You’re building a startup – life’s busy. You’re working hard and dreaming big. So what if the admin and the paperwork falls a bit behind? Well, it could significantly impact your chance of raising funds when you decide to take that route. To make your admin burden lighter, we asked some of our investor friends what documentation they require from startups in order to consider them for funding. Here’s what they said…
Andrea Bohmert, partner, Knife Capital
“Firstly, when approaching an investor, companies need a VERY compelling powerpoint presentation, not more than 15 slides, that really articulates all the major points.
Who are you? What do you do? Why? What is the market need? How did you validate this need?
Market influences: size, competition, regulatory or technological changes? Is there hype (or will there be) and is there growth? External Risk?
Why are you able to play in this market? Key value proposition / differentiator.
How will you go about penetrating this market and gaining market share?
Some financial projections and the key assumptions these are based on. How much money do you want to raise and what will it be used for? How will investors get their money back?
Unfortunately, many entrepreneurs stop here. And that is where many deals fall flat. Because, if I am interested I am going to ask for more information. I might ask for some market research, financials, copies of customer contracts, or an explanation on the assumptions that are the base for the financial projections. And if the entrepreneurs need more than a week to get this information together, I lose interest, as it is a sign that the entrepreneur didn’t prepare for the fundraising process.
Entrepreneurs should have their data room ready to go into due diligence immediately, before approaching the first investor. This preparation will guide them well in answering all potential questions, shows appreciation for the value of time, and will immediately send the signal that one deals with an entrepreneur who is prepared and in control.”
Oliver Drews, chief executive officer, Clifftop Colony
“To “consider”, i.e. Not to “commit”, we need a well thought-through 15 page pitch book covering the proposition, space, market, competition, business plan, description of the technology, product, core team, price to market, customer profile, why and why now?
To take it further we have the customary due diligence list to work through where we help our clients to collect all the necessary material investors will want to see. Financials are obviously part of this, although given the volatility of financial forecasts of high-potential ventures I always think they are in the end of secondary importance to most investors, especially overseas, compared to other factors such as market potential, structure, uniqueness of the solution and the entrepreneurial team.”
Wim van der Beek, managing partner, Goodwell Investments
“First I would like to emphasize that our main investment criteria are more about the quality of the entrepreneurs and not so much about documentation.
However, the corporate housekeeping must be in good shape, including founding documents and agreements that are important for the business e.g. with key clients, employees, co-founders, funders and business partners. It is also useful to have a document trail about important decisions that have been taken, e.g. through board minutes and shareholders resolutions.
And of course the business plan must be up to date, and it must speak to the financial plan and projections.
Last but not least, if the startup has some IP that is critical for its business model, then it is useful to have the proper documentation for that in place.”