Despite the stories you might read about startups raising investment in ten seconds flat as they queue for coffee, it really doesn’t happen that way. Normally, securing investment is a process which you should allocate at least four months to (covering presentations, diligence, term sheet and long-form negotiation) and possibly longer. Before you ask for your first introduction, here’s the basic checklist that you need to have ready.
1. One (or two) page summary
Your executive summary. Usually the thing that will get emailed around and form your introduction.
2. Investment deck
The single most important element of raising investment. Worthy of an entire post, this should cover team, market, product, traction and use of capital.
3. Financial projections for three years
Monthly for Year 1, quarterly for Years 2-3. Generally speaking, anyone who asks for five-year projections from a startup doesn’t know what they’re talking about. One year is realistic, two optimistic and three is a total guess. The good VCs understand this.
4. Detailed breakdown of your competition (and market)
You should expect to be asked for a good profile of your competitors and how you stack up against them. Be realistic-bullshit tends to be pretty obvious here. Also, some macro data on your market is very useful.
5. Some kind of product roadmap
Similar to your financials, you should be detailed in the shorter term (1yr) and more aspirational in the longer term (2yrs+).
6. Some kind of hiring plan
You don’t need to know specifically who you’re going to hire but you should be able to give pretty detailed jobs specs and where you’ll poach them from.
7. Customer references
Obviously the exact nature of this depends on what type of company you are. For a consumer-facing company, expect to share your analytics and prepare some cohort analyses. For a more enterprise-focused startup, have some testimonials lined up.
8. References for the company
At least two e.g. advisor, strategic partner etc.
9. References for each founder
At least two per founder e.g. former investor, co-founder, colleague, boss etc.
10. Shareholder cap table
Current shareholder register. If you’re promised equity to people (e.g. advisors, the mob etc.) make sure you show it here.