Investors fund people, more than ideasGabor Becsei
What’s the big vision?
What does your product do today?
What is your value proposition?
What is your advantage?
3) Market opportunity / size
What’s the opportunity?
What’s the market size?
Tell us about the executive team
Why are you uniquely qualified to solve this problem?
5) Proof of
product / market fit
Growth to date: sign-ups, weekly or monthly active users, paying customers (if relevant)
To the extent it’s relevant, do you have quantitative evidence that you’re better than competition/incumbents?
6) User engagement + retention
Engagement metrics for core product features
Monthly or weekly cohort retention (depending on the kind of product/company); churn (for subscription products)
7) Customer acquisition
What are your customer acquisition channels?
How much does customer acquisition cost (per channel)?
How will you make this money back and how long will it take?
How scalable are these? How big can you get with your existing product + customer acquisition channels? At what point do they get saturated or become too expensive, and what do you do if/when that happens?
8) Business model / monetization
Do you make money today?
How will you make money?
9) Competitive landscape
Do you have competitors? Who are they?
If no one else is doing this, why not?
10) What’s next / fundraising ask
How much money are you raising?
Use of Proceeds: What will you do with the money you raise?
What are the milestones you will accomplish to get to the next phase of your business?
Are there any gaps in your team you need to fill?
What are you looking for from an investor?
Take Action and Raise Funds
1. Create the following five VC marketing and presentation items
High concept pitch – A phrase describing your business by mentioning a familiar company, followed by the twist that differentiates your company. Allows you and others to communicate what your business does, quickly.
Elevator pitch – A one- to two-minute pitch explaining: what your business does, how it makes money, and how it benefits customers. Incorporate the high-concept pitch. Throw in a fact or two showing a large and growing market for your product or service. Helps you to create investor interest quickly.
Teaser email – An invitation to a VC to invest in your company. Includes the same types of information that appears in your elevator pitch. The purpose of the teaser email is to entice investors to meet with you and fund your venture.
Business plan – The all-important document “selling” your business to investors and/or lenders, to entice them to meet with you and fund your company. Includes an Executive Summary, Company Analysis, Customer Analysis, Industry Analysis, Competitive Analysis, Marketing Plan, Operations Plan, Management Team, Financial Plan, and Appendix (supporting materials.)
Slide presentation – A 20-30 minute pitch to investors, the purpose of which is to create more interest in your business and build a relationship with the VC.
2. Build your list of qualified
a., Institutional investors, financial funds, investment companies, venture capitals, startup incubators, private equity funds, clubs or groups. Research each firm to determine whether they are a good fit for your company. The firms on your list must be based within 100-200 miles of your business; prefer funding businesses in your sector; invest in businesses that are at your stage in the funding process; and actively investing.
b., Professionals in their fields: surgeons, veterinarians, accountants, lawyers, consultants, engineers, athletics, multinational companies’ managers and leaders.
c., IFA (Independent Financial Advisors), Financial and Investment Consultants/Planners
d., Angel and private investors from all over the globe
e., Advertisements for business partners and investors
f., Fundraising Agencies and Project funding programs
g., Crowdfunding Agencies and websites
3. Contact the partners whose professional backgrounds most closely resemble your business. Ask friends, family, associates, and mentors for introductions to VCs they might know. Use online and offline networking to initiation contact with VCs yourself. Send your teaser emails to your target partners at your target firms.
4. Give your slide presentation after a venture capital firm agrees to meet with you. Answer their questions about your financial plan, customer analysis, competitive analysis, and management team. They will try to poke holes in your plan, so you will have armed yourself with all the knowledge you can possibly gather. Stay in contact with the VCs. Continually supply them with any pertinent new information about your business as it arises.
5. If and when you receive a term sheet from a VC: You are in the home stretch. Review the terms with an eye to preserving your stake in the company. You absolutely must hire a lawyer to help you review the term sheet and negotiate the best possible deal for yourself. Just remember that you need funding. A ten percent share of a $10 million company is better than 100% of a $500,000 company.
6. If and when you receive your financing check: Continue to carry out daily operations to serve customers (short-term processes) and strive to meet or exceed milestones (long-term processes.)
7. Look to the next round of funding. The #1 reason business fail is running out of cash. Remember, black ink in the accounting books does not necessarily equal cash. Seek either to solicit more funding from your current VC firm, or reach out to new firms. Always be fundraising.
Just like always, I questions and comments are welcome, also sharing! I am excited to know what do you think and where you need help in order to get funded. Thank you.