What does your start-up need to do in order to get investors and Venture Capitalists to pull the trigger?
We interviewed investors along with start-ups who had just received venture-backing to give you the details of what to do to prepare for your presentation, what not to do, and how to both keep and attain new investor backing for your start-up.
The Big Question: What does an investor look for in a start-up?
What we heard most: The team is important. Having the right business model that is scalable and a team that can communicate quickly and consistently are key. A problem a lot of start-ups have is that while they have an excellent idea, they struggle to communicate their business model to investors; this can cause hesitation and can be the factor that causes them not to commit. Lastly, don't forget finances and valuations.
What Do Other Start-Ups Have to Say?
We spoke with a few that had just received funding, and what most of them had to say were not far off from one another. The key things are:
1. Get the deal set up in advance so that the heavy lifting is done by you for the investors.
2. Set up your deal early with all the key docs: corporate docs, financial plans, etc.
3. Make sure the documents are available ahead of time so the due diligence team can review.
What About The Pitch?
Remember, the pitch is just the start of a path--it is not the end-all determining factor for investors. You are going to have a lot more discussions and will need to build strong relationships with your investor teams. Be deliberate about that and stay communicative with the investors--these are really important things that promote the investment beyond the pitch that some may not realize at first glance.
What Should I Avoid?
Avoid going into your pitch saying we think we can take X% of the market hoping that will stand alone. Investors want to know how your start-up plans to go about building your customer base, what your customer acquisition strategy is, and what long-term value you can accomplish and retain with a customer overall. Talk to the investors top-line, but also show them you have a cost structure built up underneath that-- which will support that revenue stream and will make you stand out among the rest.