How to Tell a Good Equity Story

You need to begin the process of building your presentation by first gaining a thorough understanding of what your target investors want to see in both your investment proposal and what they expect to see in you as the CEO.

Realize that most investors are seeking to find holes in either your business model or in you or your team. In other words, they are looking for reasons to say “no.”

Writing a cheque is an exception that comes only after all the possible reasons to say “no” have been exhausted.

Don’t be too quick to take investment from less sophisticated investors. Consider that every investment obligates you to that investor going forward.

Before you start pitching, make an honest appraisal of your shortcomings and your ability to successfully convince investors that you can lead your company.

You may be better off being a successful second fiddle than a failed conductor.

Plan to make a significant investment in honing your presentation style. Once developed, good presentation techniques will last for the remainder of your career and beyond.

Develop an understanding of the hierarchy of business validators that investors look for, and focus your early marketing efforts on targeting strong referenceable and paying customers. Paying customers are your most important trump card in convincing investors.

Make sure your attainable market share fits the objectives of your target investors in advance of first meetings.

Be prepared to explain how and when investors will receive both a return of their investment as well as a return on their investment!

Show such excellent returns in 5 years in your projections, even though investors will be giving you some slack and may be willing to wait longer to get the hoped-for returns.

Well-Defined Exit Plans

Investors expect firms they invest in to build something significant and to take it to exit. Possible exit options including:

  • Go public via an initial public offering (IPO).
  • Merger or acquisition (M&A).

It is advisable to focus at least some of your strategy on identifying and cultivating potential acquirers of your business.

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