What do pro forma forecasts help guide in the fundraising process?

Pro forma forecasts play a crucial role in the fundraising process by offering projected financial statements that can illustrate the expected financial performance of a startup over a specific period. These projections typically include income statements, balance sheets, and cash flow statements, which provide potential investors with a clear and structured insight into the business's anticipated revenue, expenses, and profitability.

By presenting these projected financial statements, startups can effectively communicate their financial goals, growth potential, and business viability to investors. This transparency helps build trust and can significantly influence an investor's decision to contribute funds. Investors often use these forecasts to understand the financial health of the business and assess how their investment will contribute to its growth trajectory.

While the other choices, such as cash flow, budget allocation, and market strategies, are important components of a startup's financial planning and overall strategy, they do not specifically focus on the comprehensive overview of financial expectations that pro forma forecasts deliver to investors during the fundraising process.