the market bottom-up from the deck's own figures. If the target customers are 20,000 mid-sized law firms and the price is $6,000 a year, the serviceable market is about $120M, whatever the TAM slide says. A TAM quoted from an industry report that covers a much wider market isn't wrong as such, but it isn't the company's market.

Then compare the SOM with the revenue plan. A five-year forecast that needs 40% of the serviceable market should come with an explanation.

Unit economics

If the deck quotes customer acquisition cost (CAC) and lifetime value (LTV), test them against each other and against the rest of the deck.

• Payback. CAC divided by monthly gross profit per customer gives the months needed to earn the acquisition cost back. A $9,000 CAC with $1,000 a month in revenue per customer at 75% gross margin pays back in 12 months.
• LTV built on churn. LTV figures often rest on a churn rate. A 1% monthly churn assumption implies customers stay about 100 months on average, or more than eight years, which a two-year-old company can't have observed.
• Margins. Check that the gross margin used in the LTV is the same as the margin in the financial slide.

Figures that change between slides or versions

Read the deck for the same figure stated twice. Customer counts on the traction slide and the team slide, ARR in the summary and the financials, the raise amount on the cover and the ask. If you have an earlier version of the deck, compare them: restated history is more telling than a fresh mistake. Revenue for a past quarter shouldn't change between decks without a reason.

What a mismatch does and doesn't mean

A mismatch is a question, not a finding.

• Undated figures can't conflict. Two numbers from different periods can both be right. Treat any gap between undated figures as something to check, not a contradiction.
• Rounding and definitions differ. Some founders include annual prepaid contracts in MRR, others don't. Ask which definition they use, then check it is applied consistently.
• Early decks are often rough. A first-time founder may simply have used the wrong formula. How they respond when you show them the sum tells you more than the error.

What a mismatch does mean is that the figure can't be relied on until it is explained, and that whatever document settles it (the revenue export, the bank statement, the cap table) should be requested.

Red flags

• ARR far above MRR × 12, with no dates given
• A customer count that, at the stated prices, can't produce the revenue claimed
• Runway that only works if the current round is counted as cash
• "Valuation" without saying pre-money or post-money, or a stake that doesn't match the round and valuation
• A growth chart with no axis, no scale or no dates
• A SOM larger than the SAM, or a forecast that needs most of the serviceable market
• LTV built on churn the company has been too young to observe
• Historical figures that changed between versions of the deck
• Reluctance to share the monthly figures behind a chart

Questions to send the founder

Keep them specific, and quote the slide:

1. On what date is the ARR measured, and what does it include?
2. How many customers are paying today, and what are the five largest contracts worth?
3. Is the burn on slide 9 gross or net, and for which month?
4. Is the valuation pre-money or post-money? Please share the cap table with all SAFEs and notes.
5. Which accounts or exports should we use to confirm revenue and cash?

Then check what can be checked against records: the company's registration, any Form D filings for past raises, filed accounts where they exist, and the customers it names. Our public records checklist sets out where to look.

Doing this faster

Evifound's research chat reads a pitch deck and runs this arithmetic as fixed calculations: ARR against MRR × 12, customers × average contract value against ARR, cash ÷ burn against runway, pre-money plus the round against post-money, TAM ≥ SAM ≥ SOM, and figures that are restated. The AI only reads the numbers off the slides; it doesn't judge them, and a gap between undated figures is shown as a check, not a conflict. Alongside the deck math it maps each claim to its slide and checks what it can against public records, such as SEC filings, and lists questions for the founder. You can try it from the research chat for investment professionals.