Michael P. Moore, director of St. Thomas’ William C. Norris Institute, presented his 10 key issues to address when pitching a start-up company to investors, at the Minnesota Inventor’s Congress Inspire 2015 Innovation Expo, on Thursday, April 30.
Clarity: Make a clear, concise statement of the problem and how the company will profit by providing a cost-effective solution to specific customers.
Reality: Tell your “reason-for-being” story, what you have accomplished so far, and who you will be competing with for your target customers.
Credibility: Give specifics of the founders’ backgrounds, especially what is relevant to this company, and tell about the advisors and others supporting the company.
Practicality: If your product or service is still being developed, describe where it is in the R&D stage and what specific advances must be made before it can be evaluated as a practical product or service.
Validity: Name who outside of your company (preferably potential or actual customers, partners, licensees) with knowledge of the industry has looked at your solution and understood its value.
Frugality: Show how you have used capital and human resources to date, the specific uses of the current round, and your grand plan for the company with full funding.
Accessibility: Tell how you will access your target market and describe the sales process(es) by which you will access the customers who make buying decisions (often not the end users).
Profitability: Show conservative five-year financial projections, but focus mostly on the assumptions for market entry and growth, pricing and gross margins, revenue and expenses that you used in building the projections.
Affordability: Describe how you have priced this round of equity to give investors a reasonable chance of 5x to 10x returns on their investment. Get deal advice from experienced advisers.
Integrity: Provide easy-to-understand support materials, and trusted referrals and resources to investors to help them make an informed decision about the risks of investing. Be readily available to take calls and follow-up meetings with individuals or groups of investors, but be wary of those who insist on negotiating special terms for their investment.