When pitching to investors you need to be prepared.
How many times have we heard the phrase "Fail to prepare, be prepared to fail."?!
With the aim to help any StartUp business looking to approach investors for funding, we have put together a list of questions we know Investors ask. We suggest you answer them all before contemplating approaching Investors.
First up - Tell them about your business
Section 1: Basic public data
- Company Name
- Company Logo
- Name of founders of the startup - include their role within the company.
- When did you start your company? - when did the idea come to you and how long have you been working on it?
- What is the incorporation date of your company?
- How many man-years have you already spent on this project?
This should be based on someone working full time on the project. For example, one person working full-time and one part-time for a year make 1.5 Full-time Equivalent Years.
Investors find these last three questions interesting because it tells them how long the idea has been worked on. If you've been at it for 5 years and you are still not creating a profit the idea could be less appealing to investors.
- What Town and Country the startup is based in?
- How would you describe your business activities? What do you do?
- What is your client base? Who do you sell to?
- What is your Commerce type?
Do you sell to other businesses (B2B), directly to end-user customers (B2C), or a combination of both?
- How would you describe, briefly, the business concept for your Startup?
For example, for VenCat it could be "Automated Data Screening for Angels".
- How would you describe, briefly, why an Angel would be especially interested in your Startup?
For example, for VenCat it could be "Guided Pitch Building, Easy Input, Key Word searches, Investor Views".
- What is the geographic reach of your startup?
Local, Regional, National, Continental, Global.
- What is the primary way your enterprise will earn money/What is the revenue model of your startup?
Unit Sales, Subscription, Advertising, Commissions, Service Contract, Other.
- What stage of business evolution do you think your Startup fits in to?
Concept - Still just an idea, maybe with some research to back it up.
Prototype - It is working, or partially working, in development and testing
Commercial Launch - It has gone live with a number of lead clients and early adopters
Revenue < Operational Costs - The company has recurrent revenues from its business but not enough yet to cover operational expenditure
Revenue > Operational Costs - Recurrent revenues cover operational costs but not yet expenditure on capital goods, development, or R&D (note: development and R&D costs are to be excluded from operation costs)
Revenue > All Ongoing Costs - Recurrent revenues cover operational, capital, development, and R&D expenses
- Create a Pitch Video
A super-efficient way to get your vision over to the investor. Practice your elevator pitch to perfection and then record it on video!
We recommend that it be no more than 3 minutes long. External videos should be in a format that is likely to display well on all devices: Our recommendation is 1280x720 pixels in an MP4 file using h264 encoding.
- Add links for all your Internet Presence.
Include the company website, Facebook page, or Linked-in page to help potential investors learn more about your Startup.
Section 2: People - The details of the important people in your company.
- Who are the key executives of your Startup other than the Founders?
There may not be any others but list their details if you have them. Include at least their name, and some comment about their role in the Startup. A picture, and a CV or description document, would be good. It would be useful to say when they joined the company and whether they have equity in the company.
- Are there any existing shareholders other than the Founders or Key Executives already declared?
Again include at least their name and some comment about their role in the Startup. A picture, and a CV or Description document, would be great. Include the date they invested and what kind of investment they made.
- Add the contact details of the startup.
Your email, postal address, name of focal point.
Use Business addresses rather than personal addresses where possible.
- Create a video about your people.
This should be no more than 6 minutes long. It should show the key people in your startup describing their roles. External videos should be in a format that is likely to display well on all devices: Our recommendation is 1280x720 pixels in an MP4 file using h264 encoding.
Section 3 - Legal details of your company - This will explain the legal status of your Startup and some of the other legal details of your business.
- What is the Legal Form of your company?
e.g. limited company, sole trader
- Applicable Law
e.g. England & Wales, Scotland, Netherlands, etc.
- If you are a member of a Chamber of Commerce, provide some details.
E.g. Reg number, chamber of commerce city.
- Who owns the intellectual property (IP) for your Startup?
- Do you have any Patents Pending or Granted for your Startup?
- Are there any Regulatory bodies that your Startup has to comply with?
Briefly state which organisations and regulation numbers.
- Do you belong to any Associations that support the business sector your Startup operates in?
- Does your Startup qualify for any schemes that would provide tax relief for an Investor?
Visit the blog next Thursday for part 2!
Part 1 of 3.... further questions released over the next two weeks. Get answering the questions above in the meantime OR if you can't wait to get your Pitch together, signup to VenCat for free to answer the questions and build your pitch. Subscription fees are due when your pitch is complete and you are ready to present it to investors.