How can you be more successful with your fundraising efforts?

Forget your fancy PowerPoint slides, dynamite demo and tremendous track record. If you can’t tell a simple and compelling story about your business, you won’t get past first base with an investor.

Surprisingly, many entrepreneurs don’t tell a story that includes the simple answers the key questions that investors need to answer first. And most startup CEOs don’t do this well — even though the basic elements of a compelling investor pitch are freely available and have been common practice for years. (Several investor pitch resources listed below.)

Every angel investor (or VC) needs to hear your answer to these basic questions to consider investing in your company. Miss one of these key elements and your story is incomplete.

The basic angel investor pitch

1. Introduction

• What exactly does your company do?
• What is the key value proposition?

2. Team

• What is the background and story of the CEO?
• Who are the key employees and advisors?

3. Problem/Opportunity

• What is the problem you are going to solve?
• How big and urgent is this problem for this market?

4. Product/Solution

• What specifically is the product or service?
• How does it address the market problem?
• What is the current stage of development?

5. Technology

• What the secret sauce technology or unique delivery approach?
• How is this defensible?

6. Competitive Advantage

• What are the key market segments and current competitors?
• How are you different and better than competitors?

7. Business Model

• How do you make money?
• Is this a common or standard model in your industry?

8. Go To Market

• How will you build awareness and grow sales?
• What traction do you have so far with customers?

9. Company Status

• Current number of customers, employees
• History, accomplishments and status

10. Financials

• Expected (pro forma) revenues, expenses, profits/losses for 5 years
• What are the key factors that drive this business?

11. Investment

• How much money are you raising at what valuation?
• How are you planning to spend this money?
• What are some likely exit scenarios?

This isn’t a revolutionary approach. This is the simple form of the standard investor pitch that has been been used for years.

Is there just one way to tell the story? Of course not. Only eleven slides allowed? Every investor and every startup is different, so make the adjustments that make sense. Also, a great presentation won’t make up make up for a mediocre CEO.

Your basic startup story gets you in the game with investors. Your selling skills, your knowledge of the business and several other factors get across the finish line to raise money.

It isn’t easy, so don’t avoid the fundamentals of your startup pitch.

Popular investor pitch resources

• Guy Kawasaki’s 10/20/30 Rule of PowerPoint for investor presentations
• Detailed outline with explanations from investor Bill Reichart
• Deloitte and Touche presentation outline with notes
• Outline and example slides from Alliance of Angels

What investor pitch resources or suggestions are most valuable to you?

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There are several active angel networks in Arizona: Arizona Technology Investor Forum (ATIF), Arizona Angels and Desert Angels. Smaller angel groups and events are growing too.

These angel investor groups provide a formal process for a network of investors to learn about new businesses and evaluate investment opportunities. They each have a screening process to select the best deals. Selected entrepreneurs are then invited to present at regular group meetings. Some networks invest as a group, while others invest individually.

Active Investor Networks in Arizona

Arizona Technology Investor Forum (ATIF)
ATIF members have directly invested $2.3 million in technology startup companies based in Arizona since 2007. ATIF focuses on technology ventures that are seeking seed or early-stage funding.  www.atif-az.org

Arizona Angels
Arizona Angels is a network of investors that reviews and invests in a variety of startup and early stage companies based in Arizona. www.arizonaangels.com

Desert Angels
Desert Angels is a Tucson-based investment group that reviews and invests in early stage startups in a wide range of industries.  www.edesertangels.com

Invest Southwest Capital Conference
While it is not a formal investor group, the annual Invest Southwest Capital Conference is a premier forum for Arizona companies to present to angel and venture capital investors. www.investsouthwest.org

Northern Arizona Angels
Northern Arizona Angels is affiliated with the Northern Arizona Center for Emerging Technologies (NACET) in Flagstaff. www.nacet.org Contact Rick Gibson for information at rick@hotventures.com.

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Additional Angel Network Resources

• Inc. Magazine directory of national investor networks
• Angel Capital Association directory of angel organizations
• Arizona Angel Investment Tax Credit The Arizona state Department of Commerce provides state tax credits to investors who make capital investment in participating small businesses
• TiE Arizona The Phoenix chapter of TiE – a global support organization for entrepreneurs

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The most common reason to create a formal advisory board is to allow you to promote the stellar credentials of your advisory team to the world. In return, a well-known advisor will typically get something valuable for their advice and use of their name – stock options are a typical form of payment.

Before you get formal, I recommend that you make the most of individual relationships with informal advisors and mentors. There are plenty of experienced business leaders who will gladly discuss and offer perspective on the big questions of your business without having a formal relationship or even payment.

You should cultivate at least ten trusted advisors and mentors that you can call on occasionally to ask for advice on the big questions in your business. These informal (unpaid) advisors may include successful leaders in your industry, a former boss, coworkers, other CEO’s, parents or friends.

Networking and cultivating these relationships takes work, but experienced advisors can provide valuable perspective and guidance when you need it.

Keys to working with informal advisors:

• Learn from successful people. You should only ask qualified and capable people to offer advice, not just anyone who has an opinion. Learn from mentors who are successful in their field, capable of understanding your situation and who have offered to help at some time in the past.
• Share your problems and your personality. Advisors are the most helpful when they know you very well and are familiar with your situation. The more they know about you, the more they can help.
• Ask for advice. Most experienced businesspeople will respond with gusto if an earnest entrepreneur they know politely asks for their time to offer some advice. “I’m working on a big idea and I would like to run it by you to see what you think, if you have a few minutes for a call or coffee.”
• Be considerate. Advisors and mentors will continue to provide useful insights if you appreciate the value of their time and show respect for their advice. Pick up the tab for lunch and send a nice thank you note after you meet.
• Don’t abuse their generosity. An occasional lunch meeting is fine. Calling every week and taking too much time will burn out your network. If you ask an advisor to do actual work for you, then you should start paying them.
• Take some advice. Not every recommendation should be acted on, but if you ask for advice from qualified people and never take it, you are not learning from the mistakes and experience of others. They will also stop helping you – what’s the point of their effort?

Remember, one of the best things these people offer you is an outside perspective. They are not working all day and all night in your business. You probably lost perspective the moment you got crazy about your business idea long ago.

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