If you want to raise investment for your startup, you need to cover this.

As an experienced startup CEO and someone who has been living in the startup world for the last 10+ years and now mentors startups globally, I have seen countless founders approach investors when they are just not ready. The house may look good but inside it's absolute chaos. It's important to remember that most investors receive hundreds if not thousands of investment decks and see startup pitches every day, with everyone believing that they are the next Unicorn to go big.?What can you do to stand out from the crowd, because the confidence with which you pitch is only part of what investors look for?

So, what are the top 5 things from my experience that you need to cover before you approach an Investor, that will give you an edge?

A Clear Value Proposition

First and foremost, you need to have a clear value proposition that outlines what your startup does and why it matters.

Cough* Cough* 30 second pitch cough* cough*

This should be a succinct description of your company that highlights the problem you are solving and how you are solving it. If you put the effort in here it shows, don’t be boring, your value proposition needs to be compelling, unique, and easy to understand. (Don’t try and show off how smart you and your team are), communicate why your startup is different from others in the market and why investors will financially and personally benefit from putting their money into your company and not something else.

A Business Plan

Edward Deming once said, “If you can’t describe what you are doing as a process, then you don’t know what you are doing.”

You often hear stories of startups raising millions from a plan drawn on the back of a napkin, but the reality is that it's just not true. Often when you drill into those stories you discover that the impromptu chat was what got the investor interested, but not what secured the investment. Now I might be unpopular in saying this or be seen as old fashion, but you need a business plan.

A detailed document that outlines your startup's goals, strategies, and financial projections. It should include an overview of your industry, a description of your product or service, competitor analysis, a marketing and sales plan, and a financial plan. Your business plan should demonstrate a deep understanding of your market and competition, as well as a clear path to profitability. It should also show how you plan to use the investment to grow your business.

Ok, I can hear people saying but why to bother, no one reads it, the point here is to ensure that you and the founding team have thought through every eventuality on how you will build, grow and develop the company, considering potential and associated strategies. It will also help you better articulate how you will address expected challenges in developing, delivering, and selling your projected product or service.

Strong Financials

As mentioned above, projected financials are an essential ingredient. A financial plan is a numerical description of how the company will operate. Investors want you to demonstrate how the company will financially position itself to generate a high return on its investment. This means having a clear understanding of your startup's revenue streams, costs, and cash flow projections. Your financial projections should be based on realistic assumptions and consider various scenarios, such as best-case and worst-case. Investors will also want to see your startup's financial history, if applicable. Don’t be afraid of this, it’s always very concerning to me when a startup CEO doesn’t have a solid understanding of the business's financial plan or passes the buck to the CTO or Finance manager.

KNOW YOUR NUMBERS, INSIDE OUT AND BACK TO FRONT.

Key figures to know.

-??????Monthly cash burn (how much will you spend a month running your startup pre and post-investment)

-??????Cash-out Date (When will you run out of money if you don’t make any sales)

-??????Break Even Date (When will project sales cover projected costs)

-??????Projected sales growth Vs Manufacturing or delivery capability??

A Solid Team

This should be an obvious one, Investors invest in people, not just ideas. No matter how impressive your product or service is, people are what make a business successful. Hence, you need to have a solid team in place that can execute your startup's vision and a clear plan to recruit the people and skill sets you don’t currently have in the team. Investors want to pay for people that have the skills and expertise to deliver on their roles, not spend all their time learning how to do the basics. This includes having a strong CEO, a talented management team, and a board of advisors. Your team should have a mix of technical and business skills and a track record of success. Also, if an investor is committing their funds to the business, they want to know that the team is fully committed to the startup's success and willing to put in the blood sweat, and tears required to make this business a scale.

Intellectual Property

Finally, you need to have a clear understanding of your startup's intellectual property (IP). This is one area where it’s worth spending some money to get some advice as one of the primary challenges around IP for startups is determining what IP assets your startup has and how to protect them. Many of the startups I see and work with have unique and innovative technologies, which can be difficult to protect and enforce, particularly if they operate in a crowded and competitive market.

Another challenge that startups face is ensuring that they have the necessary rights to use and commercialize their IP assets. This includes conducting due diligence to ensure that your startup has a clear title to any IP assets it plans to use, as well as ensuring that your startup is not infringing on the IP rights of others. Failure to conduct adequate due diligence can result in costly litigation and damage to your startup's reputation.

Ultimately if you don’t have a legal background or the appropriate UpToDate experience to navigate the challenges around IP, you need to work with an experienced IP Lawyer to develop a strategy that considers the business’s risk profile and subsequent needs, goals, and budget.

Although not a comprehensive list, I could go on to talk about data rooms or the importance of corporate governance. Each point raised is a significant part of what’s needed to present a winning formula to an investor. Also, if you are a first-time founder or start-up entrepreneur then don’t be afraid to engage with a mentor or qualified industry professionals who have the knowledge experience, and background to help guide and support you through the process.