Despite being so enthusiastic about their business ideas, entrepreneurs often fail to win the attention of investors when they meet. The reason usually lies in the differences in terms of perspectives, information needs and benefits sought.
The entrepreneur-side often focuses on the “What” aspect of the idea, namely what is going to be produced or established and what are its innovative and impressive qualities while the investor-side emphasizes the “How” aspect, e.g. how feasible is the business, how much it will cost and bring back, how large is the market, etc. As a result entrepreneurs usually go into too much technical detail but are unprepared to answer the questions that investors are asking.
What we do at Merar to help entrepreneurs be more effective in presenting their investment projects is first of all providing a standardized investment project submission form supported by detailed instructions. We ask for information that is relevant to investors and important to entrepreneurs in that it is helping them take a more realistic look at their business ideas. In addition, we provide feedback with suggestions for improvement of the project description when required.
We know what investors are looking for because we are in constant interaction with them and we are carefully listening to what they say and observing what they are looking for.
This time we’d like to give you the opportunity to get an insight on what investors expect and require straight from the source. We got in touch with a successful global Venture Capital firm, whose professionals have been so kind to share their expectations towards fund-seeking entrepreneurs within a well-structured and very useful presentation.
The presentation consists of practical tips for entrepreneurs who are about to pitch in front of VCs. In short, the key success factors for the pitch seem to be good preparation and focus.
In terms of formalities, candidates are expected to come a little earlier to their meeting with the VC, ‘equipped’ with a presentation of 12-20 slides and a hard copy of it. They are given the opportunity to introduce their investment case in about an hour, including a Q&A session.
The entrepreneurs are advised to present their business ideas in a structured way, providing information on the following topics:
- Company background: Company’s history, scope of operations, target market, sources of funding so far
Team Presentation: positions, experience, qualification and complementary skills of the people involved in the business/project
- Identified opportunity: problem/need the business aims at addressing, importance/urgency of the need for solution, size of the market, addressable market share, etc.
- Proposed solution: main idea, differentiation and advantage to competitors, plan
- Competition: other players in the market, differentiator
- Business model: revenue generation streams, pricing, performance so far, future projections, customer pipeline, etc.
- Funding need: amount, milestones to be achieved with the funding, investment rounds, etc.
The authors of the presentation summarize:
“The success of your pitch depends on the clear & defendable presentation of an opportunity (big problem + big market), your plan for addressing it (your solution) and identifying the team that is uniquely positioned to do so”.
We completely agree with the authors’ tips and recommend you to follow them in order to get to the minds and hearts of investors. In our belief, the key is to be honest, to be sure what you are doing and to speak the other party’s language. And, don’t forget that at the end of the day both you and the investor want one and the same thing – to make the identified business opportunity a successfully running venture.