No doubt that most readers of this blog, if not this blog post, have seen at least one list of the important elements you need to communicate to an investor. But Jeff Schumacher, founder of BDG Digital Ventures, has a few that I don’t often see in pitch decks in his Entrepreneur.com article How to Become Investable in 13 Steps sub-titled If you want investors to take you seriously, you need to know the answers to these questions. You don’t necessarily need to include these in your deck but be prepared to respond to each and every one.
3. Why now?
Too many founders just assume that now is the right time for their venture because now is when they started up. There are two precursors for a timely startup: the availability of enabling infrastructure at low cost, like Amazon’s AWS, and market readiness, for example the market doesn’t seem quite ready for crypto currency in my estimation.
4. Corporate alignment
What Jeff calls corporate alignment I call partnerships or M & A. How can being aligned with a large company benefit the startup? After Course Technology was acquired by Thomson we were given access to their Canadian field sales force which enabled our Canadian sales at much lower cost to us than building our own Canadian salesforce would have cost. You do have to be careful about how aligning with a corporate partner will look to other players in the market; it may drive away other prospective partners if you get in bed with one dominant corporation.
11. Ecosystem
I recommend to my mentees that they diagram the ecosystem for their product: prospective customers, competitors, vendors, investors, analysts and other stakeholders. This is especially necessary in the case of startups that aim to become platforms. What elements of the ecosystem will join your platform and why?
13. Road map
As founders you need to plan where you want to be in the next 12 months, the next 18 months and the next three years (beyond that is in the realm of fantasy, not planning). You also need to know what resources you will require on your roadmap and how you will acquire them (raising capital, customer revenue, debt, etc.) Keep in mind the revenues tend to lag expenditures, often by weeks if not months.
As I’ve said before, I applaud the efforts of VCs to educate founders through their blogs, books, and presentations at conference. What was an opaque business to us when we started our first company in 1989 has become much more transparent, with the help of sites like TechCrunch and Pitchfork as well as VCs like Jeff Schumacher.
