Ask any early stage CEO what keeps them awake at night and the answer is most likely sourcing capital and generating revenue. Those same early stage CEO’s would probably also state that sourcing capital is the more difficult of the two. Often these Entrepreneurs have deep knowledge in their areas of expertise, but lack the experience in sourcing capital. The problem is larger for those CEO’s who reside outside the Silicon Valley. So how does a CEO improve their odds of raising capital?
Sourcing capital requires relationships developed over years of networking. Most Venture Capital firms or investors will only return a phone call from those they have known from prior successes. Finding someone with these relationships increases the odds that a venture firm will look at your company.
Finding the right investor requires a methodology. The startup CEO should create an Investor Source Book that not only contains the names, addresses and e-mails of their target investment firms but the characteristics that would make the investor take notice. For instance, in which competitive companies did this firm invest? If not competitive, then in which like-company did they invest? What events occurred that created success for that investor? Did they syndicate a round, and if so, what other venture firms or investors participated in that syndicated round? The investor source book should describe the process for funding from the current stage of growth through to an eventual exit or liquidity event.
Last, the startup CEO should build an investment pitch deck that grabs the attention of the investor. The deck should contain the basics: the thesis, problem and solution statement, value proposition, innovation, differentiation, market size, financials, ratios, exist strategies and other very succinct and attention grabbing aspects of the business. It should be in a language that can be understood by investors. It should be appealing from a ROI perspective, while taking into consideration the associated opportunities and risks.
Raising capital comes from relationships, hard work, a strategy that is well crafted, a presentation that is professional and compelling, and an executed road show that achieves the right number of touch points with the right investors. Finding an expert will improve the odds of raising capital and free up the early stage CEO to focus on strategy and revenue generation.
For more information about Heritage Ventures and how we share in your risk, please contact either Cameron Ackbury Cameron@HeritageVentures.com or Chris Wheeler ChrisWheeler@HeritageVentures.com.