By Klara Bergman
The Tri-Counties has never seen such a robust environment for startups.
Spanning multiple industries, ranging from software and clean tech, to food products and new restaurant concepts, dozens of innovative early-stage companies in the region are making noise — and thriving. They’re also seeking one important ingredient to success: funding.
According to recent reporting in the Business Times, since 2010, tri-county entrepreneurs have raised at least $6.3 million through crowdfunding websites Kickstarter and Indiegogo. This year alone, projects in the region have raised more than $900,000.
L.A.’s Tech Coast Angels, the largest angel-investor group in the U.S., has funded more than 200 Southern California startups since 1997 to the tune of $120 million. And scores of other local companies, such as Ventura’s The Trade Desk ($20 million) and Carpinteria’s Procore ($15 million), have secured major cash injections in recent months from California’s most respected venture-capital firms.
While financing is plentiful, getting funding is still challenging. Based on my experience seeing entrepreneurs’ investment pitches at Tech Coast Angels, Maverick Angels, and Ventura Ventures Technology Center meetings, I’ve learned a lot about which entrepreneurs and companies get funding, and which ones don’t.
Here are 10 valuable pieces of investor presentation advice that any entrepreneur can use to increase his or her chances of securing funding:
1) Bring multiple copies of your business plan. Your business plan should include an executive summary and multi-year projections, and be well-written, logically organized and professionally packaged. An arduous preparation will educate both the investor and the entrepreneur.
2) Get coached ahead of time. Identify and use a coach to prepare you to perform and speak like a polished business professional. Make sure your presentation unfolds in a coherent sequence. Exude passion and enthusiasm, but don’t go overboard. Insightful investors invest in the jockey, not the horse. Also, look and act the part.
3) Have a complete senior management team in place. Even if your team will change in the future, smart investors want to see you have the talent to hire and shape a synergistic group of executives.
4) Stick with the facts. Deliver easy-to-understand, realistic pro forma projections grounded in research and market data. Identify, but don’t slam, your competition. And if you’re fortunate enough to already have sales, showcase the results — in a big way.
5) Be overly prepared. Develop and rehearse clear, well-articulated responses to both easy and difficult questions you are likely to be asked. It will pay off in the end.
6) Rehearse as if you’ll be graded. Just as you were evaluated in school, investors will grade your performance and confidence, as well as the viability of your business plan, model and concept. So prepare accordingly. Investors will only back your company if the performance is realistic, professional and comprehensible.
7) Be humble and maintain eye contact. Always remain humble, and be aware of any potential arrogance you might project. Maintaining consistent eye contact demonstrates trust, confidence and honesty. Experienced investors see many deals daily, and although they may sport gray hair (or none at all), they are well aware of the pitfalls and the latest and greatest mousetraps in the marketplace.
8) Be authentic and personable. Even though this is a business presentation, don’t be afraid to showcase your personality and true self. Investors like and appreciate authenticity — and a little humor, as long as it’s appropriate.
9) Don’t be defensive. If an investor grills you about a tough topic, respond honestly and respectfully. Also, fast-forward 10 to 15 years, and answer the question as if you were investing your personal capital in this business.
10) Be gracious, respectful and appreciative. Regardless of the outcome, sincerely express appreciation and gratitude for the investor’s time and consideration. No one likes a gloating winner or a sore loser. Even if you get turned down this time around, an investor may change his mind down the road and still invest in your company.
Securing funding in the current business environment is difficult enough. If you’ve come this far — and it’s probably been a long way — the last thing you want to do is make a critical mistake during your investor presentation that kills the chance of making a deal. When such a golden opportunity presents itself, take advantage of it, and follow the aforementioned suggestions to increase your likelihood of success.
• Klara Bergman is a Thousand Oaks-based entrepreneur, investor, author and strategic adviser to startups and early-stage companies. Contact her at [email protected].