I'm building a business and financial plan for a new startup. A financial advisor mentioned to me that a balance sheet for a startup is not mandatory as (in his words): "it is more important from the investor standpoint to see the payback, break-even, cash generation abilities, revenues VS expenses than liquidity or gearing".
Is this advice correct? Would investors want to see a pro-forma balance sheet?
IMO, the balance sheet isn't important at all for startup projections!
It's the cash-flow and income statement that matter. The balance sheet shows the assets/liabilities so if you're doing projections for a startup your assets are mostly immaterial, and most investors know that, and there aren't any liabilities since the business is new (ie. no debt, retained earnings or equity). Your projections are necessary to show how much cash you think you'll need, how you plan to spend the investment you're looking to get, and how you forecast your business growing.
That's just my opinion; I could be off but I just don't see how a balance sheet could be "more important than anything" for evaluating a startup. Now if it were about evaluating an existing business that's applying for a loan, then that'd be a different story.
The main thing that the balance sheet will show the investor is DEBT. They want to make sure that their money is going into running the business in the future, not running it in the past. So, for example, the balance sheet may show something like deferred salaries for officers (which, BTW, is really a bad idea for tax purposes) or outstanding loans.
Balance sheets are easy to produce. Not sure why you wouldn't do it.