Presentation vital in raising capital – Entrepreneurs must know facts to lure investors

As a member of the Utah Angels Venture Group, I often see presentations from aspiring entrepreneurs who are trying to raise capital. While some are excellent, most are uninspiring because presenters fail to provide the information for which potential investors are looking.

By Joseph Ollivier
Brigham Young University

http://deseretnews.com/dn/view/0,1249,575040765,00.html

Most aspiring entrepreneurs trying to raise investment capital do not have a presentation that matches up with the investor’s expectations. Following are 10 suggestions that will help in making presentations to potential investors. See if they don’t give you more confidence when you’re standing before these "angels."

1. Explain the idea and competitive niche as if we are customers to whom you are selling the product or service.

2. Explain the deal. For example, let’s say you want to raise $500,000 by selling common shares at $1 per share, representing a 20 percent stake in the company. We will want to know how you came up with the 20 percent figure, and why you chose to price it at $1 per share.

3. How is the company presently valued, and how did you determine that value? By way of illustration, in the scenario described above, the company would have a $2.5 million dollar valuation. What is it that makes you a $2.5 million company?

4. Who owns shares or major percentages of the company currently? What did they put into the company in return for shares? What options or warrants have been issued or proposed?

5. You need to describe the use of proceeds. How will the money be used? When will the first CPA audit of your financials be completed?

6. A chronological marketing plan is critical. Explain in detail, not generalities, how you are going to produce sales. Be prepared to explain your overall revenue model in detail.

7. Why is the current management team going to be successful? Why don’t they have money of their own? Why do you need investors — specifically, why do you need us?

8. Who are your outside directors and service providers (lawyers, auditors, etc.), and what do they bring specifically to add value to the company?

9. Don’t tell us that the exit strategy is going to be an IPO, a private sale to another company or a merger unless there is someone on your management team who has done that before. At the very least, you need to provide some details about how you expect to accomplish one of these goals. If you say you are going to do an IPO, you should already have an idea of who your underwriters are, as well as SEC-qualified auditors and securities attorneys who will have a comprehensive timetable laid out.

10. You need to have current financials for us to look at, no matter how ugly they are. Also, your plan needs to include program income statements and balance sheets projected for three years, and a one-year cash flow statement.

Expect a frank discussion with very pointed questions and comments. We are not trying to harass you; we just need information. You need to be able to answer all of the above questions within the parameters of a 20-minute presentation. If you can do so, your presentation to "angels" can be heavenly. Or at least not hellish.

Joseph Ollivier is a founding member of the Utah Angels Venture Group and is associated with the BYU Center for Entrepreneurship. He can be reached via e-mail at