While raising money is not for everyone, at some point in the entrepreneurial journey it may make sense to raise outside capital. There are many articles and pitch deck templates out there for how to prepare. Rather than go through a long list of tactical points (i.e. research your investors, tell a story, practice, know your numbers, etc.) I wanted to focus more on three big themes you want to get across in your meeting. Most investors have some variation on team, market, and product as lenses by which to evaluate funding a company.
You want an investor to walk away thinking something like this: “This entrepreneur/team will succeed no matter whether we invest in them or not. They have the determination, resourcefulness, desire to learn and skill to work through any challenges and capitalize on opportunities. I’m really looking forward to working with this entrepreneur/team.”
This is the most critical for early stage companies. At the early stage there is not as much business traction and lots of noise. You want to impart the confidence that you can be a great leader, have the passion, commitment and grit to succeed, and articulate why now is the right time for you to start this business. As you have more team members, the quality, culture, and diversity of the rest of the leadership team comes into play.
This entrepreneur/team will succeed no matter whether we invest in them or not. They have the determination, resourcefulness, desire to learn and skill to work through any challenges and capitalize on opportunities. I’m really looking forward to working with this entrepreneur/team.
You want an investor to walk away thinking something like this: “They are focused on a specific target customer in a large and growing market. The timing is right for this market to expand/change based on recent technology and related structural elements.”
Investors are trying to understand the problem you are solving and how big the market could be. You can do TAM analysis to try and quantify the size of the market. Be sure to explain the key factors driving market adoption, competition, and why the timing is right for your company. There are many great products that fail because the market timing is too early/too late.
You want an investor to walk away thinking something like this: “The solution they have is solving a must-have problem/mission critical workflow and is 10x better/differentiated than current offerings. That differentiation can also be sustainable against competitive pressures.”
You want to be crystal clear what differentiates you in the market; why is your solution better than the existing alternatives in the space. You want to prove your product is a “must-have” vs. a “nice-to-have.” Understanding the potential economics of acquiring customers, margins, retention, and growth are all important. Intellectual property may be another point to address if that is applicable to your company.
While there are many details to prepare for, having a clear story to potential investors on team, market, and product is critical.