Updated: Apr 7, 2020
All startups are not investor ready. Founders need to prepare their story and develop their pitch to support their story of startup. At early stage,investor invests in story of a startup. So what does this story entail?
Market size & Customer- The first part of the story is about the opportunity that founders believe in. What is the market , how big is the opportunity. Who are the potential customers, which segments. The clarity about market is one of the foremost things.
Traction- To get investor ready let most of the heavy lifting be done by the numbers. If you can show some early traction, improvement in sales, product adoption numbers then as a founder, there is very little pitching needed. As a founder, try to get early traction numbers showing good growth rates for several weeks( 8-10 weeks) with 5-7% growth week on week.
Founding Team- This is one of the single most important factors. Founding teams with complimentary skills and right domain focus can get noticed by investors quickly. Flaunt your relevant experience. If you are a startup in hyperlocal delivery and your founders have worked in Swiggy or instacart then by all means talk about it, mention in your pitch deck.
Here is a look at key questions that typically investor would like to know. Although is there are many questions, Eventually this questions allow the founders to think about the opportunity from multiple perspective. Market
What is the market size of the opportunity, total Addressable Market (TAM) and what is the Serviceable Addressable Market(SAM)?
What percentage of the market share do you hope to get?
What is your focus market B2B or B2C OR both
Who exactly is your best customer/segment?
What are the key supply demand factors & trends in the target market?
How do you come up with these figures?
Who do you most aspire to be like?
Who do you least want to be like?
Why is this the right time for this product or service?
What is your marketing or Go To Market strategy?
What is the current user adoption rate? How much feedback have you received so far?
Has growth been linear and consistent?
What changes have you made based on that feedback?
How many actual users do you have?
How long do users stay on average?
How many actual sales have you made?
What is the annual growth rate?
Total rate of growth?
Has growth been linear and consistent?
What has held back your growth?
Can you provide a demonstration of the product or service now?
Who are the founders/core team members? What is their previous experience
Who are key team members? What are their roles in the company? Who is the tech person and who is the business person?
Any existing board members?
What key roles may need to be hired for soon?
What experience do you have in this industry?
Why are you the right person to bet on to achieve this?
What motivates you/ reason for starting this business?
Are there any other people who may claim they are owed or responsible for your ideas
Who are your direct competitors?
Who are your indirect competitors
What are your strengths and advantages over your competitors?
What are your weaknesses or disadvantages?
What barriers to entry for your competition?
Why haven’t your competitors done this yet?
How do your features differ?
How do you compare on price?
How do you compare on service?
How do you compare on customer satisfaction?
What are the Capex requirements in next 12-18 months?
What is your burn rate?
What are your per customer acquisition costs?
How much is your customer lifetime value?
How much equity and debt has been raised in the past?
Who participated in earlier rounds of fundraising?
How long will it take to become profitable?
What are the key metrics your team is focused on?
What stock options have been given already? What is the distribution of equity between founders?
What is unique about the company?
What big problem does it solve?
What legal risks do you see?
Are you aware of any product liability risks?
What regulatory risks could impact this business?
What intellectual property do you own?
Who developed any intellectual property owned?
Have any employees or partners have left who may challenge these rights?
Are there any additional patents pending or planned?
How are any current intellectual assets owned?
Use of Funds
How will these funds be allocated?
How much will be spent on founders’ salaries?
How much will be spent on overhead versus expansion?
What if you don’t get all the money you are asking for?
What assets will be invested in with this capital?
What are your milestones?
What are the biggest risks to my investment?
Why are you choosing this method of raising capital?
How much of this money will be used for future fundraising efforts?
How much are your personal expenses each month?
Which specific marketing channels are you using?
Why are you using these marketing channels?
What is your plan B if these sales channels are interrupted?
What profit margins are you operating on?
How will scaling impact profit margins?
What pivots have you already made up until now?
Can you tell me a story about how a customer has decided to choose you and their experience with your product?
What other streams of revenue can be added to this?
How is the company currently organized?
Who holds which titles?
How are shares split?
Is there an existing board or advisers?
Where is the company registered?
Who handles accounting?
What unique skills and talents does each owner contribute?
Name someone you chose not to include as a founder and why?
Who filed the company?
Who is the registered agent on record?
Existing Financing Round
What is your exit goal? (i.e. IPO, M&A)
What is your expected time frame for this?
Who do you imagine will help you exit?
When do you expect you will be conducting a follow up round of fundraising?
How much is your pre-money valuation?
How are you determining current valuation?
How much are you trying to raise now?
How many previous investors will participate in this round?
What is the next milestone this money will take you to?
How else do you hope an investor will help beyond money?