Though I have no experience in pitching to the VCs, I have written this based on my theoretical knowledge, and based on the inputs given by some of my acquaintances. My experience always taught me that people always want things very plain and simple. Though there are a hundred things to take care of in a business, a VC is looking forward to check some simple points in a firm under consideration.
Any VC will look forward for the following simple points:
- Who are you? What did you do till now? What do you intend to do?
- What is your future and why should I partner with you in your future?
- What is in it for me in the future and in how many years?
- Does it suit my investment portfolio and strategy?
Most VCs look for a very strong team that have the relevant domain and management expertise. In fact, this is the only factor that can offset any weaknesses in the business, because a strong team gains the trust of the investor that they know where they are going.
- Who are the Key Founders?
- Who are the Key Advisors?
- Who are the board members, if applicable?
A Quick View or an Elevator Pitch
What does the company do?
What problems do you address or how do you add value to the customer?
What is the target market size?
Why will the customer use it?
Why do you want to do what you want to do? It is about ‘Why?’.
What do you want to achieve in this endeavor? It is about ‘What?’
It is important to see that the Vision and Mission statement realistic, and doesn’t include everything under the sun.
Market and Industry Environment
- Industry or Area you operate in
- Different market segments
- Target segments, Size and Growth rate of the Target segments
- Critical factors in this market, and the target segment
- Situational Analysis of various stakeholders – customers and other participants, competition, suppliers, and distributors, etc.
- Who is your customer? (This is probably the first and the most important question that one has to answer.)
- Why will the customer use your solution?
- Why will the customer pay you?
- What are the alternatives available to the customer?
- Road-map of the evolution of the suite of products and services
- Assumptions made
- Existing Competition
- Future Competition
- What sustainable competitive advantage you have?
- Important revenue and cost drivers of the business
- Pricing and Different customer offerings
- Key partnerships and alliances
Financial till date (if applicable)
- All the audited financial statements – PNL statement, Balance Sheet, Cash Flow, etc.
- Break even path
- Assumptions made
Until here, the document explained all the details about the business background, achievements till date, and the possible market strategies with some assumptions. Now, the document has to convince the investor by showing why this is a good business to invest. One can do that by:
- Showing the competitive advantage that the investor will gain
- Which are the possible companies that might acquire you and the reasons?
- What are the valuations of similar companies in the past after a particular duration?
Capital Required and the Return on the Investment (ROI)
Most VC firms have a strategic advisory panel that will help on the capital required and how to manage the funds. But, an entrepreneur who is paving the future is also expected to know how much money does he need and the reasons. If the business model is decently good, the best way to convince the VC is always to talk about money – Return on Investment.
- Amount of capital needed and the rationale behind it
- Rationale for the allocation of the funds
- Return on the Investment at different time period
- Exit Strategy for the VC
Risks, Gaps, and Assumptions
It is always important to do a detailed study of the best probable investors for your start-up based on the domain and other factors such as the size and stage of the start-up. Following is the list of some top VC firms in India based on the number of investments made till now, it is not based on the value of the investments. Most of these VC firms invest in a diverse portfolio of companies across different verticals like consumer, technology, healthcare, finance, energy, etc and some of the VC firms are interested in only some verticals.
- Sequoia Capital India
- Intel Capital
- Helion Venture Partners
- DFJ India
- Norwest Venture Partners
- Nexus India Capital
- NEA IndoUS Ventures
- Canan Partners
- Kleiner Perkins