Pitching to Hard-Hitting Investors

My first column focused on developing a business plan that would have investors pleading to meet with you. The second column provided insights on the swamp an entrepreneur had to survive to get an opportunity to play Let's Make a Deal.

Somehow, you have received the blessing of the trolls who guard venture capital, and an audience has been granted with the mostly Ivy-League-educated, open-collared super-cool money boys, who may have never run a business besides a fraternity keg party. These masters of your future will invite you into a boardroom and ask you to tell them why they should write you an enormous check on behalf of their rich private investors and pension funds. You undoubtedly will quake like Dorothy and wish you were back in Kansas.

How do you prepare for the meeting with the Great Oz? When I prepare for a meeting with investors, I develop a list of questions and write out the answers so I can see my responses.

Here is the list of questions, broken down by category, that investors will ask:

Problem and Solution

• What is the problem you are solving? Professional investors aren't interested in putting money into the next Giga Pet, because there is no one out there wishing someone would develop it. The Gordon Gekko types are looking for corporate and/or consumer pain that needs fixing.
• What is the solution you are providing? Here, you want to provide a short one- or two-sentence description of your superhero solution to the problem.

Market

• How big is the market in terms of dollars? Don't bother coming to a professional investor if the market isn't more than $1 billion and growing.
• Is the market growing, shrinking or flat? Shrinking and flat markets usually invite a yawn from the venture capital gods. A market growing at 20% a year brings a smile to even poker faces.