JumpStart: IdeaExchange Blog

The challenges of raising investment capital for your business and how to best prepare for an investor have been well documented by many industry experts. Yet having witnessed scores of presentations over the years I find that many entrepreneurs routinely miss a few key areas. And while there are certainly no guarantees or full-proof plans that will automatically result in successfully raising capital, the following suggestions should help you along the journey:

1. Present your business with energy, enthusiasm and confidence –- if you’re not excited about your business endeavor you’ll have a very difficult time getting an investor excited.
2. Know your business and industry cold – take the time to really understand and segment your chosen market. Know the trends, and consider doing a SWOT analysis on your chosen market (Strengths, Weaknesses, Opportunities and Threats).
3. Know your competition cold –- don’t make the mistake that so many have in assuming that “No one else is doing this”. If your investor discovers a recognized competitor that you should have discovered, you have instantly damaged your credibility.
4. Consider a comparison chart that demonstrates your unique advantages versus key competitors.
5. Clearly articulate your Value Proposition and what “makes your business so special’, and further explain how your unique competitive advantage represents both a significant barrier for your competition as well as a real benefit to your client.
6. Do your homework on the overall size of your market both domestically and internationally. That includes both consumer and commercial applications if applicable (overall market size or potential should approach $1 billion or better to really get the attention of investors).
7. Explain why you or a designated team member are the best candidate to serve as CEO.
8. Secure or “tee up” a deeply experienced management team. The people you surround yourself with are often the key deciding factor in securing investment capital.
9. Present a clear and “executable” plan to exceed $30 million in annual sales potential within 5 to 7 years. Remember that investors have options; they can choose to invest in any number of opportunities from traditional stocks and bonds to other high growth businesses. If you’re going to convince an investor to support your vision, you have to paint a large enough and clear enough picture that makes choosing your plan worth the risk.
10. Make sure the “assumptions” that drive and support your financial projections have been reviewed by experienced personnel so that such key items as unit sale prices and costs per unit have been thoroughly vetted.

As stated previously, in the journey of raising capital there are no magic bullets or guarantees. By incorporating these 10 tips however, you’ll be well on your way to dramatically improving your chances for success!

Darrin is Chief Economic Inclusion Officer of JumpStart and President of JumpStart Inclusion Advisors. He founded and ran his own strategic planning and management assistance firm and spent 16 years in the commercial banking and finance industry. Darrin has an MBA from Baldwin Wallace College and an undergraduate degree from Mount Union College. He has led a series of workshops and seminars on matters of economic development and diversity.

Any entrepreneur looking to grow their business is always thinking (or should be) about how to improve their investor pitch. Once you have an opportunity to get in front of an investor, you want to do everything you can to make your pitch successful. I offered some tips I’ve learned during my years coaching entrepreneurs in my post, ‘Things NOT to Do When Presenting to Potential Investors‘. Last week, a fellow blogger, Timothy Hay posted ‘Entrepreneurs’ Most Common Mistakes When Pitching VCs‘, offering some great builds on the ideas I’d shared.

Some of the key mistakes he shares, and my thoughts on each:

1. Not at least considering the potential of taking your company public someday. - Although IPOs are about as common as Browns playoff appearances these days, shaping your company so that it could conceivably go public is a great way to ensure that you are touching all the bases and thinking big enough. And… you never know… the Browns might make the playoffs, and you could be a candidate for an IPO.

2. Being overconfident. - If you remember, I said in my post that ‘Not Bragging’ is a mistake. You DO need to be confident, knowledgeable and sell yourself and your team. You shouldn’t be overconfident, and act like you have all the answers, however — the VC knows that you don’t. And besides, VCs have big egos — if anyone has all the answers, it will be them! Be sure to be willing to say that you “don’t know” or that you are “unsure” to certain questions, while accepting suggestions from the investors — they have seen a lot of companies, and have a lot of knowledge to bring to the table. The trick is to be thought of as “confident”, but not “overconfident”.

3. Never being audited. - This is directly related to my mention of having your detailed financials prepared - and going a step further to have them audited. This shows potential investors that someone else has validated your books, and mitigates their risk and questions in this area. Despite that, do NOT put the detailed financials into your investor presentation — they don’t care at that point. When I was raising money for my company, Ion Optics, we handed interested investors a CD that had all of our slides, our more detailed business plan, audited financials, articles on the company and technology, and other tidbits. This showed attention to detail, and made the investor’s life a little easier.

Read Timothy’s full post - and share your questions and additions so we can continue to share the knowledge gained through our collective experiences.

Chris Mather is President, JumpStart Entrepreneurs-in-Residence. Previously, he managed a number of technology initiatives in Northeast Ohio for NorTech. Before entering the economic development world, Chris ran a number of technology companies in Northeast Ohio and New England, including Ion Optics Inc., where he raised $6.7 million in venture capital, and Apsco Inc. and Gould Instrument Systems. Prior to that, he spent 13 years in sales, marketing and management roles with Hewlett Packard after graduating from Worcester Polytechnic Institute with a BS in Electrical Engineering.

One of the things I love best about my job is the chance to interact with entrepreneurs on a regular basis. I’m always impressed with their passion, their commitment, and perhaps most, their persistence. Being an entrepreneur is one of the toughest jobs out there, and boy, do I want to make it just a little bit easier (as does everyone at JumpStart.)

So another thing I love about my job, particular as a marketer, is the chance to tell people about the services or events that do make it a little bit easier to be an entrepreneur…and here’s one, particularly for women entrepreneurs in the life sciences. If this describes you, or someone you know, read on…

Springboard Enterprises is a fantastic organization dedicated to accelerating women’s access to equity markets. That’s right. They exist to help women grow their companies faster through better access to capital (Sound familiar? No wonder I think they are great!) Springboard is having its first venture capital forum for women entrepreneurs developing companies specifically in all aspects of the life sciences. Entrepreneurs accepted into the program will first attend a bootcamp, conducted by life sciences executives, investors, attorneys, and other business experts. They’ll then have the opportunity for individual coaching, followed by showcasing their companies to investors in the fall in forums in New York City, Silicon Valley, Austin, and Madison, WI. It’s a 6 month program that supports female entrepreneurs in the pursuit of strategic partnerships, investment, and strategies to ensure sustainability and success. What could be better?

Applications are due by June 1st and are being accepted now at www.springboardenterprises.org. If you think you might benefit, or know someone who does, more details and the application form can be found there. Be sure to check it out today to make your job just a little bit easier!

Cathy Belk is the Chief Marketing Officer of JumpStart. She specializes in branding, marketing communications, and business management. She brings 16+ years of experience in a variety of marketing and business roles, but gets her energy from working daily with entrepreneurs and their growing companies.