Tag Archives: Funding

Pitching Perfect: Fundraising fashion right now – The One Page Pitch

For years start-ups have been sending investors and other potential funding sources their business plans. With more and more start-ups pitching these days, and funders having less and less time to review them all, a new trend is emerging about how to approach funders.  It’s the one-page pitch. Get to the point immediately.   Here are some basic questions the answers to which should be included:

·         What’s the problem?
·         How are you solving it?
·         Who’s your customer?
·         How will your solution make money (your business model)?
·         What stage is your company in right now?
·         How much money are you looking for?
·         What are you going to do with the funds?
·         What’s the payback horizon and how much return will the funder get on their investment?

What’s really good about the one-page pitch is that it can be a significant way to force you to clarify, condense and articulate your ideas.

John Ason, an angel investor, often speaks about the one-page pitch:  he has approximately 1-3 minutes to look at your idea. And it had all better be on that one page. And not single spaced with no white space on the page. If it’s not visually inviting, he won’t read it. John always offers very pointed and amusing illustrations of how he wants to invest. When asked what John looks for in a management team, his answer includes passion but he also says the combined age of the two principals should not be more than his age.  Another, related to return on investment, is that the payout should not extend past his lifetime – his event horizon (as is that of many investors) is a 10x earnings return on his investment in a reasonable time frame (usually less than five years).

To learn more about John, how he works, what he looks for when investing, what he’s invested in etc.
http://www.johnason.com/

Check out Martin Zwilling’s post on pitching angel investors – BTW these points hold true for VC and other pitches as well.
http://www.alleywatch.com/2013/08/10-guidelines-for-pitching-angel-investors/?goback=.gde_3032640_member_267586133#

Here’s a first time funder’s story
http://viniciusvacanti.com/2013/04/16/lessons-learned-raising-6-million/

 

Sandra Holtzman teaches CEO 035: Licensing.
She is the author of Lies Startups Tell Themselves to Avoid Marketing.

Interesting Article & Event

Interesting Article:

Venture Capitalists and Investors
http://onstartups.com/tabid/3339/bid/91669/Surprising-Insights-From-HubSpot-s-35M-Mezzanine-Round.aspx

 

Interesting Event:

Hatchery – Are You Serious? – November 14, 2012
Wednesday, November 14, 2012 from 6:00 PM to 8:30 PM

http://ays1114.eventbrite.com/#

The Hatchery invites serious entrepreneurs to take part in its next open pitching event on Wednesday evening, November 14. Presenters will have five minutes to pitch their product or startup to a panel of angel investors. The panel will provide candid feedback and guidance on steps to improve the pitch for actual investor presentations. Further, the panel will provide opinions on whether the products or firm are commercially viable. Typically, panelists have seen hundreds of pitches from startup firms, and have a good feel for the ability of a new company to create a successful launch.

 

Sandra Holtzman teaches CEO 035: Licensing.
She is the author of Lies Startups Tell Themselves to Avoid Marketing.

Funding Your Business

What do Angels and Venture Capitalists have in common?

Have you often wondered what the difference is between an Angel inventor and a Venture Capitalist? There really isn’t much difference except for the size of the investment in your business.

Angels are private investors who are looking for a better investment and return than traditional investment schemes, like in the stock or bond markets. The age of the company and other specifics are on their checklist: early or formation stage and they look for a payback and a return on their investment where revenues are between $2 million and $10 million. They would usually expect preferred stock in return for their money which would pay semi-annual interest for the use of their money. After 5 to 7 years they would expect to be paid back and exit.

Venture Capitals are on a higher plane than Angels and can be private equity funds. They invest in early stage companies expecting a high return for the high risk involved where revenues are in excess of $10 million. Venture Capitalists look for companies with a defensible market position, strong management team, positive EBITD and discernible growth characteristics.

So what do these Angels and Venture Capitalists look for, you may ask? Think about the program Shark Tank seen on ABC-TV on Friday nights. You may have seen Angel investor Kevin O’Leary quizzing the presenting owners of small companies. He asks, “How am I going to increase my investment?” “What are your goals for the business?” “I don’t like your valuation!” “What are your margins?” “What are your sales and in what timeframe?”

What is making him salivate or not over the company’s products? These attractions are not unlike what the Venture Capitalist looks for. Take a look at the following:

1.   Unique or proprietary products or services. A patent owned by you is a plus.
2.   Existing sales are evidence of consumer demand where revenue growth is greater than 20% to 50% year to year; gross margins are over 40%; and with a lean management team.
3.   Increasing sales would be the result of their investment by marketing or hiring additional personnel, which they will  oversee.
4.   Realistic valuation based on your sales and profits
5.   Exit strategy must be included in your plans, like selling the company or merging with another company.

While some of you may say that seeking funding from these people is not worth it. Think of this. If you did not have their investment you would not be able to grow your business faster, gain market share and have the benefit of their expert opinion and management expertise. Their contacts and relationships would help you gain clients and suppliers for increased revenue and growth. So it is worth it, but make sure that you benefit from the relationship as much as the investor would. It is a two way street.

Margo Moore teaches BE 261 Starting a Small Business, CEO 001 Setting a Course for Your Business, CEO 002 Knowing Your Market, and CEO 003 Formulating Your Financial Strategy.