What Do Investors Want to Know?

The following are some things that would be useful to outline in a presentation to a prospective investor:

Strategy

  1. Explain the problem and how it will be solved
    1. Expert opinion, peer review, explaining the validity of your business
    2. Proof/demonstrations
  2. Explain the timing to have your minimum viable product/service available
  3. What are the company’s top paths to profitability, ranked in order?
  4. Top priorities must be outlined
  5. Growth plan

Use of Funds

  1. Outline the timing and the amounts (in ranges)
  2. It’s preferred that an equity holder’s compensation should be delayed until breakeven/profitable event takes place
  3. Incentives need to be tied to performance

Financials:

  1. Existing income statement and balance sheet if applicable
  2. Budget forecast

Timeline

  • Traction/progress to date?
  • Milestone based funding: Capital is released as milestones are met/proven
    • For example, third party verification of a a test/study

Management Team

  1. Explanation: why your team is the best fit for this project
    1. Strong references may help
  2. Full time focus
  3. History of both success and failures
  4. Incentives are aligned
  5. Skin in the game (Key managers have contributed their own capital and will delay compensation until the company is profitable)
  6. Compensation for founding members aren’t made until a “proof of concept” or “minimum viable product” is achieved
  7. Negligible conflicts of interests with disclosure
  8. Able to pivot/adjust/not stubborn
  9. Honest
  10. Healthy

 

Investment Vehicle

  1. Based in the US, UK, or CA ideally (ideally, the founder will be based out of one of these countries). These countries tend to have reasonable banking and legal systems
  2. Legal: JAMS arbitration in LA county, California with the prevailing party entitled to costs

Reporting

  • At least quarterly reports (sufficient) by email

Risks:

  1. Please explain your track record: Why/how have your past projects succeeded/not succeeded?
  2. Please analyze:
    1. Strengths
    2. Weaknesses (eg. Knowledge, Capital, Human resources)
    3. Opportunities (ie. What markets can be entered?)
    4. Threats (eg. Competitors/Substitutes)
  1. Regulatory/compliance issues?

Offering

  • $X Cash in exchange for Y equity