See Don't Pitch A Venture Capitalist Without This Checklist
I’m surprised at how many funding pitches I get which lack some of the basic information which investors require before funding. I think this stems from two causes:
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Lack of basic knowledge of the information investors require. I would hope that a competent founder could easily educate herself about what information an investor wants with some basic research.
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A desire to hide important information which you think might be perceived badly, e.g, you raised $6m but are pivoting and would appropriately be valued at a seed level. I think this is bad logic. If you’re talking with an investor competent enough that you’d want her to invest in you, that investor will also be competent enough to surface the negative information you’re trying to hide. By surfacing the negatives early, you help establish a relationship of mutual trust and respect. This is why formal investment prospectuses always have a "Risk Factors" section, and also why I told my former girlfriend (now wife) about some of my idiosyncrasies before she had made any life commitments to me.
I've listed below the points I recommend you cover when pitching your business to early-stage investors.
First, I suggest you send a 7-10 page presentation deck (or link to a deck) with a one-page introductory email. The cover note should include: name, website, location, revenues (if any), detailed financing history (if any), and precise terms on which you are seeking to raise capital. If you are testing the market to see what terms you can get, just say, "We are targeting to raise $X at pre-money valuation of $Y." Investors value getting a sense of your expectations.
Raising capital is about quality of outreach, not quantity. Before approaching any investor, review their website to understand their areas of interest. Most VCs (including ffVC) only accept business pitches via referral.
Here’s our checklist.
One or two sentences about what you do, for who, so they can do what.
Location.
We want to know what qualifies you to execute your idea successfully and better than the five other companies in your space: work history, network, and skills are all key.
Your history is important: did you work together in a prior company or did you meet last week at a hackathon? At an early stage, the key driver of our investment is the people, particularly how hungry and coachable you are.
We almost always require a demo, or at least a mockup.
What is the problem, why does it exist, and how big is the opportunity?
Your value proposition: how you solve this problem faster, cheaper, smarter.
How do you make money? Who pays, how much, from where?
Who they are and how many?
How will you reach/acquire them?
Know every competitor and what are the current solutions to this problem, and why they aren’t addressing your market adequately.
List the major competitors, understand their processes and what your competitive advantage is.
What are the expected revenues, expenses, and EBITDA three years out? How long will this round’s cash last you?
We typically fund companies sufficiently so that they can run 18 months until the next funding, if needed.
How much are you raising and how are you going to use the money? To grow a team, to support overhead, to expand? How much have you raised thus far and from whom?
What is your vision for the future, measured in milestones for the next 3 years?
Note that in our board meetings, we will evaluate your progress against these milestones.
Where are you incorporated?
Are you planning to relocate some or all of your team?
We only know one thing for sure about your business presentation: most of it will be proven wrong. However, we want to know that you are expert in your market and that you have thought about the key issues inherent to your business. As much as possible, emphasize the traction you have already achieved and the metrics you are using to measure that traction.
We suggest you title your deck in this format: [Company Name] [yyyymmdd], e.g., "Klout 20150524". This allows investors to differentiate your file from all of the other files they receive, and also easily track the evolution of your pitch as it changes. Naming your file “Pitch.ppt” does not make you look thoughtful, considerate, or organized.