• How-to

Going to a venture capitalist half prepared is akin to going to battle with one boot on. You will never get far. One of the first things to get ready is all the documentation you would need for their review. A word of caution here. Do not associate documentation with business plan. Only half the venture capitalists anyway read the business plans. And if you are unlucky, your plan may find its way into the hands of many others. Give your business plan only when asked and if you are sure of full confidentiality.

So what other than the business plan? Read on to find out more.

The Teaser
This is what I call the tasting room phase. You need to get the attention of one partner or principal at a VC firm to get a break. For that, creating a two-pager document that gives out just enough for your target individual to get excited is necessary. This document should allow this individual to be able to communicate the premise of your proposal further within the firm and get the core team ready for your pitch.

Ideally, the document should contain the relevant and exciting aspects about your product, its positives, the market for your product and, most importantly, the men who will be at work in your company. If all goes to plan, this document would leave your audience intrigued to find out more and itch to see the pitch, no pun intended.

The Pitch
I hope you have been following the “How to make a Perfect Sales Pitch” article running in this section. The basics remain the same for making all pitches, whether for products or business ideas.

As far as the data in the pitch goes, there are slight variations. Your pitch should contain the accurate and relevant dope on all important aspects of your business idea.

The pitch should let your audience know about your product, what problem it solves, the market, the beneficiaries, your revenue stream, your distribution and marketing channels, your competition and, most importantly, the money that would be pumped in and then harvested when everything goes right.
Quite likely, you would be making a PowerPoint or Keynote presentation. In that case, follow the golden rule of keeping it short. Less than 20, always. You are still not biting for investment at this stage, just making them interested to dig further.

The Supporting Cast
If the pitch goes well, expect the VC firm to do its due diligence work before investing its money. It would like to see your financials and product development documents for sure. Some might also like to see what your hiring plans are over the next five years at a minimum. Filed for any patents? Have the documentation ready. You must also prepare a marketing and sales plan for sure. Signed any contracts in the past? Hire a lawyer to make sure the papers are up to date and correct.

You paperwork ready, it’s time to approach the right people.

This is the second of a multi-part series.

©Entrepreneur March 2010

Tags:
funding, VC, venture capital, venture capitalist