Every organization should be able to answer the following 8 WH- questions – but perhaps more than any other type of company, it’s important for startup companies seeking funding.
In my opinion, a good investor presentation needs to address these questions:
The motivation behind any venture. The background, the need, the observation of the founders that motivated them to start their venture.
One of the mistakes I see among many of my clients is not addressing this question in depth. In my opinion, describing the current situation, the need, connects the potential investor to the venture. It makes it easy for them to understand the next question – the “What.”
The heart of the venture. The thing that will solve the problem we detected – the product or service we are creating. The Solution.
When I ask any entrepreneur “what is your venture?” I get very in-depth answers.
It is easy for them to tell me exactly what they do. Thus, most times I find it easiest to get material related to the solution.
Many other times, though, I see how the founders realize that they need to revise their solution when answering the other questions…
This question should really be divided to two:
First – who is the end user, the client? Who is going to pay for our product/service? After all, this is a business venture. Someone needs to pay.
Once we know who our clients are, the next question is: where are they? And further: what is the market potential? How many clients can we expect to attract? How much money is “out there”?
This is another area where mistakes are often made.
The first mistake:
Many times the end user is not the paying customer. For example, when we develop medical devices the end user might be the doctor, but the client is the hospital or the local HMO.
The second mistake:
Stating an unrealistic market potential. Example:
Let’s say we have developed an eco-friendly soda can.
Stating that the soft drinks market is $XX gazillion might sound impressive, but this is not our potential market. Not all soft drinks are canned soda. We need to find out what the market of canned soda is, and what percentage of that market is willing to pay more to protect the environment. Now we know what the true market potential is. And out of that number, what is the venture’s potential penetration rate is.
Once you know the answers to both parts, you have the full answer to “Where.”
Investors don’t want to get on board too soon or too late.
When we say it’s “like Facebook” or “like UBER” – maybe the market is already saturated with such ventures?
On the other hand, many startups have failed because the market was just not yet ready for their venture: VR ventures before there were practical means of viewing, applications that the devices are not yet able to run, GPS products in countries that do not yet have sufficient satellite coverage, etc.
Many times, investors are looking for “investment opportunities,” and therefore it is very important to address this question.
One of the most important questions: How are you going to create income?
In other words: The Business Model.
Known as: THE BUSINESS MODEL
Now that we know how to create revenue, who our clients are, and how we will get to them, we need to show our investors (and clients) who we are – and convince them that we can actually make it happen…
One of the mistakes I see here is simply stating a title, a name, and the current position, for example: Dr. John Smith, CEO.
That is not enough. Why is Dr. Smith qualified to be the CEO? Does he have past experience in managing a company? If not, I would state “founder” and a short bio that shows the correlation between his experience and the current venture.
Again, we need to address a few sub-questions here:
What is the requested investment? How much do we need?
For how long?
Why this sum? What do we need it for?
Do we already have income? How much?
When will the venture be ready? When will the goals stated in the previous section be met?
What has been done until now? What is the current status? What are the next stages? What are the next steps?
The answers to these questions are the core data that investors need in order to make decisions. To decide if they are willing to invest their time in considering this venture.
I don’t think that a presentation will secure an investment – but it will definitely secure a meeting with potential investors.
Many times I’ve seen Founders obtain a meeting with a different investor than the one they originally contacted – because the person they got in touch with understood immediately from the presentation that they were not personally interested, but they referred it to other investors who were the perfect match.
If you are not sure that your presentation is “investor ready,” I encourage you to benefit my special offer to get professional feedback on your existing presentation.