Investor Presentation Development – Fund Raising

Fund-raising is a subject the Company usually wants to discuss only with Investors. However, business partners and customers are also interested and in early days may insist on knowing about it.

Business development executives and Investors prefer that the Company include valuation expectations. However, the Company is advised to be informed on this; but not include it in the presentation unless they are looking for a low valuation.

Investor Presentation Development – Fund Raising

This section/slide of your presentation to investors should address:

  • Investment required at this time. It is important to show the Company is asking for enough money to achieve the next key benchmarks, with enough cash afterwards to raise the next round, and to have a financial cushion. For seed financings this may be 6 months. In all cases it is situation-ally specific. Show the cost to achieve each milestone.
  • Total funds required to achieve key milestones or breakeven. Depending on the situation, achieving key milestones can be much more important than achieving breakeven.
  • Total investment required (total for all rounds).
  • Deliverables tied to use of funds. When/why more funds are needed. Goals achieved by then.
  • Prior funding raised involved the following list of investors
  • Anticipated financial exit, how it will be achieved, and when it will occur. Corporate development units tend to be more focused on how soon production product can be shipped. Financial Investors prefer that the startup will be capable of an IPO exit (implies a level of quality in several ways).

Notes

  • The best investors, from the perspective of future investors, provide funding, have connections to key business opportunities, and furnish strong introductions to superior “next round” investors.
  • Investors will want to understand the “Financial Exit” expectations of the startup officers and the other investors. This includes expectations as to type of exit, when, and investment multiple.
  • Typically a technology company is looking for a small number of key partners/investors with knowledge of a specific domain. However, if the Company is trying to cross diverse sectors, they may be seeking multiple partners/investors to cover all of the key sectors.
  • There is a fair equity plan in place with employees (including founders) on a four year vesting schedule (with cliffs). All put their own employment agreements in place early so that the vesting schedule clock starts “ticking.” For IPO’s or high multiple exits, the “overhang” must be reasonable.
  • It takes at least nine months to get to know the Silicon Valley community well enough to raise funds. Part of this can be done while still resident elsewhere through visits to Silicon Valley. Some corporate funds and others with global-reach can invest from within foreign countries.
  • Startups entering the US market from foreign country origins should note that Investor requirements for staff US market experience will likely be lower outside of the Tier I Silicon Valley Investor community
  • Depending on the CEO, founders, and/or CFO; their internal relationships; and their relationships/obligations to prior employers; there may be written documents and/or verbal commitments that create a host of real or potential equity/IP rights holders that is difficult-to-resolve.

John Gale’s White Paper is Available for Download

This Post is based in part on John Gale’s White Paper, Startup Presentations to Angel/Seed Stage Investors and Partners: Recommendations for Best Practices  This White Paper can be downloaded from:

  • The Business Plans page on this Website
  • It can also be downloaded from this page on the Angel Capital Association website.  The Angel Capital Association is the leading professional and trade association supporting the success of (US) angel investors in high-growth, early-stage ventures

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