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Meeting Startups at Conferences: What Investors Gain, and Miss in the Event Environment

Meeting Startups at Conferences: What Investors Gain, and Miss in the Event Environment

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Fundraising, Investing

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    How to Write a Pitch Deck

    2 min read When venturing into raising funding, every startup needs to know how to write a pitch deck. The following is a listing of all the slides you’ll need to put in your startup’s pitch deck. Use it to make a solid first impression on potential and current investors. After reading this list, if you still have questions about what needs to be in the slides, check out our TEN Capital eGuide: How to Build a Pitch Deck for an in-depth explanation of the subject. The Problem State the problem you are solving so the investor has a frame of reference for your startup. Show how this is a critical problem and must be solved versus a nice-to-have solution. The Solution For your solution, show a picture of the core product or technology so the investor gets a sense of it. Describe how you came up with it and why it’s a great solution. Highlight both what it does and why they should care. The Market Show the total available market, which is anyone you can sell to. Then show the serviceable market or your core target market. Finally, show the beachhead market (the first 20 customers you’ll sell if you are early stage). Monetization This slide answers the question of how you make money. The goal is to show you have predictable revenue from your operations. Traction In this slide show current sales as well as the funnel of upcoming sales opportunities, your pipeline, customers and prospective customers, and forecast numbers for each opportunity. The Competition This slide often helps highlight the market size and strength by showing who is playing in that space. In your slide, highlight three to four competitors. Avoid saying you have no competition. Competitive Advantage Highlight your core value proposition for the customer, then show what value the customer receives from your product/service. Show what competitive advantages you have. The Team For this slide, the goal is to show you have a complete team and everyone has experience. Show the C-level team, including the CEO, CTO, and CSO, and the names of companies and projects they have worked on that, are relevant to your target industry. Value Proposition This slide should tell you the benefits and why customers will choose you over competitors. Financials This slide gives the company’s current status concerning revenue, expenses, and profit. You want to cover growth rate, scale of revenue, and break-even expectations. Investment Opportunity This slide shows the fundraise target and how much is raised so far. Show interested and committed investors and invested funds to date and key terms of the deal. Read more from the TEN Capital eGuide How to Build a Pitch Deck: http://staging.startupfundingespresso.com/how-to-build-a-pitch-deck/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    Presenting Your Pitch Deck

    2 min read Presenting Your Pitch Deck: what you need to know. A pitch deck is an essential tool to have when looking for funding for your startup. Your pitch deck functions as your introduction to your potential investor and can make or break your relationship. Here are some essential points to keep in mind when crafting your own. The Goal of The Pitch Deck The goal of the pitch deck is to introduce your deal to an investor and find out what is essential to them. It isn’t to tell your complete story or explain how your product works. Ideally, you want to plan a follow-up meeting with the investor. Good pitch decks show what you are doing and the opportunity to grow more with funding. Ideal pitches show the proposed outcome will happen with or without them; in other words, the outcome is inevitable. The results of the team are there for everyone to see what has been done so far. Remember, you are the presentation, not the slides. Avoid discussing multiple scenarios as this may confuse your audience. Focus on the core message – it’s one product, one team, one market, one fundraise, and one outcome. What Your Title Says About You Investors want to know what your product is from your pitch, not just your technology or benefits. Your title should come near the beginning of the pitch, as some investors have difficulty focusing on what you’re saying until they know what the product is. It’s essential to show the product and define it clearly, so investors know how you will approach the market. If it’s a physical product, show a picture of it. Make sure the product has a name, helping establish it as a real thing in the investor’s mind, even if the product is still in development. Even the case of a physical device can make it seem real. Say what it does in five words or less, so the investor gets a high-level understanding of it. Even if the product is not yet ready for sale, treat it like it has form and function now so that investors can grasp what you are doing. Common Mistakes in Developing a Pitch Deck One of the most common mistakes is explaining in great detail how the product or technology works. Instead, focus on the benefits of the product and what it does for customers. It’s better to save the detailed explanations for later. Other mistakes include: Not identifying the competition or claiming there is none. Making the font so small that no one beyond the first row can read it. Using too many words so that readers get distracted by reading it. Not setting up a flow, so the slides follow a logical story form. Using market sizing to distract the audience from the fact that you have no traction. Forgetting to ask for investment, so investors are left wondering what you want from them. Using cut and paste from Excel for financials, rendering the slide unreadable. Trying to tell the investor everything in one sitting. Remember… The pitch deck should focus on your core product, team, customer, and fundraise. You can flesh out the details later. The biggest mistake is not asking questions or listening. Most startups spend their time talking when they should be listening for objections and concerns. Read more from the TEN Capital eGuide How to Build a Pitch Deck: http://staging.startupfundingespresso.com/how-to-build-a-pitch-deck/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    What’s Your Timeline for Raising Funding?

    2 min read What’s Your Timeline for Raising Funding? If you answered, “right away!” (as many entrepreneurs do), you’re probably not being realistic. In fact, the benchmark is that for every million dollars you are raising, it will take you one year. But even if your fundraise isn’t that large, it can still take many months of planning and executing to raise funding from Investors. Here’s a rough outline of what you should be ready for when developing your plan: Month 1: Check Readiness. Assess your readiness for raising funding, and be honest. Ideally, you have a product and have sold some units. You should also have built a core team. Communicate with your current team and investors you already have about raising funding. And don’t forget to check with your attorney about the legal aspect. You may have to consider modifying your legal entity to allow for outside investment. Month 2: Prepare the Company. Planning your fundraising strategy includes assembling your key documents including, the Executive Summary, Slide Deck, Financials, and Due Diligence documentation. Take steps to fill out your board of advisors and build a set of email updates for monthly transmission to the potential investors. Month 3 to 5: Prepare the Investors. Identify potential investors to put on your investor prospect list. Start with ten investors you already know and have contacted, and add ten new investors per month to your list. Set up meetings to introduce investors to your deal and tell them that you will start raising money in a few months. Ask permission to keep the investor on the list for updates you will be sending out. Start sending monthly updates on your company’s progress using personalized emails – not ‘broadcast’ emails. Customize the mailings to build a personal relationship. And don’t send them your press releases. Demonstrate how you are actually achieving milestones. Month 6 to 9: Pitch the Investors. Follow up with each potential investor and pitch the deal. Identify the lead Investor and close the first round with investor-friendly terms. Offer an incentive to the lead investor for the additional risk he is taking by going first. Month 10 to 11: Close the Investors. Invite other investors to follow on. Keep the relationship with all investor prospects–some may join in a future round. Month 12: Finish the Round. But you’re not done. At this stage, continue sending updates to investors AND the investors on your prospect list quarterly to prepare for the next round of funding. Read more from the TEN Capital Network: http://staging.startupfundingespresso.com/education/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    Five Steps to Identifying Market Validation

    2 min read Five Steps to Identifying Market Validation (and the one key criteria that counts). Angel investors look for market validation in a startup before investing. Fundamentally, this means that the entrepreneur has found a market with a need. But how to validate a market segment? There are 5 key criteria that Investors will look for, and one key that provides the “acid test”, indicating you have found one. Identify the Target Market Write out a specific definition of your target market segment and how it fits in the overall market. Set up a list of objectives you want to learn from the research. Build the Question Set Using an online or email survey to ask no more than five questions. In an interview, up to ten questions capture a good amount of information. Match each question to your objectives. Test the Question Set Send the question set to five friends. Ask them to fill it out and then give you feedback on the wording. You can also check their responses to see if it addresses your question. Roll up the responses and see if the results answer your objectives. Conduct the Interviews/Surveys In an email survey, you will receive most of the responses you’re going to get in about 2 to 3 days. After that, the responses drop off dramatically. In the survey, you may want to ask if you can contact them for further questioning. This may give you additional contacts to interview. Analyze the Data Review the raw data yourself. It’s surprising how often the same set of data can generate completely different results from different reviewers. While surveys and interviews can help validate the market, the one criteria that counts more than anything else is: “Will the customer buy the product/service?” Generating revenue, even at a small scale, says a great deal about your market’s need for the product. This is important because when investors review deals, one of the first questions that come up is “Do they have revenue?” If the answer is “yes” then you’re in the “to be considered” category. Read more from the TEN Capital Network: http://staging.startupfundingespresso.com/education/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    Key Elements of a Startup’s Story

    2 min read Storytelling is a key skill for any startup raising funding so let’s discuss the key elements of a startup story: In the early days of a startup, the product and team aren’t fully developed, and customers typically aren’t fully engaged. As such, investors look to the founders to understand the potential of the business. In this case, the founder who can articulate a clear vision of the company and fill in the gaps can win over the investor. The Purpose The first key element to the story you’ll use during your fundraise pitch is your purpose. This can also be seen as a theme. The purpose or theme comes from what inspired your startup. There was something about the world that you wanted to change, so you started the company to fix it. Start your story strong but letting the listener in on this information. To make your point even more substantial, try to connect your purpose to a universal principle or truth that everyone recognizes. Next, build your story around that theme. The Hero There second key story element is the hero. The hero is the character whose journey the audience cares about the most. In a startup fundraise story, this is the CEO. Most heroes are trustworthy and likable, leading the audience to empathize with them in some way. Painting the CEO as this character increases your chances of landing funding. Your story should focus on the hero and not just the product as investors seek to build a relationship with people. In this case, the company takes on the persona of the CEO. If the CEO is trustworthy, then the company will be considered reliable too. The Mission The third element is the mission- the job to be done. It is the goal of the hero both now and beyond the story. For your startup story, focus on what the CEO is trying to accomplish and how he plans to solve it. Outline how hard the problem is for the customer and how it can be made easier. Show how the proposed solution will save time and money for the customer. Talk about the steps to accomplish the mission; what must be done to bring the solution to the market. Finally, show how the product achieves the customer’s desired outcome. In telling the startup story, use the mission to set the direction. And always be sure to show how your startup’s mission reflects your core principles and values. The Obstacle The fourth element, the obstacle, stands between the hero and the goal. All good stories have a conflict that must be overcome. A startup’s obstacles could be competitors, lack of knowledge, regulations, and more. The obstacle creates tension which holds the audience’s attention and helps them experience the story for themselves. For your startup story, show the CEO facing the challenge in bringing the product to the market. Investors will empathize with the plight as they have been there themselves. Show how the CEO overcomes those challenges, remembering that the investors look for grit, determination, and persistence. The Plot After you establish the theme, hero, mission, and obstacle, you can start work on the final element of your story: the plot. The plot is a series of events that leads to achieving the mission. Plots can be set up in several ways, and choosing the suitable model will help make the story more engaging. Try to position yourself as David fighting Goliath: The small startup taking on the big corporation. Or, try telling a Rags to Riches story: How a small startup hit upon a big idea. You can also position it as a quest: Show the entrepreneur’s journey and the lessons learned. Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/how-to-craft-a-startup-story/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    5 Things Investors Love to Hear in a Pitch

    2 min read 5 Things Investors Love to Hear in a Pitch Investors hear pitches continually throughout the year. So many, in fact, that one’s eyes can glaze over. However, from time to time, an entrepreneur will make a pitch that will break through the noise. Investors are listening for a few key things that show you have a business with real growth; the rest is filler. Every entrepreneur has a story. Many are interesting, some are not. For investing purposes, there are 5 key elements that are sure to capture the investor’s interest. Real Traction Entrepreneurs who have sales and show it are head and shoulders above the rest. Most talk about the traction they will have in the FUTURE but not what they have today. In an investor’s mind, this equates to “No Traction”. Real Pain Point The entrepreneur has found a real pain point in the market and is filling it. Someone once said that customers pay for the pain to go away, they don’t pay for nuisances or inconveniences. Real Team They have someone building it and someone selling it and those team members know what they are doing. Real Product The product works and is non-trivial to build. It’s more than just spin marketing. Real Growth Prospects The market opportunity has strong growth potential and is not going to run out of steam in a year or two. Those are the elements that light up the investors in the room, if you really have it. Read more from the TEN Capital Education Center: http://staging.startupfundingespresso.com/education/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    Pitching Angel Investors

    2 min read Pitching to Angel Investors: Competition & Competitive Advantage If you want an investor to stop listening to your pitch presentation or stop reading the business plan, state how you don’t have any competition. You might be surprised at how many entrepreneurs make this rookie mistake in their pitch presentations. We hear it constantly, and it’s almost certain that you’ll lose credibility with investors. What Angel Investors Really Want I believe that entrepreneurs who say they have no competition try to convey a broad opportunity to exploit a market. This will have the opposite effect. The main reason is that the customer is solving the problem somehow now, even if indirectly compared to your solution. There’s always another company competing for the same dollar and if the investor finds out about a competitor from someone other than the entrepreneur, it makes the startup look even more unprepared. Competitive Analysis The competitive analysis in your business plan demonstrates to potential investors that you understand the strengths and weaknesses of your business. It also gives them a better picture of the market opportunity when researched thoroughly. When researching the competition for your plan or pitch presentation, focus on answering the following: Who is out there competing for the same dollars that you’re going after? Are they directly or indirectly selling products, services, or substitutes thatcompete? What are their strengths and weaknesses in the market? How are they currently positioned in the market? In what segments of the market do they operate? What is their go-to-market strategy, and how does that differ from yours? What threats do they pose that may impact your business? In other words, perform a SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) on each of your competitors and compare them to your company. List the Key Competitors with their strengths/weaknesses in comparison with yourown. Show Specific Competitive Advantages of your solution. Use Numbers to make the comparison. The more numbers, the more solid your companylooks. Use numbers to show market share, your economic benefit, etc. Read more from the TEN Capital Education Center: http://staging.startupfundingespresso.com/education/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    What gives You Competitive Advantage?

    2 min read  Many entrepreneurs are unaware of what gives their product a competitive advantage, confusing anecdotal stories for concrete evidence. Recurring Revenue Competitive advantage increases revenue by 30% over the competition. This creates a loop where the extra money coming in becomes a competitive advantage to improve the startup’s product or offered services. In today’s world, you would think every business has recurring revenue. Yet, most companies that are raising funding did not structure their business for recurring revenue. Recurring revenue helps your business in several ways: Opens up your business to new customers who could not afford your product previously because the one-time payment was too high; breaking the payment into smaller steps means that more customers will be able to afford it. Provides an ongoing revenue stream to plan your business better as you know how much you will have coming in. Helps you maintain engagement with the customer and gives you the chance to find new opportunities to serve the customer. Platform-Based Solution Consider adopting a platform-based approach to your business. A platform-based solution is a competitive advantage over a single product company as platforms reuse the research, design, architecture, and product packaging. Customer support is also turned into a recurring factor. Network Effects Most businesses increase in value as the customer base grows and validates the product/service. When users encourage others to join the platform, it is called Network Effects. As the number of users increases, so does the value of the platform. If a business can harness that customer base and turn it into a community that more aggressively attracts other users, this will become a competitive advantage. Virality Virality is a key competitive advantage in which users invite other users to join your platform. This approach, in turn, reduces your cost of customer acquisition. Though this is similar to Network Effects, Virality is different. Network Effects shows the platform increasing in value based on users interacting directly, while Virality seeks to engage via social platforms online. If you build virality into your product, you will have a trackable pool of prospects to monetize and a lower cost of customer acquisition. Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/how-to-craft-a-startup-story/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    Thinking Like an Investor

    2 min read A start-up’s ability to close an investor can make or break the company; to tie up the deal successfully and efficiently, you have to think like an investor. Understanding what an investor is looking for in a company and its end goal will help you tailor your pitch and supporting documents to appeal to their specific wants and needs. Below, we share with you what investors really want and how investors and venture capitalists make decisions. Continue reading to set yourself up for success. What Investors Really Want Most investors look for startups in which they can find a return on their investment. In the diligence and funding process, what the investor wants is not to lose all their money. Essentially, they want to reduce their risk to zero. As a startup raising funding, you can help the investor find confidence in you by showing the risk mitigation you have put in place. For each concern, you should show how you’ve mitigated that particular risk. For example, when asked: “How do we know the team will execute?” Respond with: “We’ve demonstrated execution so far with these results…” When asked: “How do we know we can sell the product?” Respond with: “We’ve sold X amount so far and will continue using the same process.” Remember where the investor is coming from and show how the risk has been reduced, even though it’s not zero. How Investors Make Decisions Entrepreneurs look at the opportunity in the deal. Investors look at the risk. Two factors help the investor decide to invest or not. The first is the worst-case scenario approach. They look at the worst-case scenario. Oftentimes, this is them losing their entire investment or being stuck in a deal for the next decade with little to no return. However, if the investor can live with the worst-case scenario, then they move forward. The second factor investors weigh when deciding whether to make a deal is reputation. How will this deal impact their reputation? Many have a standing in the community and their investor circle, and this reputation impacts how other investors treat them. They don’t want to be seen as the fool, and if the deal turns out to be a dud or even goes sideways, their reputation takes a ding. In presenting your deal to an investor, consider how the investor will view the deal and its impact on them. How VCs Make Decisions Venture Capital investors make investment decisions as a group. Therefore, you must convince the team to move forward with the deal. After the initial pitch to a VC investor, the startup meets the rest of the investment team and pitches the entire group. The team decides together to pursue diligence. With the diligence results, the team again comes together to make a go/no-go decision. The advocate for the startup makes a case for moving forward with the investment. It’s best to arm your advocate with enough information to make your case. The startup should also remember that the advocate is taking both a reputation and financial risk on the startup, which is never easy. Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/closing-the-investor/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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