What is the best way to submit a plan to a VC ???

VC receive 100s of pitch decks every month. It is hard for VC to evaluate all the pitch decks objectively.

VC receive 100s of pitch decks every month. It is hard for VC to evaluate all the pitch decks objectively.

Thus, the funnel approach is used while filtering. Wherein at the top of the funnel average VC spends less than 15 mins on a pitch deck.

In such a scenario having the right approach becomes very crucial. The approach to

submit a plan to VC has 3 steps

• Investor Identification
• Collaterals for communication
• Channel for approaching

Investor Identification

VCs typically have an investment thesis/philosophy/approach. It is important for entrepreneurs to identify the same for their business and then identify the investors who invest in line with the business.

Critical elements of Investment Thesis for VCs include

• Stage of the business: VCs have a preferred stage of investment in line with their philosophy designed by taking into consideration the following
• Communication to the LPs while launching the fund
• Internal expertise
• Expected returns
• Risk appetite
• Average ticket size & Expected ownership percentage
• Sector and business model preferences

Based on the stage of the business, start-ups are classified into 4 stages to enable ease of communication and standardisation of expectations. Typically, these stages with potential investors are as follows :

more-seed – Friend & Family, Hackathons, Government grants, College Grants

• Seed Stage – Angel Investors, Angel Networks & Incubators
• Pre-series - Family offices, small size VC firms & accelerators
• Series – Mid & Large size VC firms, PE firms & corporates

Average ticket size, expected ownership percentage, Sector and business model preferences can be identified by doing a brief research on the past investment by the VC.

Chances of investor interest is higher when the business and the expectations are aligned with the investor interest.

To know more read our blog on Know Your Investor

Collaterals for communication

All the communication collaterals (as mentioned below) should be prepared beforehand. It is important to ensure the collaterals are aligned with the general practices as the information required varies with investor type, region and business model. “No one size fits all”

Entrepreneurs should devote time towards research while designing collaterals and engage professionals.

As Steve Jobs said, “Packaging can be theatre, it can create a story”. Similarly, collaterals create the brand story. Moreover, ability to sell the brand story to investors reflects on the entrepreneurs’ ability to sell to its customers.

Elementary things like :

• design aesthetics,
• grammar,
• punctuations,
• spellings,
• sentence formation  reflect strongly on entrepreneurs’ attention to details.

 

Having it in checklist as crucial gets to the next stage of building & fine tuning the narrative.

The narrative should be precise and simple to understand. It is important that the narrative is understood by the viewer who may or may not be equally sound with all the terminologies of the business, technology and industry. 

Simplicity is the sign of strength and being able to explain the thoughts in simple language reflects on the depth of understanding of the presenter himself.

The collaterals for communication include

• Elevator Pitch Deck – Brief about the business, team and the vision.

To know more follow our blog – Introduction to Business Plan.

In the times of COVID, addition of video elevator pitch has been observed to create a huge impact. The trend is expected to continue. Video pitch is a powerful tool to communicate with expression and should be used to its fullest potential. 3-5 mins of a crisp, impactful and relevant pitch can do all the magic.

• Pitch Deck – Detailed outline highlighting the business journey so far and the future milestones. Details of the growth strategy & tactics to achieve the milestones.
• Business Plan (Financial Model) - Investor ultimately evaluate the business for investment, basis the potential return they can make on the investment. Thus a 5-year financial model highlighting the business performance in numerical converting into shareholders’ wealth is what will get the investor to write the check.

The idea of financial model is not only limited to the shareholders’ wealth but also to reflect how well the entrepreneur understands the business. The line items for expenses, credit cycle, working capital requirements, etc. are crucial for business management.

Every great product does not turn into a successful business and one of the crucial item in determining business success is how the money flows across the business, thus the financial model.

Channel for approaching

Bottomline cold connect rarely works. Most impactful ways of pitching to the investor includes:

• Pitch sessions dedicated for businesses to pitch amongst the investors. Conducted by various VC firms, Angel Networks, Accelerators, Incubators, College e-cells & independent ecosystem enablers
• Referral through portfolio company
• Investment facilitators

Do note that a  well-researched approach yields better results than shooting in the dark.

Next time when thinking of submitting a plan to VC -  ensure the right course of action -  Research, Collate & Communicate.

What is the best way to submit a plan to a VC ???

VC receive 100s of pitch decks every month. It is hard for VC to evaluate all the pitch decks objectively. Thus, the funnel approach is used while filtering. Wherein at the top of the funnel average VC spends less than 15 mins on a pitch deck.

In such a scenario having the right approach becomes very crucial. The approach to submit a plan to VC has 3 steps

• Investor Identification
• Collaterals for communication
• Channel for approaching

Investor Identification

VCs typically have an investment thesis/philosophy/approach. It is important for entrepreneurs to identify the same for their business and then identify the investors who invest in line with the business.

Critical elements of Investment Thesis for VCs include

• Stage of the business: VCs have a preferred stage of investment in line with their philosophy designed by taking into consideration the following
• Communication to the LPs while launching the fund
• Internal expertise
• Expected returns
• Risk appetite
• Average ticket size & Expected ownership percentage
• Sector and business model preferences

Based on the stage of the business, start-ups are classified into 4 stages to enable ease of communication and standardisation of expectations. Typically, these stages with potential investors are as follows :

• Pre-seed – Friend & Family, Hackathons, Government grants, College Grants
• Seed Stage – Angel Investors, Angel Networks & Incubators
• Pre-series - Family offices, small size VC firms & accelerators
• Series – Mid & Large size VC firms, PE firms & corporates

Average ticket size, expected ownership percentage, Sector and business model preferences can be identified by doing a brief research on the past investment by the VC.

Chances of investor interest is higher when the business and the expectations are aligned with the investor interest.

To know more read our blog on Know Your Investor

Collaterals for communication

All the communication collaterals (as mentioned below) should be prepared beforehand. It is important to ensure the collaterals are aligned with the general practices as the information required varies with investor type, region and business model. “No one size fits all”

Entrepreneurs should devote time towards research while designing collaterals and engage professionals.

As  Steve Jobs said, “Packaging can be theatre, it can create a story”.

Similarly, collaterals create the brand story. Moreover, ability to sell the brand story to investors reflects on the entrepreneurs’ ability to sell to its customers.

Elementary things like :

• Design aesthetics,
• Grammar,
• Punctuations,
• Spellings,
• Sentence formation  reflect strongly on entrepreneurs’ attention to details.

 

Having it in checklist as crucial gets to the next stage of building & fine tuning the narrative.

The narrative should be precise and simple to understand. It is important that the narrative is understood by the viewer who may or may not be equally sound with all the terminologies of the business, technology and industry. 

Simplicity is the sign of strength and being able to explain the thoughts in simple language reflects on the depth of understanding of the presenter himself.

The collaterals for communication include

• Elevator Pitch Deck – Brief about the business, team and the vision.

To know more follow our blog – Introduction to Business Plan.

In the times of COVID, addition of video elevator pitch has been observed to create a huge impact. The trend is expected to continue. Video pitch is a powerful tool to communicate with expression and should be used to its fullest potential. 3-5 mins of a crisp, impactful and relevant pitch can do all the magic.

• Pitch Deck – Detailed outline highlighting the business journey so far and the future milestones. Details of the growth strategy & tactics to achieve the milestones.
• Business Plan (Financial Model) - Investor ultimately evaluate the business for investment, basis the potential return they can make on the investment. Thus a 5-year financial model highlighting the business performance in numerical converting into shareholders’ wealth is what will get the investor to write the check.

The idea of financial model is not only limited to the shareholders’ wealth but also to reflect how well the entrepreneur understands the business. The line items for expenses, credit cycle, working capital requirements, etc. are crucial for business management.

Every great product does not turn into a successful business and one of the crucial item in determining business success is how the money flows across the business, thus the financial model.

Channel for approaching

Bottomline cold connect rarely works. Most impactful ways of pitching to the investor includes:

• Pitch sessions dedicated for businesses to pitch amongst the investors. Conducted by various VC firms, Angel Networks, Accelerators, Incubators, College e-cells & independent ecosystem enablers
• Referral through portfolio company
• Investment facilitators

Do note that a  well-researched approach yields better results than shooting in the dark.

Next time when thinking of submitting a plan to VC -  ensure the right course of action -  Research, Collate & Communicate.