investorsIn the very near future I have meetings scheduled with investors which I hope will help me raise a software startup.
I don’t have any experience with any of these financial sort of things, just a very simple and superficial understanding of how this all works. Nevertheless I’m very sure I could make an extraordinary impression for my professional abilities and extreme passion.
And so I would like to make these meetings pleasant and beneficial interactions. Towards that end, are there any ways I could prepare upfront?
Are there any details investors would particularly find interest in that I should bring up? are there any specialized data I should prepare? etc.
A short deck can be a good thing to have. It should cover the basics things like:
• Team (Why do you think you can make it)
• Market (How big is the economical value of the problem you try to solve)
• Problem (What is the problem you try to solve)
• Solution (How do you solve it)
• Go to market (How do you plan to make them come)
• Competition (Who else is around, and why you are better)
• Financial potential (How do you plan to make money and how much of it can you make)
You should also try to understand the investors you meet. It means to understand what they are looking for in the companies in general, and to understand their fields of interest and previous investments.
Here is a good deck about approaching investors and understanding how they think.
Good luck!
Nevertheless I’m very sure I could make an extraordinary impression for my professional abilities and extreme passion.
It’s a sale. Your professional abilities and extreme passion count less than benefits, answers, solutions and – most importantly – trust.
Put yourself in their shoes: they’ve convinced their own clients that they can spot opportunities that combine a) a sound business case and b) people who can execute.
Hence, demonstrate both:
In plain English, that means knowing your market, your competition, what difference you have to offer, etc. It also means having a sane business model, understanding its full implications, its opportunities for high growth channels if any, the sales objections you’ve worked around so far, etc.
And so I would like to make these meetings pleasant and beneficial interactions. Towards that end, are there any ways I could prepare upfront?
Have a friend or two who are into maths, physics or philosophy a) read your plan and b) watch you rehearse your presentation. Give them the explicit goal of nailing every possible objection they can come up with. Particularly so when it comes to questioning the assumptions that underlie your business model.
(Avoid family, your significant other, and very close friends for this – they’ll tend to be be lenient in order to encourage you, whereas what you really need is mercilessness. Friends of another family member or of your significant other are usually good choices.)
Do this seriously. Have them drill and interrogate you until your plan is shattered to the point where you have doubts yourself. Then come up with the missing answers, and have them shatter your plan again in a follow-up meeting. Repeat until they’re satisfied with your answers. Buy them a dinner or three in return. This way, you’ll be prepared for the inevitable periods of doubt that set in when things don’t go as well as planned. And compared to your friends, the VCs will feel like a walk in the park.
Are there any details investors would particularly find interest in that I should bring up? are there any specialized data I should prepare? etc.
Per above: Demonstrate that you fully understand the upside and the risks from their viewpoint in addition to yours. Trust will follow.
And bouncing on Luke’s point, I wholeheartedly agree with demonstrating why you need their money. If your business model is very sound, btw, you’re bootstrapped and can make do without their funding – but you still want the money, because you want to get there much faster.
I found this video from Guy Kawasaki called “The Art of The Start” to be very helpful.
http://www.youtube.com/watch?v=Y8X57eucxnI&feature=youtu.be&t=40m3s
In it he speaks about the 10/20/30 rule of creating powerpoint presentations for investors and VC’s.
10 Slides, 20 Minutes, 30 Point Font
Here is what he says should be in those 10 slides.
Here is a text version if you prefer to read. http://blog.guykawasaki.com/2005/12/the_102030_rule.html
The biggest thing you need to answer is, “How does the investor get his/her money back and then some?”. It takes a combination of things to answer this question which usually result in you talking about the team of people who can get this done, the product or service and why it will be successful and why you need the money and what will it be used for when you get it.
TEAM - This is important because you can have an amazing product, but a terrible team of people who burn money and have no sense of direction for the company.
PRODUCT/SERVICE - This may seem obvious, but what makes your product or service different? If it isn’t different, what else are you doing to beat the competition (special marketing, pricing, etc.)
WHY DO YOU NEED THE MONEY - If you can’t tell them what you need the money for…that is a big red flag. You need to know why you need the money and how is it going to make you money. Investors ideally want to “pour gas on the fire”. They want to hear that you can make XXX,XXX dollars if only you had another X dollars to buy more inventory or whatever.
Talk about these three things and you should be good. This isn’t reciting your entire business plan, it is just a broad overview. But one last thing…know your numbers! Investors lose interest quick when someone is just speaking in fluff with no hard data to back up their ideas. Good Luck!
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