There is a subtle art to raising funds for your business. Here's how to create a succinct, impactful speech.
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Lots of businesses want to raise funds, very few are actually successful. This is because the job of fundraising is poorly understood. And to make matters more complex, fundraising is more of an art than a science.
The one-page pitch
As part of the fundraising process it is essential to prepare a one-page summary of the opportunity. This should be the first piece of information you send out – don’t bombard people with lots of information.
If you can’t summarise your proposition in one page - then you need to go back to the drawing board. Too much information is not helpful. In fact, it’s the exact opposite. The vast majority of people prefer to receive information that they can read and discuss at their leisure, and then indicate whether they are interested.
This document should include a summary of the opportunity; what investment is being sought and what kind of business is going to be generated as a result, including a potential return if it’s possible to identify that. It must be an accurate summary of the business, be clear, concise and easy to read and understand.
The one-page pitch is designed to entice the investor to read further and needs to be crisp and concise and should contain sufficient information to say what is attractive about the opportunity. But it doesn’t need to include:
1. Full financials and cash flow statements – summary information at high level will do
2. Too much information around the products and services – the market definitions are critical and also the market sizing needs to be included
3. The market problem or issue needs to be set out – however, it needs to be succinct
4. The competitive position needs to be explained succinctly and why the business is a compelling story for the market – too much information is confusing, so a high level punchy summary is needed
Once a potential funder is interested they will then want more information. This is where the business deck comes in.
The business deck
The aim of the business deck is to give funders the information they need to make an assessment of the investment opportunity. Your job is to make the exercise as simple as possible for them; i.e. help them get from A to B in their understanding. Avoid information overload at all costs.
Powerpoint can be a useful tool. Although you will likely present this to them in person in the first instance, it should still be able to work on its own – and not require you to be standing there explaining it.
It needs to answer the following questions:
· What is the business?
· Who are the management team?
· What is the market size?
· What is the opportunity within the market?
· How much money is needed?
· What is the money going to be spent on?
· What kind of business will be created post investment?
Essentially, the deck is an executive summary of the business plan. It is also a sales opportunity for the management team to present their business and themselves to the potential investors.
The deck should include:
1. A title slide – this should include the company’s name, a short description of the company and the name of the person presenting
2. Your elevator pitch – a succinct description of your products or services, market, and competitive advantages; use vibrant language; if possible and embedded audio or video
3. Size of the opportunity – investors want to know the potential size your company can grow to and your plans for future development
4. Your specific target customers – who they are and the customer needs that your product will meet
5. The market size – the numbers, the money, the pounds and the pence, including past growth and future forecasts
6. The competition – division of market share, how your product compares to theirs, your value proposition in comparison to the competition’s, and any barriers to entry
7. Your team – who they are, past successes and experience, and why they’re qualified to do the job
8. The business model – how you will distribute your product, pricing strategies and how you’ll reach your customers
9. The time line – when you expect to reach your key milestones
10. Financials – a brief summary of the profit and loss account, the balance sheet and the cash flow projections – and in particular a source and use of funds analysis is critical
11. Funding – how much you’re asking for in this round, how many future rounds are expected, how much you’ll request during those rounds and how the funds will be used
12. The investment opportunity – potential exit strategies and financial return for investors
By following the steps above, you are more likely to be successful at raising the money you need for your business. Preparation, putting in the necessary time, and perseverance are all key aspects of the funding raising process.
Finally, it’s important to remember that fund raising is a combination of a sales project and a numbers game; you’re going to have sell the business to a lot of potential funders before you find the perfect match.