The seed round starts in seconds, seconds that pass the slowest. VCs scan you with their steel-cold eyes in silence, and the silence is not broken by sweat and sweet dreams. Dreams they’ve seen countless times in their fights throughout their life, and life has seasoned them in this dance of dollars and dreams. But for you, it may be your first pitch. Unfair? Not necessarily.
Here’s the twist: while the stage might seem rigged against the newcomer, with the right knowledge and preparation, the scales are balanced. Knowledge is the greatest equalizer, and by the end of this article, you’ll be equipped with invaluable insights into what it takes to be funding-ready, distilled directly from successful entrepreneurs who have navigated this journey countless times.
Bootstrap for as Long as Possible
“I wish I knew I didn’t need investors.”
– Emil Åkesson, Chairman & Founding Partner at CLC & Partners
When You Decide on Seeking Funding
“I wish I knew how mentally and physically tough you need to be….. “
– Darren Coxon, Senior Consultant at CLC & Partners
Find the Best Funding Method for Your Startup
Seek Strategic Partnerships Over a Bag of Money
Revenue: First and foremost, investors are not charity. They are interested in your business for the sweet ROI (return on investment). The higher the potential return, the shinier your startup becomes. However, they know high rewards often come with high risks and always weigh these two against each other.
The Fear of Missing Out (FOMO): Investors have FOMO hardwired into them. They are constantly on the lookout for the “next big thing,” and their biggest nightmare is saying, “I knew them when they were just a garage startup.” Make them understand your startup is that story waiting to happen.
Due Diligence: Investors do not like risks, and they will scrutinize every aspect of your startup. From your business model, financials, and market size to your team, product, and competition. Expect to be on the hot seat.
Long-term Viability: Many investors look for startups with long-term viability. They’re not just investing in the current product or prototype but in the potential to innovate and dominate the market in the coming years.
Signs of Weakness: Certain red flags can spell “pass” for many: lack of revenue, limited runway, no other offers on the table, lack of traction, unrealistic projections, buzzword overload, and lack of transparency.
Signs of Strength: On the flip side, there are attributes that make you incredibly attractive to investors: a steady revenue stream, profitability, multiple potential investors, a strong and competent team, being in an up-and-coming sector, clear market opportunity, a robust revenue model, and scalability.
Make Sure You Are on the Table, Not the Menu
In the startup battlefield, the investment arena is the frontline. You need to gear up and face the barrage of questions, skepticism, and challenges thrown your way. Being well-prepared will allow you to articulate your vision with precision and clarity and also demonstrate the solidity of your concept and the depth of your commitment to it.
Mind Over Matter
As much as a startup pitch is about presenting the facts and figures, it’s equally about the energy, the story, and the charisma you bring to the table. You want to project confidence and authenticity, not a rehearsed script.
Think about it. Investors listen to numerous pitches. What’s going to make yours memorable? Humor, passion, and genuine engagement can set you apart.
Seriously, make them laugh. Get the good hormones to do the work for you. If you can get them to say ‘Oh, remember that one guy?’ moment the next day, that’s a win. Our brain remembers better when things are associated with emotions.
Practice Makes Perfect
On the practical side, preparation is paramount. Don’t dive in blind. Practice until it’s a part of you, a thousand times if necessary. Whether it’s in front of a mirror, getting feedback from friends, or running through the presentation with your co-founders, it all helps.
Some people even prepare a script like a Broadway play, including pauses, intonations, and even jokes. Others prefer a more spontaneous approach. Whatever suits you, make sure you become comfortable with it, sound natural, and remember it’s not a monologue.
In conclusion, be genuine, be confident, and be well-prepared. It’s about forming a connection, making an impression, and, above all, believing in your vision enough to make others see it too.
At CLC & Partners, we apply a revenue-first methodology. We focus on making businesses both profitable and sustainable. This strategy doesn’t just attract investors; it retains them. Once we complete refining the revenue model, we shift our focus to perfecting the pitch. A solid financial foundation is paramount, but the ability to convey its merits convincingly to investors is equally crucial.
If this approach resonates with you, we are here to guide you.
When it comes to crafting a good pitch deck, your passion needs to shine and readiness be evident. Stay true to your voice and style, and adjust it accordingly to your startup. In addition, it’s always good to violate the norms a little bit. After all, the most memorable ones are those that dare to be different.
If you’re seeking a general framework, consider the following guidelines:
“I wish I knew 9 out of 10 start-ups fail, not just from business challenges, but because they start with their own vision and not the eyes of their target audience.”
– Robert Leon Karlsson, CMO at CLC & Partners
Call to Action
Be Skeptical of Large Offers
There might be times when investors, recognizing the potential of your idea, push to invest more than you’ve asked for. While it might be tempting, it’s wise to resist since you may end up giving away more equity than you need to. If you’ve determined you need two million, don’t get swayed by a ten million offer. Accepting such offers can unnecessarily dilute your ownership, diminish your say in your business, and lead to remorse.
By resisting such offers, you not only protect the essence of your startup but also convey a deep-rooted belief in its trajectory. This solid stand will safeguard your vision and position you in a place of strength during negotiations.
Failure is Feedback
Success is Successive
Investor Readiness Checklist
I. Corporate Governance:
- Board of Directors:
- Meeting Minutes
- Shareholder Agreements
- Articles of Incorporation
- Compliance with applicable laws and regulations
- Conflict of Interest Policy
II. Financial Documentation:
- Audited Financial Statements
- Current Year Budget
- Financial Projections
- Cap Table
- Unit Economics
- Burn Rate Analysis
III. Pitch Deck:
- Problem & Solution
- Market Size & Analysis
- Business Model
- Revenue Model
- Competitive Analysis
- Marketing & Sales Strategy
- Traction (Customer Growth, Revenue, Partnerships)
- Team Overview
- Ask Slide (Investment ask, Use of Funds)
IV. Operational Metrics:
- Customer Acquisition Cost (CAC)
- Lifetime Value (LTV)
- Churn Rate
- Monthly Recurring Revenue (MRR) / Annual Recurring Revenue (ARR)
- Net Promoter Score (NPS)
- Product Metrics (usage, engagement)
V. Legal & IP:
- Intellectual Property:
- Contracts & Agreements:
- Customer Contracts
- Supplier Agreements
- Employee and Contractor Agreements
- Litigation and Legal Compliance
VI. Market Validation:
- Customer Testimonials
- Case Studies
- Industry Awards and Recognition
VII. Technology & Product:
- Product Roadmap
- Technology Stack
- Data Security & Privacy Compliance
- Founders & Key Management
- Advisory Board
- Organizational Chart
IX. Exit Strategy:
- Potential Acquirers
- Industry Multiples
- Projected Exit Valuation
- Insurance Coverage
- Real Estate and Tangible Assets