Guiding questions for startup founders: Preparing to meet with VCs

Meeting with a VC can be daunting, but if you prepare properly, you stand a better chance of getting the funding you need to grow your business. Follow along as we take you through some critical questions that will help you best represent your company’s strengths.

Figure out what makes your company valuable 

Before you can start asking for funding, you need to have a realistic understanding of your company’s value. And not just how much you think your business is worth—it should be grounded in some sort of reality. To get you started down this path, first, it helps to honestly reflect on your company’s strengths and weaknesses.

Major factors to consider:

Strength of the management team
•    What experience does the management team bring? 
•    Past successes? 
•    What makes your team special?

Size of the opportunity 
•    What is the value of your target market? 
•    What is the addressable market size for your company?

Product/Technology/Service 
•    How unique, valuable, or interesting is your product?
•    Is your IP well defined?
•    Do you have any traction yet?

Competitive Environment 
•    How tough is the competition?
•    What are the challenges or barriers to entry?

Marketing/Sales Channels/Partnerships 
•    Do you have a captive beta audience?
•    Have you worked with any notable partners? 
•    Any early wins or success stories that validate your organization?

Need for Additional Investment
•    Is there anything else that is working for or against you? 
•    Do you have very positive existing customer feedback? 
•    Do you have a competitive advantage because of your location?

Think critically about how your business stacks up to the competition in each of these areas. In what areas do you excel? Where might you want to improve? One major point of this exercise is to help you determine where your business falls in the continuum of startup valuations—do you belong at the top, middle or bottom? Having more awareness about how you stack up can help you make your best case for why you deserve funding.

Coming to terms with the term sheet

Now that you’ve considered your company’s relative place in the market, it’s time to focus on more concrete topics. Before you walk into a meeting with a VC, you should already have a clear strategy for the term sheet. One of the key components of your initial discussions—and overall VC relationship—is getting this critical document agreed on. 

You can think of the term sheet as a sort of roadmap that outlines the basic terms and conditions of a VC partnership—which will also be the start of any legally binding paperwork that comes later. At its core, the term sheet is about setting up protections for each party and establishing who gets what. 

Before you meet with a VC, here are some questions you should consider:

Equity and options
•    How much equity are you willing to give up?
•    How much should you set aside for the option pool?

VC track record and past performance 
•    What is the VCs track record? 
•    How successful are they? 
•    What do they invest in? 
•    Do they invest in companies like yours? If so, how much do they typically invest?

Competitive impact 
•    Have they invested in a competitor or potential competitor? 
•    Has a competing VC invested in a company like yours? 
•    Are they missing out on a growing new segment? 

Additional considerations
•    Are there potential opportunities for additional cross-collaboration—have they invested in companies or technologies that may be beneficial to you? 
•    Similarly, could your company provide additional benefit to companies they are already investing in?

As important as it may seem to get the highest possible valuation right out of the gate, the term sheet is just a starting point down a much longer road. Everything that is negotiated will significantly impact your business now and in the future—so be very thoughtful in your approach. Though there will still be a lot ahead of you, some honest reflection on your prospects is a great place to get things started. 

Source: Pitchbook.com

About Pinewood Consulting

Do you need outsourced accounting services for your business in Connecticut or New York? Call Pinewood Consulting at (203) 286-8719 to get a quotation for bookkeeping, taxes, acquisitions, and other financial related matters. Chad Pavel is a Stamford CT and New York CPA.

20 Times You Will Need A Business Pitch Deck

Do you need a pitch deck?

When most people hear the word “pitch deck” they think of VC-backed unicorns like Airbnb, Yelp, Facebook, or WeWork and investment bankers from Goldman Sachs, JP Morgan, Citi Group or Credit Suisse.

However, pitch decks have evolved from tools of Silicon Valley to strategy boosting methods of every day companies, nonprofits, and local businesses.

Here are 20 ways you can use a pitch deck to win new business, present your idea, or help your nonprofit thrive.

Unique scenarios that require a pitch deck

Software Startups: The most obvious. If you are a software startup entrepreneur seeking a seed capital from angel investors and venture capitalists, an investor pitch deck is an absolute necessity for raising money.

Starting A Local Business: Starting a new local service company like a construction firm, plumbing business, or commercial cleaning business, you may be approaching banks for a start up business loan, equipment lease, or SBA loan.

eCommerce Business: Raising money to purchase inventory, secure key supplier relationships, and secure new customer accounts and purchase orders.

Real Estate: Seeking capital to purchase or build real estate or pitching your city’s local economic development council to develop a piece of land.

Family Business: You own a family business and need an SBA loan to expand your business, acquire new assets or or buy a competitor.

Management Buyouts: Your employer is ready to retire and has no successor in the business and you want to present your case for acquiring the business when the current owner retires.

Buying a Business: You are seeking capital to acquire your first company and approaching individual investors or bankers for capital.

Opening a Restaurant: You are starting up a restaurant or food truck concept and raising capital from friends, family and your local bank.

Opening a Retail Store: You are opening a retail location in a strip mall, traditional mall, or outlet center and must present your business plan to the landlord to show that you will be a good fit and cover your lease payments.

Pitch Competitions: You are competing for investments or grants at a local pitch competition and want to capture the audience and sponsors with your new concept to win cash.

Startup Accelerator Applications: You are applying to a startup accelerator or incubator like 500 Startups or Y Combinator and they require a deck for your application.

Government Grants: You are writing grant applications to fund research, development and marketing to solve a novel problem.

Crowdfunding: You are building your profile on an equity crowdfunding platform like Indiegogo, Fundable, Kickstarter or SeedInvest.

Sales Presentations: You are making a sales presentation to a new potential customer and need to organize your value proposition in a compelling sales pitch deck.

Nonprofit Fundraising: You are a nonprofit and raising funds from donors at a dinner event for charity gala.

Joint Ventures: You are seeking joint venture business partners to coinvest in a new initiative and must show proof of your skills and past successes to secure key partnerships.

Fortune 500: You’re a fortune 500 company and seeking to partner with or acquire smaller companies and must communicate your fit and value to the founding teams.

Trade Show Presentations: You were presenting at a trade show in front of hundreds or even thousands of people and want to create a stunning visual presentation.

Chamber of Commerce: You are giving a presentation at your local Chamber of Commerce and want to impress local business owners with your business presentation skills and portray your value in the community.

Political Campaigns: You are running for office and want to describe the economic or social problems in your town and how you will go about solving them.

Summary

Regardless of your personal or business needs, creating a stunning and smooth pitch deck presentation can accelerate your success and improve your chances of getting what you want. Taking the time to build a professional pitch deck can change your business forever, and developing presentation skills to complement your pitch deck are even more important.

Nee help with your pitch deck? Book a consultation to learn about our process and how we help companies raise capital with stunning pitch decks every day.

Having Trouble Raising Money For Your Startup? Here Are Two Reasons Why

Are you raising money for your startup? Having trouble getting anyone’s attention? Investors, customers, lenders?

There are two immediate fixes that you can start with TODAY to get your business moving forward.

#1: Refine your story.

The FIRST thing you need to do as an entrepreneur is to get your story straight. Who are you? Why are you relevant? What problem are you REALLY solving and why should anybody care?

Pro Tip: Practice your 10, 30, and 60 second pitch. Focus on the problem or desire you address, the size and relevance of the number of people who share the problem. Present your solution and why your audience will benefit from working with you.

#2: Show proof.

Ideas are a dime a dozen. Everyone has them! And while it is easier than ever to create a landing page and “fake it” for awhile, a savvy investor and customer will see right through you. Show proof that your new and novel idea is relevant. Show that people care!

Pro Tip: Gather email signups from your customers. Post on Facebook and start conversations. Pre-sell your product to a few dozen customers (actually collect cash!), and show the world that people care enough about your product to sign up with you!