equity, growth, pitchI have recently applied to join a startup competition and my startup has been selected as top 45. We are required to deliver a 2 mins pitch to a panel of investors who will judge us.
My startup is a service that automatically recovers websites that have been hacked with minimal downtime.
My question: The guidelines for the pitch require me to include how much i am raising and for how much equity. I have no idea how to answer this question. How do I know how much money I need and for how much equity?
Any help regarding this and pitching in general would be greatly helpful. Thank you!
I have several comments and then an answer:
There is just not enough information in this question. Either your startup is so early that it is barely in the idea stage, or you built a product you thought was cool - without thinking about anything else (like the customers, or building a business)
OK - all that being said. At a pitch event, presumably in front of potential investors:
They want to know:
You are asking here, about the last point. IF you are addressing the other questions, then - for the pitch event, all they need to know is the “ballpark” answer to the question. (if you don’t address those other questions, then they don’t care how much money you need)
So … if you don’t have exact numbers or an analysis, then you will need to say things like:
Right now - everyone one of your responses will start out with “It’s very early, and we really don’t know for sure, but ….”
And also -I DO think there is a lot more information you can gather on your own, beforehand, to get a better, more accurate idea of how much money you will need, and how big the revenue opportunity is.
In an elevator pitch (in which you usually have 2-5 minutes of time to pitch), you should always try to focus on the main points such as
Typically startups raise capital for anywhere between 12-18 months for their first round. You can calculate this number by adding up all the expenses you would have such as office rent, salaries, marketing budget, etc.
As far as calculating the valuation of your company goes, various factors are included. One way you can go about it is by checking the deals that happened in your domain recently and seeing what multiple they used and using the same. This link gives a more details version and various methods that you can use while calculating your valuation http://www.developmentcorporate.com/2009/03/07/how-to-calculate-the-enterprise-value-of-private-companies/
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