Many cases have been seen where in-spite of good business model, promoters have failed to gain sufficient and appropriate funding and mostly rejected for funds.
Through this article we are going to discuss the points that takes substantial role in inducing investors for funding.
1. The problem which the business is developed to solve
This is the first thing that one shall consider at top to engage the investors and make them excited to direct and redirect in your business concept. It involves explaining the current scenario and a quick comparison of situation with the business model.
How to begin : The presentation may begin with a story that is revolving down the problem, highlighting the issue that the business model is accustomed to override, it shall be precise and to the point, and must aim to directly deliver the meaning it want want to deliver. The story can be more appealing if it is inspired by some real incident which you can duly give reference of.
2. Explaining the Solution & Product/Service.
In this section points such as the solution shall be highlighted, it shall consist of products, its unique character, service, attributes and all other features that you want to add in the product/service to solve the current issue.
3. Target Market & their composition.
Here points such as your market composition, the niche shall be described and explained in details to convince the investors that our business model has huge market opportunity, here one shall never use the word “The world is my Market / Entire population” the reason to not use such word is that the investors might think that you did not made proper research about your market/goal/demographic composition, and you lack basic study, etc.
4. The Model of revenue/Money making mechanism.
This section shall consist of the most precise and accurate calculations as the investors are mostly interested here, they want to know how the business in which they are putting their money earns. Here you shall come with revenue models that are recurring and engaging, the business model shall be such that it can earn multiple time with same customer. Investors prefer revenue model that has high customer retention and long term engagement.
5. Professional Experience of Founders
This is a major component that shall explain the details of persons managing the startup, their experience in the said domain, expertization, experience, extraordinary achievements accomplished in the past jobs/education, etc. Ideally the basic team shall consist of person with expertization in Finance, Marketing, Sales, Management, Law, etc. It shall also explain the roles undertaken by founders in past during their Job/business.
6. Details of team and their control on the entire functioning of business
This is the most inspiring and confidence building component that induce investors to invest in your business. Investors prefer that business whose founders are working at ground level and are aware, responsible and accountable for the operations of the business, this shows that business is intended to build strong market, and create value in long run. This shows promoters dedication and involvement in the business and can give confidence that the amount invested in the business will be used for its purpose with optimum return.
7. Customer Acquisition Strategy
This section shall be the final step that you can use to convince, it shall be such that it explains your strategy to find your potential customers, and hold them in long run. The section shall also consist of the cost of acquisition of customers, meaning how much you need to spend in order to attract one customer in your business by way of marketing & promotions. Investors prefers business that has lower customer acquisition cost. You can also refer other marketing forces working organic for promotion of your business such as word of mouth, Press, Media & News, etc. Although organic promotion works great in case of social entrepreneurship.
8. Financial Projection
This section is mostly based on certain assumption and comparative calculations, you can give multiple reference of sources you had used to derive at your financial projection. The calculation shall be accurate and must explain about the Fix Cost, variable Cost, Semi-Variable Cost, further it shall have separate earning charts for most of your services/product. It shall be usually of 3-5 years and must aim to give returns on investment.
9. Peers details
The success of the business depends on the strength of the peer, if the peer is weak with high market share you will be benefited the most and vice-versa. The comparison can be done with product uniqueness, quality, issue resolution time, speed and affordability. However, in every market there shall be competitors and we need to perform better than competitors either by reducing cost of product or reducing the selling price, we will get benefit in both the ways. This section shall also comprise the market share of the competitors and it may be explained using Competition matrix.
10. Funding Details
Here you need to explain about the funding need, ownership details, previous investors details, ,their stake, and returns given so far. Further it shall also explain the need of funds, meaning how much money you currently need & for what purpose?
11. Exit Strategy
This is useful and mostly used when you are seeking funds of $1 Million and onward, Investors need to know about your strategy to exit the market in case the idea does’t work or failed to meet the expected need. You can even use in your presentation, however it is advised that you shall consult professional for drafting about the exit strategy.
You shall be very precise and up to the point in your presentation and avoid any sort of irregularity and be consistent with the steps. You can give reference of your points in other section to keep them curious about the things coming next.
Be fast and complete your presentation in time, meaning that you asked for 10 minutes to explain about your business and even after 15 minutes,you are at slide 4 of 10, which is never a good sign.
You need to value investor’s time and complete your presentation within defined time, and further ask for any doubt/suggestion as per their interest.