One of the unavoidable responsibilities for the CEO of any startup company is to provide the initial funds; and round 2 funding; and round 3 funding, until investment is secured or revenue generated, as running out of cash is not an option.
Think you are ready to raise investment capital?
I review many business plans and pitch decks for companies who are seeking funding for their pre-seed, seed or series A through our Business Marketplace. And as part of our process to successfully secure capital for our clients, I also write many plans and pitch decks. I want to share with you what I’ve learned.
- Investors lend you money to make MORE money
- Investors write you a check when they are emotionally high
- Investors don’t bet on an also ran
Before you get to meet with investors, you will have to submit yourself to their vetting process by sharing information about your startup: pitch deck, executive summary, business plan and financial projections. In other words, your documentation will speak first on your behalf. You only have one chance to make a great first impression! Here are the top strategic errors many entrepreneurs commit from the get go:
- They do not ‘speak’ intelligently about their business
- They talk and talk about the labor pain but never show the baby
- They live for today
What does it mean to speak intelligently about your business in your pitch deck and business plan?
When seeking funding, the first thing is to prepare a funding business plan and not an operational business plan! Sounds obvious but many don’t know that such a difference exits! They contain the same type of information but the emphasis is on different points. Investors want to know 4 things:
- Who you are
- What’s your product and market
- How much do you need
- When do they get their money back
Use words wisely and sparingly: as you can imagine, you are not the only opportunity that investors are reviewing and vetting. Show empathy! Provide them with concise and to the point information:
- Your business plan should not exceed 10-page maximum, 15 if very technical. And your 3-5 year projections!
- Your executive summary: 2 to 3 pages
- Your pitch deck: We use the Kawasaki method: 10, 20, 30: 10 slides, 20-minute presentation, 30-point font.
Lastly but not least, never underestimate the greed factor! You’d better be prepared to deliver a pretty big return on investment to your investors (while keeping it real!) with a strong business model. For some reason, the business modeling is usually where we witness the least creativity! Innovators create ingenious and unique solutions and yet take a very traditional route when creating their model. Creating your business model will require the same discipline and critical thinking that you put into your development process and some soul-searching too!
Author: Carine Dieudé, Partner, Director of Strategy, Entrepreneurship Aficionado – Growth and exit strategies, systems and operations, for startup, small and medium size businesses.
Altima Business Solutions, “Empowering You To Focus!”
Altima Business Solutions: We are business accelerators. We collaborate, mentor and advance entrepreneurs who are creating tomorrow’s jobs.