There are four things that are important when raising venture capital for your business. You’ll want to have an elevator pitch, executive summary, pitch deck, and product demo/prototype. While every venture capitalist is a little different in how they want to be approached or pitched, having these four items will significantly increase your chances of getting a meeting, receiving a term sheet, and raising money for your business.
The Four Things You Must Have When Raising Venture Capital
Elevator Pitch – Verbal & Written
When raising venture capital for your business you need to have a short elevator pitch. The elevator pitch is the 30-second overview of your business. Things to include in your elevator pitch are what you are building, what problem(s) you are solving, who you are targeting, and how you will make money. The idea of the elevator pitch is to give the person context, but not overwhelm them with details.
Whether you meet with a venture capitalist for the first time in person or via email, you’ll want to have a verbal and written version. The reason being is that when sending an email to a VC you’ll want to provide the context of what you do. From the elevator pitch, the venture capitalist will decide if the business is interesting enough to move on to the next item you should have prepared. Also having a well-written elevator pitch is important when a VC circulates your business to other folks within the venture capital firm. You want them to describe your business accurately and who knows your business better than you.
Executive Summary
The second item you’ll want to have prepared when raising venture capital is an executive summary. An executive summary is a 1 to 2-page overview of your business. This goes into more detail than the elevator pitch and quickly shows the key facets of your business. Things to include are:
- The Investment opportunity/ask
- Overview of the problem
- Your solution
- Market opportunity
- Key Customers or users
- Financials
- Team members
- Contact info
As you can see the executive summary takes the elevator pitch a step further. It includes the same information as the elevator pitch in a more detailed manner with a few additional pieces. The executive summary is not meant to be an exhaustive document. But simply provide the key pieces of your business in a SHORT format. This is the document that venture capitalists will share internally when introducing your company to other members of the firm. Be concise and informative.
Pitch Deck
The third and (probably) most obvious document when raising venture capital is the pitch deck. This is your 10-20 slide deck that goes into greater detail of your business. Now the pitch deck is often the most well-known item. There are various different philosophies when it comes to a pitch deck. You want to have as little as text as possible and use visuals or images to tell the story of your business.
A simple rule of thumb is Guy Kawasaki’s 10-20-30 rule which simply says keep your presentation to 10 slides, 20 minutes presenting and no smaller than 30 point font. This will improve your presentations dramatically. Now one caveat is you will likely have multiple versions of your pitch deck. Sending one that is a bit more verbose or has additional appendix slides is perfectly fine if you are sending a pitch deck over for a venture capitalist to review. The key here is to create a master version then make small adaptations based on the available time.
Product Demonstration or Walk-Through
Lastly, venture capitalists are like kids in that they like to play with the cool new technology or product you are building. Give them a prototype or early mockup for them to click through. The idea is to let them experience the benefits of your product first-hand. It doesn’t matter if your prototype is buggy or simply mockup screens. Venture capitalists want to get as close to experiencing what users will for themselves. Let them have fun with your product and pay attention to how they use it.
If you are sending this over via email you can send a link to a demonstration, a video walk-through, or the actual product if it is already built. Don’t worry about not having it fully functioning or working 100% properly likely the reason you are looking to raise venture capital is to get the product where it needs to be. Don’t be shy and let the venture capitalists play!
What if you don’t have these things when raising venture capital?
Every venture capital firm is different and will want different documents. There are stories of folks getting funded off of just a deck or an idea, but those are few and far between. Often times those types of deals are serial entrepreneurs that have built successful businesses with those venture capitalists in the past. While kudos to you, if that is the case, having these four documents, will put you in a much stronger position to successfully raise venture capital for your business.
Some recommended reading for raising venture capital are below.