When it comes to raising capital for your startup, it can be an overwhelming but necessary step in order to scale your business. In a recent Forbes article, 2018 MIT Platform Strategy Summit attendee and Voices.com CEO David Ciccarelli identifies four documents that are key to helping you raise capital for your company.
1. A One-Pager Company Profile
This is your executive summary in an easy-to-digest document, a graphically designed PDF, that gives potential investors their first impression of your company. It answers basic questions like how big the market is, why they should invest in you, and why they should do so now. Packing your information into a content-rich document like this will show that you’re organized and serious about the fundraising process.
2. A Confidential Information Memorandum
The Confidential Information Memorandum (CIM) is a 40-100 page presentation covering every aspect of your company in high detail. This is where you let the information about your company shine. This comprehensive document will provide an in-depth look at your business through growth rates, SWOT analyses, product overviews, organizational charts, and financial statements.
3. A Pitch Deck
The pitch deck is your opportunity to personally address the investment committee. Give yourself 10 slides and deliver a presentation that shows you are passionate, enthusiastic, and someone they would want to work with.
Pitch Deck Structure: You can find great examples of pitch decks on SlideShare. A 5-point formula that worked for us when we recently raised $18 million from Morgan Stanley Expansion Capital was: capture, highlight, ask, summarize, and thank. To elaborate, capture the audience’s attention in the first slide or two by using an attention-grabbing figure like the size of the total addressable market and the percentage you are penetrating. Next, highlight the market problem and drive home the solution that you offer. Close out the presentation with “the ask.” Don’t be afraid to put the number on-screen at this point, and outline what you intend to do with the funding. Finally, summarize your presentation and give highlights of a potential investment with metrics proving the opportunity before them. Be sure to thank everyone for their time, and use the questions you didn’t have the answers to as an opportunity to follow-up.
4. A Financial Model
This spreadsheet projects the performance of your company into the future and includes the core financial information such as the company’s income statement, balance sheet, statement of retained earnings, and the cash flow statement for your historical financials. When it comes to your projections, describe the inputs you used to get the figures you did and back up those inputs with historical data or market research. Remember that the financial model is crucial; It keeps the conversation going following the pitch and shows that you’re able to speak the language of finance, something investors want to see in a company they will potentially be working with.
Pitching to prospective investors is, no doubt, an uncomfortable and stressful experience. You need to put your company under the microscope and dissect it, which can be time-consuming and revealing. But for all the hair-pulling and nail-biting, there are rewards to reap. If at first you aren’t successful, you at least have the framework for your next pitch. In the best-case scenario, not only have you secured funding to fuel your future growth, you have also created a compelling case for why your business is poised to achieve great success.
David Ciccarelli is Co-founder and CEO of Voices.com, the online marketplace that connects business people with professional voice over talent. You can read his full article in Forbes here. You can also learn more about entrepreneurship and the entire venture creation process in the week-long Entrepreneurship Development Program (January 20-25, 2019).