So you have decided that you need to raise some money. You need a rich champion who is prepared to believe in you and your project and put some money in to help you get to the next stage. You need an angel. It is good that you have come to a decision and determined this, but now what? What should you prepare before you go off searching for this ‘knight in shining armour’?
There are three main things that you have probably heard about which you may need: an elevator pitch, a pitch deck and a business plan. In this article, we explore what these are and when you might need them. The next article in this series, discusses what goes into each one.
This is a 20-30 second verbal summary of the business and proposition. There are no slides, no paper. Although you are unlikely to jump bump into someone with both the means and desire to invest in your business in an elevator (especially in these socially distanced times), it is still important to be able to succinctly, eloquently and fluently describe what it is that someone is invested in. You would mainly use this at the start of a Zoom / Teams call with a potential investor as an introduction (or at the start of a meeting ‘over coffee’ in post Covid-19 times).
This is a slide deck of 10 to 15 attractive looking slides which detail the proposition. This needs to be focussed and well polished. You would use this both when ‘pitching’ i.e. standing up in front of an audience Dragon’s Den style either virtually or physically and so you should be able to talk through the slides and answer any questions which are then raised. You should aim to spend between 1 and 2 minutes on each slide and so your entire pitch should run between 10 to 20 minutes which is typically how long you are given to present.
A pitch deck (or a PDF of it) is the most common document to send around first when engaging with a potential investor online. It should therefore be able to stand alone and not need you to talk to the slides for them to make sense. Ideally, the pitch deck shouldn’t contain any sensitive information so it can be shared without the need for NDAs and you can deliver it to a room of people who you do not know without worry. If you ask for NDAs at this stage it will:
- Delay proceedings
- Risk the perfect investor not receiving your pitch deck – because they may be reluctant to sign
- Prevent the angel from discussing your proposition with other angels. (HINT: Angels often like to invest in consortia to spread the risk and, when they are tempted but not sure of a proposition, they will want to sound out trusted friends and colleagues before committing
This is a 15-25 page document which provides even more detail on the proposition. It will basically cover the same information as the pitch deck but will go into more depth. The business plan is really only used with people who are pretty serious and who, having seen your pitch, want to find out more. This document can contain confidential information and so should only be released after the signing of an NDA or similar document. This document is used for closing so it has to look good, be free from typos and have excellent grammar. It should be well formatted, pleasing on the eye and therefore easy to read. Although used rarely, you really should prepare a business plan before you start approaching anyone as, if interested, things can move pretty quickly. It gives a very bad impression, if it take your 3 weeks to supply a business plan after you have had a conversation with someone, shown them your pitch and they have shown interest.