Raising capital in the midst of running a business is challenging. Often it is the most important thing that you do and the one for which you are the least equipped. For many new ventures, the investment process is a constant scramble to put together new PowerPoint presentations, documents and financial information for every investor meeting that comes your way. It may seem as though each investor is asking for something unique or different than the last one, but preparing one-off packages and reinventing the wheel for every new meeting is incredibly time consuming and inefficient.

“For many new ventures, the investment process is a constant scramble to put together new presentations, documents and financial information for every investor meeting that comes your way.” 

The hard part of the investment process is not only proving your model.It is the additional work required while you are running the business. By having standard tools that you create once, and a standard process that leverages these tools, you minimize the ad hoc work you have to do and can focus on the important job of communicating your value to investors. The goal is to develop the following set of materials that you build once and use over and over regardless of the investor. While you may not need all of these tools, and may supplement them over time, these tools should care for virtually all of your investment opportunities:

Mutual Non-Disclosure Agreement

A non-disclosure agreement (NDA) is a legal contract that protects entrepreneurs against the theft of their intellectual property since sensitive information may be disclosed over the course of a meeting or presentation with potential investors.

Entrepreneurs are encouraged not to present an NDA in the first meeting with their investors. Instead, their initial presentation and business plan should be tailored to exclude actual intellectual property or confidential information, but reveal enough to entice prospective investors into further evaluation of the company. Many angels firmly believe that entrepreneurs should be able to convey their ideas and opinions without giving away secret facts. Furthermore, business owners should be aware that disclosing too much information will not advance a business deal nor will it successfully gauge interest in probable investors.

Only in exceptional circumstances or during the due diligence process will angels consider signing an NDA. Any period before the due diligence process is considered premature.

Two-Page Executive Summary

This is a one page executive summary with the key highlights of the business. Few investors these days have the time or patience to read a full business plan, so a better way to catch their eye is with a tightly written and well formatted two-page executive summary.

Key Presentations

You need two key presentations to make your investment process efficient:

• General Presentation :12-slide PowerPoint presentation that is the primary presentation you distribute when first interacting with a potential investor. It should be written in a font no smaller than 14-point. It includes the following slides:
  • Cover Slide (Logo, presenters and date)
  • Company Overview (Overview of company, What you do, highlight key wins, customers, successes, key points in history (founding date, key events, investments to date)
  • Elevator Pitch Slide
  • Market Opportunity (Size and importance of the market; Market problem and current solutions)
  • Your Solution (Product/service overview)
  • Competitive Advantage/Unique Value Proposition (Why your product or service is unique)
  • Team (Current team with backgrounds and roles • Include board, advisors and other assets)
  • Market Traction (call “customers” if you have them) • (Key customers, Other evidence of market traction)
  • Business Model (How you price your product or service, How you make money, Key revenue streams)
  • Competition
  • Financial Projection (Financial projections – summary • Financial metrics with investment (e.g., EBITDA, date of positive cash flow)
• Detail Presentation: 21-slide PowerPoint presentation that expands on Presentation 1 and adds details on the various areas of the company.
  • Sales Strategy (Strategy for selling your product/service)
  • Pipeline (Pipeline of current sales opportunities)
  • Product Strategy (Strategy for differentiating your product/service)
  • Client Management (How you manage clients?)
  • Marketing (How you market your product/service?)
  • Technology (What technologies power your solution?)
  • Operations (What operations support your product/service?)
  • Finance (How is financial management being handled?)
  • Raise Details/Use of Proceeds (Structure of investment, Use of proceeds)

It should be written in a font no smaller than 14-point.

FAQ Document

Investors ask lots of questions and at times it seems that in the investment process you are responding to the different questions of different investors. In reality, 90 percent of the questions are the same. This FAQ document should be extensive and cover the major questions for each part of the business. When an interested investor says, “We will have follow-up questions” wouldn’t it be great to say “We have a document that addresses a lot of these questions for you.”

Key Messages—One-Pager

This document is for internal use only. these are the key messages you are looking to communicate to an investor. No more than five key messages and no more than one page. The investment process can be new to you or your team members. Create a document that lays out the top five messages that you want to investors to understand. For example:

• Differentiated business model
• Key customers that are using your solution
• High operating profit
• Break even in eighteen months
• Brand recognition with key industry players

Investors are dipping in and out of your world and if you can get you and your team aligned around core messages, it increases your chances of getting them to stop and listen.

 

 

 

Training

With a standard process, you can train your team on the documents, the process and the key messages you want to deliver. Hold training sessions with team members and rehearse their specific parts. With the Key Messages document as your guide, develop and train on messages that you want to reinforce in each area of the business.

A structured and organized process, with set tools, meetings and agendas, and clear messages, shows the type of discipline that investors value. When an investment process seems ad hoc, with days going by between asks and a scramble to put materials together, investors notice the lack of structure and discipline of the business. Don’t forget investors are always watching.