Before pitching to VC’s or Investor about your Business / Product / Idea, below is the checklist you must follow, here some of the key takeaways of what actually runs in investors mind if they really wants to invest in your idea / business,
Why should investor or VC invest in your Business?
Investor should get convinced on this answer. Here is how it should be: Which problem it’s solving, how investor gets ROI ASAP. Don’t give market stats (They already knows it that’s why they are here).You can tell the sales (if they are really impressive)
How your company valuation works, are you valuating your Business correctly?
If you are asking for $200,000 for 10% of stake (equity) then you Are valuing company at $2 million. For e.g. you are making $100,000 a year and PAT is $30,000 and you are asking for $200,000 that means asking 6 times more than profit that should not be the case.
Is anything proprietary about your business?
Great innovation / idea doesn’t means it will be huge success it has to be protected.You can protect with a patent or TM (Utility, design depends on your need)
Do you have any debt?
You have lot of debt and you are not returning back investors’ money in desired time alsoBusiness is not profitable yet. It should be debt free.
Do you own 100% of your business or at least 51%?
What happens is entrepreneur has an idea he executes the idea and for next capital he keeps on raising money but his equity keeps getting diluted as raising money. Investor’s at least wants you should be decision maker for that you have to majority of your business.
Is your business profitable?
You are running business for lot of years and you have millions of dollar into advertisement, trade shows in marketing etc. You have to keep eye on margins, slotting fees (It’s a fee that you have to pay for your product in shelf space of retailers like Walmart, Walgreens etc.)
Too early to invest?
You haven’t proven your idea or product successful yet and it’s not making any money. Before pitching to VC or Investor need to have clear idea about it’s a product or company.
Is your roadmap for business clear?
You should have vision in your mind, VC’s only want return on investment and unless and until you don’t have clear plan about next 3-5 years. They want visionary leader not just a innovator.
Your pitch should be more of ROI (Return on Investments) and about product
While pitching to VC’s or investor, don’t give market data or statistics (for e.g. if you have coffee product and telling its $20 billion industry). How you going to return money back you should eat, sleep with business work your hard to bring ROI.
You should be clear with your numbers
What’s your PAT, EBITDA? How much you have earned in last 12 months, 1 year. You should be clear with your numbers.
Who all are your competitors?
Is there any similar product available in market, what’s difference between you and them? Is it costlier, healthier, safer or economical etc.?
Does market really needs it?
If your idea is not solving real problem or it’s been already solved. More of like old wine in new bottle. There must be target audience or need of your product.
What is your customer acquisition cost?
Its cost that you spend to acquire a customer. You must know this answer because it tells that you know about market size, target audience..
What will be distribution or promotion strategy?
Strategy should be going to retailer (if product is suitable for retailer) or attending a trade shows or on social media etc., it should not be to a hire a sales guy that’s give bad impression.
How much your spending on your advertising ?
You should allocate some of the capital in profit to this or best way is (go for Kickstarter campaign, Indigogo or attend trade shows etc.) . Social media is now best tool for advertising , improving SEO etc.
Is your Business / Product names suggests or relates what it does ?
Your product name , Logo i.e Branding plays very crucial part because its directly talks to customers so make it simple , clean and good design.
If everything is going your way (good sales , generating enough cash flow) they why are you here ?
Tricky one to answer , you might need a stratigic partner who will help you in making decisions and phone calls to retailers or big box stores or large co-operations.
And last but not the least , Dont be greedy !