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Monday, October 19, 2009
Keys to getting VC Funding
At Watermark, I get the same questions time and again from entrepreneurs looking for additional capital for their companies from VC and private equity sources. All these questions can be distilled down to one… ”How do I get additional funding for my business”
Five Keys to getting VC Funding:
1.Company projects a minimum of $50-75M in annual revenue in 3-5 years.
2.Elevator Pitch clear message explainable in 15-20 seconds.
3.Should be a very clean balance sheet, capital structure (not several different classes of stock), etc.
4.Stick to a 10 to 12 slide and no more than 20-25 minute PowerPoint.
5.Show a deal that has proven out the business model(s) through driving revenue and just needs capital to grow/scale the business.
PPT Slides (Make sure there is some visual representation or “eye candy”):
1.Title and contact information
2.“State of the World” as it relates to your business and the “Problem”
3.Clear definition of “The Problem” with specific example
4.“The Solution” with example (backed by case study and revenue drivers)
5.“Business Model” (how you make money)
6.The “Secret Sauce” (showing your strategic advantages)
7.Sales and Marketing Strategy (give current and historical with how you adapted if applicable)
8.Competition (current major industry players and up-and-comers)
9.S.W.O.T. Analysis - Strengths, Weaknesses, Opportunities and Threats (tie all of the above together with bullet points)
10.Management Team (Make sure there are at least 2-3 senior executives with operational experience and a track record scaling a business – preferably to a liquidity event)
11.Projections (metrics/benchmarks/timelines are very important)
* Be prepared to immediately send backup materials to interested parties including detail business, strategic and marketing communications plan as well as historical financial statements (audited if possible) and a detailed proforma based on those historical financials and real market data from industry researchers (i.e.: Forrester, Gartner, Frost & Sullivan, IDG, et.al.)
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Your Five Keys are a bit misleading as far more is required for a successful funding.
A good read none-the-less.
Thanks for your input. The outline was meant as high level key points VC usually look for before moving to the next level of interest in a deal. At least this is true for me and my colleagues. Best regards, Tom
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