Archive for May 2007

7 Powerful Tips to Gaining Investor Interest

May 14, 2007

When only “23% of companies receive all the funding they seek”, how will you obtain the funding you seek?  By making sure, when you do meet with investors, that your company is ‘investor ready’.  Most investors will take only one look at your investment opportunity and if your company is not ‘investor ready’, then they will move onto the next deal.  Unfortunately, most investors will not revisit your opportunity once they have decided they are not interested. 

Presenting your qualified opportunity to investors will increase your chances of funding.  Independent firms, who work with investors and understand their viewpoint, can identify obvious obstacles to funding through a complete business analysis.  Assessing that your business plan is clear, concise and compelling is achieved by meeting the following criteria. 

  1. Identify and examine your market opportunity, your company’s role in that market, your competitive and market analysis

  2. Evaluate your proof of concept and validation of your product or service

  3. Verify your business has clear business objectives and milestones for financial, sales, customer database, internal organization, and employees

  4. Identify your business strategies for growth, infrastructure, and development for financial accounting and human resources

  5. Check for any fatal flaws in your plan that would keep an investor from investing
    Appraise that your concepts are in clear and concise terms that an investor will understand

  6. Determine if your revenue and financial Performa makes sense for your business model

  7. Assess your plan from the investor’s point of view, the ability to attract capital at the best value, and meet the expectations of professional investors and lenders

To ensure that your business plan powerfully presents your ideas and strategies, the Business Assessment report should provide valuable recommendations on the strengths and weaknesses of your business model.  The funding strategy given based on all the information gathered from the assessment enables your company to clarify the right investor or financing for your company’s particular industry, stage, funding round, and unique selling proposition.


Top 8 Killer Investor Presentation Points

May 14, 2007

Investors are people just like you and me.  They want to know ‘what is it in for me’. The have money to invest because they have successfully earned enough income to put them in the top 5% of the wealthy.  They are motivated to invest because they want to give back with the experience and money.

Your first presentation should be no longer than 8 – 15 minutes.  Back up charts and other visuals can be used to expand on a point.  Use our Top 8 Killer Investor Presentation Points as a guide.                                                             

1.  Opening Remarks

2.  Mission Statement

3.  Market Opportunity

4.  Description of Product or Services

5.  Management

6.  Marketing Strategy

6.  Capital Needs

8.  Closing Remarks

1.  Opening Statements

Opening statements should be concise and to the point. Introduce yourself and any other members of your management team who are present.  If possible, have one of your creditable investors speak for a couple of minutes on their personal insight as to why they invested.  It should not be an investor who is a close relative or is part of the management team. 

Get excited and have passion about your opportunity.  Create a buzz about your deal, so that investors will spread the word about your company to other investors.

Comment:    Give a concise and professional overview that gives investors attending some insight as to your organizational skills.  The tone you set for the presentation is critical. Be professional, but find some areas where you can add some humor without being a comedian.

First impressions are very important.”

2.  Mission Statement

In one or two sentences, state the mission of your business.
3.  Market Opportunity

In a short paragraph, demonstrate to the investors the specific market opportunity or need for your product or service.  Be specific with how many actual products or services can be sold and in what time frame.

Sample of Opening & Mission Statements

Good afternoon, my name is Tom Jones. I am the founder and President of XYZ Corporation.  Assisting me today is our CFO, Richard Smith. 

Accelerated use of latex gloves and latex covers for medical devices to protect against infectious diseases over the past two decades has resulted in as many as 17 percent of healthcare workers affected by latex allergies.  A greater risk is with the general population that is not aware of the allergy until they come in contact with latex during a medical procedure.  XYZ has identified the cause for the allergy and has determined a process for making latex virtually non-allergenic. 

We have a contract to distribute our process to 72 countries and are raising $500,000 to fulfill the contract.

4.  Description of the Product or Service

4.  Describe what product or service your company sells.  Keep it simple.  Don’t bring up technical or confusing information.  Details are usually brought up in later meetings.  It is important to be specific on the product or service’s unique value to customers and why your company is different from the competition.  It is imperative that you show how your company will attract customers who will purchase what you are selling. 

5.  Marketing Strategy

Many companies who have had good products and services did not become successful.  One reason is to clearly identify your company’s marketing strategy.

Talk about the value of your strategic alliances and partnerships. Investors look for aggressive marketing as a key component to success.  Therefore, choosing a marketing method is critical to achieving your success.  Will you be marketing directly or use strategic partnerships and alliances?  This is vital, since the cost to market directly can be very costly.  Using strategic partners, alliances, or resellers could be a much more valuable marketing and sales strategy.

     “Create a buzz about your deal by being articulate, passionate, and with complete understanding of your opportunity.”

6.  Your Management Team

Describe each key person who is important to making the company successful.  Most investors recognize that having a management team of friends and relatives is usually not a good idea and could be a critical mistake to the company in many ways.  

Assemble the best talent you can find, with strong managerial skills, and explain to the investors why this management team, under your guidance, can lead the company to success.

If your management team is not in place, it is vital that you at least identify key personnel who will join your business at some future event or date, (such as after funding has been obtained).

Investors are attracted to people who have been successful
in other businesses.”

7.  Capital Needs

It is very important to outline the need for funding and why your company should be considered for an investment.

Understanding the importance that each investor is very interested in how you are going to spend their money.  Demonstrate exactly how your company will prudently spend the money. 

Be sure to have an easy to understand, detailed month-by-month written use of funds that backs up what you say in your presentation.  In a summary format, reveal the use of funds and projected salaries.  Investors look favorably on first year salaries of $40K – $60K tied in with some performance clause.  Investors usually don’t want to pay for high salaries.

8.  Closing Statements

Be sure to say ‘Thank you’ to the investors for their time and invite them to an demonstration, a visit to your facility, or to an additional meeting with more in-depth information.

The gold is in the follow-up.  Keep investors informed about your progress in an investor relations campaign.  Ask if there are certain areas they would like you to address.  When possible, get their feedback on what they liked and any concerns they may have.

Practice until you can deliver the presentation by memory.”

Determining the Right Amount of Investor Exposure

May 14, 2007

In planning for a successful funding campaign, you must expose your investment opportunity to enough investors. 

The Kugarand Theory of Investing states that for every …

1 investor who invests,

3 say they will invest, and

15 investors were exposed to your investment opportunity to get to the three to get to the one Investor who actually invests.

For example, if your company is raising $1 million dollars and has a minimum investment of $25,000, then your company is seeking 40 investors,

($1,000,000 / $25,000 = 40).  For your company to get the 40 investors to invest, you will need to exposure 600 investors to your investment opportunity,

(40 x 15 = 600 investors).

Find out how many investors you will need to expose to your opportunity using this formula.

A = How much money are you raising?

B = What is your minimum investment amount?

A/B = C

C = Number of investments needed

C * 15 = Number of investors who need to be exposed to your investment opportunity

Now that you understand exactly how many investors need to be exposed to your investment opportunity, you can plan accordingly.

Make Sure Investors Remember by Creating a Buzz about Your Deal

May 13, 2007

There can never be any guarantees in the process of connecting your company with capital because there are so many factors that impact an investor’s decision to invest.  Unfortunately, even when a company has none of these obstacles, they can still fail in their quest for private equity funding because the interest of the investor wanes.   An institutional investor or venture capital firm may decide they need to diversify and will not invest in a specific sector, even though they professed interest right up to negotiations of a term-sheet.   A private investor may decide to invest in another project that rings a specific emotional bell or may have a personal matter that needs attention, sidelining any private equity investment transaction.  Often, entrepreneurs make the mistake blitzing through investors and never providing updates, so when the circumstances change and the investor is ready, they are onto the next new opportunity rather than the deal they saw two months before.  They either assume the company got their funding or have failed since they never heard from them again. 

To create a Buzz about your deal and generate momentum for your offering, you need to tap in to the investor network you are creating with investors.  Investors who liked the deal, but have not yet invested, are your BEST source for potential new investors.  Therefore it is important to keep interested investors updated with news about your company to increase the likelihood of investment.  Maintaining communication, with not yet committed investors, is imperative to a successful capital raise.

Communicate with existing investors so they can ‘brag’ to their friends (and potential investors).  Have an ‘elevator pitch’ with an easy verbal explanation, so that after the presentation, investors walk away able, and desiring to talk about this hot investment offering they just saw. 

Raising Capital: 5 Reasons an Investor Won’t Invest

May 13, 2007

When it comes to funding your company, it is important to understand the difference between objective and subjective investors. The subjective investor is some how connected to you. Often referred to as “Friends and Family”, but in reality they are business investors with a connection to you directly through a common connection like your friends and family. These investors, or friends, believe in what you are doing and invest in your business. At some point, a business who seeks private investors has to move beyond Subjective Investors to the world of Objective Investors.


Objective investors examine the overall business model and investment opportunity. Objective investors see dozens or more offerings each year. How do you think they determine which businesses to invest in? They look for reasons NOT to invest. By examining your complete business model and investment opportunity they can determine red flags.

5 Reasons an Investor Will Not Invest:

  1. Incomplete financials and/or business plan (market/sales strategy, operational information, barrier to entry not established)

  2. Complex or confusing message within the investor documents regarding business model or investment opportunity

  3. Structure of the offering, perceived cost of the investment relative to a high valuation or unclear exit and return to the investor

  4. Inexperience or incomplete management team, and/or attitude of the management conveying a sense of entitlement or resistance to advice & counsel

  5. Specific industry focus or niche marketplace that limits the potential number of investors

Many of the reasons for no-go investment decisions can be identified and remedied before the investment process begins. How can your company determine if you business model and investment opportunity is investor ready?