Raising investment capital for your startup is one of the harder things you’ll do as you build your company. Unfortunately, most first time, and many second time entrepreneurs don’t really know the ‘rules of the game’ of fund raising. What are the questions you need to answer for investors to convince them that you are that ‘1 out of 100’ companies that they should invest in? In this boox, we’ll share the questions no one tells you about so that you can get a let up on most of the others you’re competing with for venture capital. Good luck!!
What is the problem in the world you seek to address? What keeps them up at night?
What is the basic need people have that your product or service will fulfill?
Make sure you are a problem seeking a solution instead of a solution seeking a problem.
Quantify the Problem
How big is it? How many people have the problem? Express this in quantified terms.
Describe how your solution addresses the problem as described above. Don’t just describe your product or service. Do that, but make sure you make clear how that product or service applies to the problem or need you’ve described above.
Think of it this way: how much will they pay you to have a good night’s sleep?
Describe your competitive advantage … how your product or service is better, faster or cheaper. What is defensible? This will bridge from the value proposition described above to the competitive landscape discussed next.
Describe the other players who are attempting to address the problem described, either as direct competitors or as one offering a substitute product. Who are you competing against? Who are you partnering with? KNOW the players in your landscape WELL!!
Choose your competitors well — as you outline the other players, you are also sending a subliminal message that you belong in this company and should be valued accordingly.
‘How You Win The Game’ aka Strategy
Discuss your business model and the marketing plan. Show how your solution penetrates the market, and grows from there. Talk about how you’ll acquire customers. What will your cost of customer acquistion be. How will it change over time as your execute your strategy. How much money will you make. What the growth rate will be. How will all of that activity return positive financial results to the Company.
Talk primarily about the Management. Knowing the strategy, how do these people’s skills fit the needs of the strategy you described.
You can also talk about influential people serving as Directors or Advisors, and professional service providers if appropriate.
Ask for the money you are trying to raise. Talk about: how the money will be used; the results expected; and, the time needed to achieve those results.
Summarize in three points why your investment is going to be the WINNER that they should invest in.