In addition to a business plan, be prepared with a business summary focusing on the management team, profit projections, market position and exit strategy. Also put together marketing materials and due diligence analyses on the company, management and industry.
Take these materials along with your product, if you have one to your meeting to help the venture capitalist fully understand your product or service. Focus on your business plan. No "blue sky" plans or dreams, no mention of products or services not covered in the business plan.
- Dodge any questions
- Hide significant problems
- Give vague answers
- Expect immediate decisions
- Fixate on valuation
- Stretch facts or projections
- Bring your lawyer
- Prepare all materials before soliciting any firms
- Send a business plan and cover letter first
- Solicit several firms
- Keep phone conversations brief
- Remain positive and enthusiastic about your company, product, and service
- Know your minimum deal and walk away if necessary
- Negotiate a deal you can live with
- Investigate the venture capitalist’s previous deals and current portfolio structure
Keeping It Real
What you say and how it is perceived is very important to your presentation success. Let’s explore some common statements that entrepreneurs make and VCs have heard thousands of times.
Entrepreneurs say: "Our patents provide a significant barrier to entry."
Investors think: We risk our capital on your ability to execute, not your attorney’s ability to win in court.
Successful version:"Our patents will buy some valuable time to establish ourselves in a very viable marketplace."
Entrepreneurs say: "The brand-name companies are too big and slow to threaten us."
Investors think: The entrepreneur is arrogant or naive. Today’s giants got to be where they are by being aggressive. They’re lean, they’re mean, and they deserve respect.
Successful version: "We understand that Brand X might enter our market, but if we establish a reputation for quality early on, they will see us as an acquisition candidate."