Start-up Entrepreneurs' Blog

So You Want to Get Investors? Where Should an Entrepreneur Focus?

March 31, 2010

Much like sports, a startup can’t win a race by winning a qualifying round, but a startup can sure lose the race in a qualifying round. Much has been written about the elevator pitch, the two minute presentation, investor call back presentations, and the series ABC’s alphabet pitches. The basis for all these presentations is the Slide Deck, a standardized format for presenting a startup to an audience. All of these things are the qualifying rounds, winning a round does not mean you have won the start-up game, winning means you get to continue to play, lose and you may be sitting on the sidelines for awhile. While there are many version of the Slide Deck, all are very similar in the information to be presented to an audience. Here is one version.

• Company Overview – Problem, Solution, Product
• Market and Market Context Your Company Addresses
• Business Model
• Progress and Milestones
• Competition and Company’s Secret Sauce
• Partners, Customers & Pipeline
• Team – Founders, Advisors, and Mentors
• Finances
• Exit Opportunity

While all of these categories are important, some are more important than others. So where should an entrepreneur focus their attention? Here’s a typical weighted breakdown of how a company is evaluated for funding from an investment group.

• Team (25%)
• Customer understanding (12.5%)
• Market Opportunity (12.5%)
• Business Model (12.5%)
• Competition (12.5%)
• Product (10%)
• Financials (10%)
• Exit Opportunity (5%)

Interesting enough, most entrepreneurs focus too heavily on the product. That’s great if you’re giving a customer presentation, but an investors aren’t interested in using the product. They want to make money and the sooner the better. What interests investors most are how does the startup make money and how does the startup plan on increasing the value of the company. Look closely at the evaluation criteria, and you’ll notice that it’s mostly about marketing – customer understanding, market opportunity, competition, and pricing schemes (part of business model) are all marketing issues. A startup defines and develops a product or service based upon the needs of the customer. Likewise, when it comes to securing funding, the startup company itself is the product. The best time to entice investors is when the start up achieves a milestone that significantly increases the value of the company. The entrepreneur needs to build a company such that it becomes attractive to the investors.

Filed under: Start Up Funding

Tags: angel funding, business plan, elevator pitch, investor presentations, venture capital funding