Monthly Archives: November 2012

8 Crucial Parts of Your Perfect Pitch for VC Funding of Your Business

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As you’ve already learned, VC funding for your business doesn’t come easy…or quickly.  Even once you think you have the right VC and you’ve made your approach to get their attention, the next step can get painstakingly long.  I’m now talking about preparing to make “The Perfect Pitch”.

Take note that it can take some time just to get on a Venture Capitalist’s schedule…sometimes up to a couple months.  You need to understand that just because you’re in a hurry, it doesn’t necessarily mean they are.

First things first: Unless your VC requests it, don’t send a full business plan; they won’t have time to read it.  Also, at this stage, most Venture Capitalists are not going to have anyone sign a non-disclosure agreement.  Therefore, you need to just give them enough information to pique their interest and have a good understanding of what you’re about.

The next thing your potential investor will want to see is your Executive Summary.  This needs to be a “Killer”, while at the same time trying to get it down to a one-page document.  Depending on the industry, this summary could be as long as three pages.

From this initial look at your Executive Summary, they will decide if they want to be pitched in person or possibly over the internet.  You should be prepared for that possibility.  Along with your Executive Summary goes your Pitch Deck…generally a PowerPoint presentation, which will aid them in their decision.

As you’re preparing your Pitch Deck, keep in mind that you want to try and keep your pitch to approximately 30 minutes, even 20, if possible.  Try to stay within a range of 12 slides, only going longer if you have elements of your pitch that warrant more detailed information, such as prototypes.  In this case, you could go as high as 30 slides.

There are eight touch points that need to be a part of your presentation.  The first six are as follows:

  1. Intro – This slide should define your company, your product/service, and your Value Proposition; ultimately, tell them what it is you’re trying to do.
  2. Opportunity – What is the problem you are trying to solve and why should the VC pay attention to YOU; who are your customers going to be…primarily…and how big are the market segments (subsets)?
  3. Solution – Display and/or demonstrate your solution, why someone would want to use you, and explain why you are different.  As mentioned above, this is when slides can go into more detail and get a little lengthier, if you have prototypes to show and explain.
  4. Business Model – This point is of utmost importance! How are you going to make money? What have you already invested to date and what have you accomplished? Provide a road map for where things are headed and what your growth strategies are once you’ve received funding.
  5. Team – This is where you identify your main team players and the strength of your management team; describe your team’s experience in the industry where you are “playing”.  This will also help the VC  know what it is they need to bring to the table.
  6. Competition – Who is your competition? Although you may not think you have competition, there undoubtedly is someone, whether a direct competitor or some perceived competition.  In what way are you defensible?

I know…I promised eight parts to your Perfect Pitch, but have only given you six! In my next blog post, I will provide the last two components, outlining the MOST important part of your Pitch Deck.  I’ll also discuss what due diligence on your part is necessary before all is said and done.  Venture Capitalist funding for your business should now be coming into focus with this part of the process almost complete.

 

 

 

Four Important Points About Targeting Your Approach to a Venture Capitalist Who Could Fund Your Business

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Once you have narrowed down your choice of a Venture Capitalist or Venture Capitalist Fund and found the right one to “court” as a means of funding your business, the next step in this process is to plan a Targeted Approach.

You need to do your research on your Venture Capitalist options and plan your pitches.  Keep in mind that there are approximately 934 VC firms.  These firms, at any given time, may consider 10 deals a day, knowing very well that they can only fund four a year.  With this in mind, your motivation should be high for doing your due diligence beforehand.

Your due diligence should include consideration of the following:

  • Industry Focus – who has invested in your industry before
  • In Network – who are investors/funds that may be in your network
  • Fit Their Portfolio – does your business fit their portfolio or is it totally outside their realm of expertise, to the point where they may not feel they can bring managerial experience to the table
  • $$ to Invest – you definitely don’t want to spend time courting a funder whose monies have been depleted for the year
  • Match of Size and Stage – is it the right size fund or investor that you need and is it geographically located to be of benefit
  • Track Record – be sure to talk to other people who may have been funded by this person or group before

It’s also very important to keep these four points in mind:

  1. Venture Capitalist Firms like to invest in their area, industry of expertise or in a mission- related project
  2. Find connections anyway you can and make contact with them (who works for them; who is on the board, etc.)  This is so important.
  3. Remember the Magic of 3 and Make it Personal – Before making your pitch, there should be three points of contact…all personal to the person with whom you want to work. This does not mean just email, a text or letters.  Think out of the box on how to make a great first impression (i.e. a gift basket of product samples sent to the executive team).  After you do your pitch, remember to do the same…another three touches or contacts to follow up.  This is very much like grant funding; you need to do the work to earn attention.
  4. A Venture Capitalist website drop box or out-of-the-blue emails DO NOT WORK!! – You need to try and make contact before going through their portal; if they are asking for a full business plan, I would want to know more about them first.

You need to make sure the Venture Capitalist you’ve chosen knows you are out there and what you are about.  This can include:

  • Networking like crazy
  • Using social media and blogs – create a buzz around who you are; let them know where they can find information on you; if you have a media or marketing plan, make sure the VC and your pitch to them is a part of it.
  • Attending industry-related events and conferences
  • Again…Create a Buzz!!

Now that you have taken time to Prepare, you’ve determined the Right VC or VC Fund for funding your business, and you have the steps for creating a Targeted Approach, it is time to begin working on The Perfect Pitch!

In the meantime, I’d like to hear about what you may have done as one of your “Magic 3” contacts or “touches” when approaching the Venture Capitalist you chose.

 

How to Know Which Venture Capitalist or VC Fund is the Right One for Your Business

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In the five-step process for going after Venture Capitalist funding, the logical first step is to Prepare, which I covered in my previous article.

Today’s blog post is going to cover step two of the five steps, and that is:  Find the Right VC.

 

FIND THE RIGHT VC –

As you’ve been thinking about pursuing Venture Capitalist funds, you may have been spending a lot of time ruminating on how to make sure you are attractive to them.  But you should also be looking at whether the VC or VC Fund is the right fit for you and your business.

You need to know that all Venture Capitalists are not created equal.  The quality Venture Capitalists should not only be ready to provide you monetary support, but also support of a “non-monetary” kind.  You want to find investors who are looking to collaborate with you and give you support on a whole new level.  Ideally, they will fill in the gaps in your foundation so that the potential that your company has is maximized, helping to lift your profitability levels to where they need to be.

This “non-monetary” support can come in the form of:

  • Operational Experience
  • Hiring Contacts
  • Service Provider Contracts (i.e. a team to help with your website)
  • Profiles and Public Relations
  • Exit Optimization – preparing for a buy-out situation right from the start; you should know your exit strategy (are you looking for an IPO, overall buy-out, to leave a legacy for your family?)
  • Experience Throughout the Process (as I’ve said…collaboration)

Once you feel as though you’ve homed in on the Venture Capitalist (Fund) that is the best fit for you and your company, it’s time to move on to Step 3 in the process, which is to create a Targeted Approach.  Funding your business can’t be left to chance at any point in the process, so my next blog post will address how to work through this next step.