Andre J. Peschong

Companies often struggle with properly relaying or presenting themselves to potential investors. The best idea can go unfunded when improperly communicated or presented to the venture capital community. There are some key tactics that all companies seeking funding should follow. Here are the top ten musts for entrepreneurs looking to secure venture capital or Angel funding:

1. People first, then process & technology. Founders of a new company must have a substantial background in the company’s area of business, whether it was working for a medium to large company in that space or having specific technical skills. Even with the most innovative technology or product, it is nothing without the right team/people behind it. It is a major plus if management can show a historical track record of improving sales, profits, margins, products etc. An old saying in the venture capital world rings true here, “bet on the jockey, not the horse.”
2. The “build it, and they will come” fallacy. The product or service must have an immediate addressable market. An investor never wants to see the following train of thought in a business plan, “We have a new bicycle design and our target market is Asia and there are 1 billion bicycle riders in Asia. Therefore if we just capture 1% of that market…” There is no action plan here which leads to poorly thought out market penetration strategy. Investors need very defined demographics of a target market as well as specific action plans to reach said demographic.
3. Plan for all contingencies. The founders must have an extremely well laid out, methodical and persuasive business plan that addresses all the key points in making your case for capital. The business plan should succinctly map how the company will grow and make the case for their product or niche. Further, it should demonstrate the founders’ ability to understand the landscape and competition.
4. Be your own best critic. Entrepreneurs should always play devil’s advocate when finalizing a business plan. Critique every portion from an investor’s perspective, all the way down to the mission statement. Think of your business plan like a prototype or a beta version of your product. It must be tested and retested for weaknesses, flaws or all out failure. After finishing the prototype business plan for the venture, founders should always go and seek outside or expert industry opinion. (Tip: don’t forget to have everyone sign a Non-disclosure or Confidentiality Agreement!)
5. Make every second count. The elevator speech. This is absolutely one of the most critical components that founders fail to develop properly. An elevator speech is typically a 30 second to 1 minute pitch on the company. It must be done in such a way that it gets the message across clearly, succinctly as well as relaying the excitement and massive potential of the venture. Never underestimate the power of the elevator speech. The goals should be to capture attention, paint a picture and to keep potential investors asking questions.
6. It’s all in the presentation. Martha Stewart isn’t the only one that should be concerned with presentation. Developing a stellar PowerPoint and verbal presentation can swing on the fence investors. PowerPoints should not be overly technical, verbose or have too many bells and whistles. Rely on the PowerPoint presentation to attract enough interest and questions from investors asking for more details. Don’t mistake this for the business plan! Too many investors have had their eyes glaze over from overly packed presentations.
7. KISS (Keep It Simple Stupid.) The acronym speaks for itself. Even in the most complex technology, biotech and software companies there is always a way to form a simple explanation that solves a fundamental problem. When investors become engaged in deep due diligence and are asking the hard questions and doing financial modeling then you have very sophisticated and interested party. The goal is to get them to this point and that is best done by initially keeping it very simple.
8. Practice makes perfect. Sometimes it is not what is said to potential investors, but how it is said. Founders should be comfortable presenting in front of groups of people, large or small. In order to get that comfort level you must practice. Groups like Toastmasters are an excellent way to gain practical experience. The presentation should flow easily, almost like having a conversation. Questions should be anticipated and addressed but the flow of the pitch should be guided by the founders.
9. It’s not (all) what you know, it’s who you know. A bad idea or product cannot be masked by a good team. However, a good idea can become great with the creation of a powerful advisory board. An advisory board can absolutely make the difference when it comes down to the VC’s decision. If you can gather notable names in your industry for an advisory board, do it! You are also much more likely to get people to join in an advisory capacity rather than on the board of directors because of liability issues.
10. Know your competition and the competitive landscape. Nothing will turn a potentially interested VC off more quickly than not knowing a competitor or competing technology. When writing the business plan, it is a great idea to hire a business intelligence expert who can really dig and look for possible fringe competitors or maybe new technologies on the horizon that could possibly affect the landscape of the market.

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