Courting Venture Capital: Tell a "Story" That Excites Investors about Your Company's Potential (2011)

EXECUTIVE SUMMARY * The most important parts of your pitch for a venture capital or private equity investment include: (1) overview; (2) management team; (3) why you exist; (4) competition and barriers to success; (5) achievements to date; (6) road map for the future; and (7) financials. * Begin the presentation with a high-level summary of the business. Include what the company does, when it was founded, and a memorable statistic or quote from a customer. * Present short biographies of the most important team members. Include years of experience, relevant prior employers, and exit prices of previous employers, in the form of purchase prices or IPO amounts. * Explain why you exist. Describe the market you intend to compete in and quantify it. * Be honest about your competition and how much of a threat R represents. Be sure to point out why you think you can win. * Show how the milestones you have mat have turned your product or service into something that is salable. If you have customers in beta tests, talk about who they are and how they have aided in development. * Explain your vision of the future, and the short- and longterm plans that will get you there. Now is the time to talk about monetization. Discuss pricing and why you think your pricing will be accepted by the market. Set up the milestones by which you will eventually be measured. * Finally, discuss financial history and prospects. Present forward-looking numbers. When presenting prior-period results, make sure to link them to goals achieved or show how they indicate a positive trend. Then focus on the future, and be sure to incorporate the story with the numbers so the potential investors can see how the story is borne out in the modeled future performance. ********** [ILLUSTRATION OMITTED] Whether you're in the C-suite or playing a supporting role, the skills you've honed as a CPA can help you land that venture capital or private equity investment that either keeps your company afloat or contributes capital for necessary growth. One of the most important ways venture capitalists and other private equity investors discover new investments and weed out the good from the bad is through the face-to-face presentation from company management. These presentations are notoriously difficult, a crucible for the company's ideas and leaders. What part does a finance professional play in this process? In some cases, the CFO or other finance professional leads the entire discussion. If that professional is you, you need to walk into that meeting prepared, and walk out knowing that you gave the potential investor all of the information needed to get you to the next step in the process, whether that is further in-depth meetings or the start of negotiations. Typically, first presentations are less than an hour, sometimes as short as 20 minutes, so knowing what you need to say, and saying it in that short time frame, is crucial. Fluency with numbers is usually among the strongest of the CPA's assets and can help when presenting a company for investors. As much as it is a strength, however, it can also be a liability. Retreating to what they know, CPAs can frequently spend too much time on numbers, and not enough time telling their company's The company's background, niche, management, strategy and other less quantitative matters, are colloquially known as the company's story. The story is what investors will typically remember and is generally what will drive them to invest. The story generates excitement where numbers alone usually do not. The financials should support the story and play the role of confidence builder. The investors should be captivated by the story and convinced with the numbers. If financial numbers aren't the central focus of your presentation, then what should be? The most important elements of your presentation include: 1. …