© 2007 Vinny Ribas -From the book “CEO Secrets”

Many people have brilliant business concepts, product ideas etc., and are trying to attract early stage investors. It is important to note than in order to get a potential investor interested in your company or project, you have to work hard at making your company worthy of money. You need to earn your investor’s trust, respect and confidence. Few investors are going to put their hard-earned money into a business or business concept that is not well developed. There are several key things that investors want to know. Depending on what stage the business is at, do your best to show how you have addressed or plan to address the following factors:

1)      The business or concept is viable. Having working prototypes, strong and accurate research showing the need for the product or service and financial feasibility are all key components of proving that the business has a more than average chance of success.

2)      Everything is being done properly, legally and ethically. Use attorneys to draw up all documents, contracts and agreements. Get professional advice on the proper corporate structure for the business. Make sure that your products are in compliance with all related laws. Document everything! 

3)      The founder(s) and the management have invested their time, money or expertise. No one wants to be the only person with “skin in the game”. If the management doesn’t have anything invested, they really don’t have an incentive to go the extra mile to make the business work.

4)      All intellectual property is original and protectable (preferable already protected). Patents, trademarks, copyrights, trade secrets etc. all add value to the company.

5)      There is a large enough reachable market for the company’s products or services. This can be proven with written research, surveys, letters of intent, purchase orders, endorsements etc.   

6)      The company’s management is solid, experienced and knows how to develop the product or service (prototype, manufacturing, distribution etc.). Be sure that someone on your management team has this experience, or document that this is a key position that you are seeking to fill.

7)      The company’s management knows how to market the product or service. Having a strong strategic marketing plan goes a long way toward proving that the company won’t be caught with a warehouse full of product or an office full od personnel with no means of generating sales.

      The financial projections, or pro forma, are accurate and reasonable. It is important that reasonable amounts of capital are allocated in every category of expenses, and that income projections are realistic and attainable. It is always better to under-promise and over-deliver!

9)      The company is capable of raising enough capital not to risk being undercapitalized. Be sure you know exactly what you will need, that you have a contingency fund for unexpected expenses, and that the company has a plan in case unexpected circumstances surface (future rounds of capital, bank credit etc).

10)  There are strong financial indications that the company will be profitable within an acceptable amount of time. This will vary based on the stage that the business is in and the time it will take to take it to market.

11)  The company has a strong and realistically achievable strategic plan in place. Investors need to know that you know what your goals are and that you know how you are going to get there.

12)  The company knows its competition, its potential competition, and how and why it can compete with them. Knowing the competition, their plans, their direction, their niche, as well as current industry trends are all extremely important indicators of how realistically you can compete.

13)  The company has a realistic exit strategy that documents how and when investors can expect to get their return on their investment, as well as how much return on their investment (ROI) they can anticipate. Investors need to know that they can expect a return that is directly proportionate to the amount of risk they are taking, and that they will receive it within an acceptable timeframe.

14)  The investor is offered favorable terms – especially in the earliest stages of the business’s development. After all, they are shouldering a very large portion of the risk. The terms of the deal can make or break a company’s success.

When developing an investor presentation, whether it will be presented in person, via written materials or both, your whole purpose is show that the company has done everything in its power to take as much risk out of the venture as possible for the investors. Prove this by addressing everything on this list thoroughly. Show that you have a viable product or service, a large enough market, strong development and marketing plans, a strong management team, strong financial projections, and that your investors can expect a reasonable return on their investment in an acceptable amount of time. Addressing these key factors will greatly improve your chances of attracting funding at every level.