In Part 2 of this series you’ve expressed your passion to me about your new business idea. I’ve seen a prototype built out of bits of cardboard stuck together with glue and although it doesn’t do anything you’ve sold the vision. So what’s next?
I love passion but passion combined with a plan leads to action. At this stage, I’m after a one page summary document. I want to see whether you have the wherewithal to be able to synthesize your entire business onto a single page.
Before you tell me that’s impossible, Rupert Murdoch, founder of billion-dollar global international company News Limited, receives a one page summary every day that summarises his businesses across the world. If Rupert can do it then I’m sure you can.
So what’s on this page?
- The product/service in a maximum of two sentences.
- What problem is it solving and for which target market?
- How will you reach the target market?
- Financial opportunity
- What will it take to secure the opportunity?
- Who is currently involved?
Assuming I’m still interested then I will next ask you to present a summary deck of slides which dive a little deeper into the opportunity. I will work under the assumption that the dozen or so slides are backed up with a rigorous analysis which can be quickly accessed in an appendix.
Amongst other things, I’m wanting to drill down into any existing financials you may have. If I see a great big liability in the balance sheet you can be sure that I’ll ask what it is so please don’t try and cover it up.
If it’s a loan to shareholders then don’t be surprised when I suggest that it be forgiven…..the reason why you are raising capital upon a certain valuation is because of that input. Either that or massively drop your valuation. The whole point of putting cash into a fledgling business is to help it grow, not to pay back debts!
So what’s going to be on the slides?
- What is your vision and value? What are you trying to achieve?
- What problem you are solving and why this is important?
- Who is your target market? You can describe this as John Smith who is struggling with….. Or do a full market analysis of the potential
- The solution you are bringing to the market to solve its problems.
- How are you going to make money from your offering? What is your position in the competitive landscape? Are you the high-price, high service offering or the low-cost mass market solution?
- Do you already have some existing sales or early adopters? Have you proven your offering and are looking for expansion investment/help or are you yet to launch?
- What is your marketing and sales strategy? What are the barriers to growth? How long will the sales cycle take? Do you have some winning solution that will beat customers compared to your competitors?
- Are there any competitors (there always are) and state why your solution is better. What is your position in the competitive landscape?
- The existing team – brief bio on each member
- Financial projections and existing sales (if any). It’s important to highlight any key assumptions here.
- What is the deal? You are wanting to raise $X for Y% of equity. Investors really would like to see the difference their investment will make to the business and where the investment will be spent.
- You may include here what the exit strategy will be? IPO, trade sale etc.
The entire deck should take a maximum of 20-30 minutes to present and each slide should be succinct and to the point. The rest of the meeting with me will be you fielding questions as I prod around the assumptions and come to grips with your product/service.
Remember, I’m not trying to be mean! I’m trying to work out whether putting time into your venture will be a higher return compared to other opportunities.
Other documents you will want to have on-hand.
- Executive summary page
- Any technical documentation on the product
- Detailed financial modelling…..and I mean detailed.
- Proper market research that describes your target market in detail and who else is playing in the space. A good rule of them is the SWOT Analysis (Strength, Weakness, Opportunities and Threats). Think of your venture in these terms.
Some people have pitched for me not to invest cash but my expertise and they’ve wanted me to participate as an advisor. If the business is interesting enough then this may be the first step we take together.
With any investment, whether it be time or money there is always a dating period before a marriage. We both need to more fully understand how we can work together and make the venture successful.
I hope you've found this article worthwhile and that it helps you pitch not just to me but to others that may be interested in investing in your new business.