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  • Aisling Quinn

The Ultimate Checklist For Your Startup's Funding Conversations [downloadable template]


As someone whose startup has been on what feels like a perpetual funding journey, I've had my fair share of experience pitching to many different types of potential investors at various stages of MoShoppa's development. Although their characteristics vary, I've found that every investor's line of questioning, due diligence and expectations are much the same. So, what can you include in your investor pack to tick all the boxes and what questions must you be ready to answer?


In this article:


i. 12 items to prepare for a potential investor

ii. 12 questions you're guaranteed to be asked


Key items to prepare for your funding journey


✅ Elevator pitch

An elevator pitch is a brief explanation of an idea, business or concept that can be delivered within the same time it would take to ride an elevator. An initial succinct delivery of your startup's story is crucial to a strong opening - this is where you pique the interest of your potential investor and they quickly gain a high level understanding of your startup, your credibility and your overall potential.


Introduction:

2-liner core statement (Tip! Learn it off so that it's an easy opener for you at every meeting).


Problem:

What gap have we identified in the market?


Solution:

What we do that fills that gap?


How:

What's unique about how we do it?


Proof/Delivery:

Progress, contracts, customers, PoC, any key data points


Goals:

We're here at X but we want to get to Y


Introduction Example

MoShoppa is an Irish AI tech company created in late 2017 by e-commerce experts, former directors of publicly traded companies and veteran AI engineers. We enable anyone to set up their own online store with instant inventory access to the world's top brands in minutes.


✅ Investment pitch deck

A pitch deck is a document (usually PDF) of about 10-20 pages that's designed to give a summary of your company, your business plan and your vision. Often, you'll be required to send this deck in advance of your prospective investor agreeing to meet with you so make sure you've proofread this document again and again and once more for good measure.


Topics to include (in order):

  1. Company Overview

  2. Mission Statement

  3. The Team

  4. The Problem

  5. The Solution

  6. The Market Opportunity

  7. How It Works

  8. Why It Works

  9. The Revenue Model

  10. The Customers

  11. Growth Strategy

  12. The Competition

  13. Financials

  14. The Ask

Not sure of the Do's and Don'ts of an investor deck? Download my investor deck template here.


✅ Financial forecasts

This is an estimate of your future financial outcomes. Although some investors will request projected P&Ls and Balance Sheets, a good place to start without incurring accounting costs is the cash flow projections. These can be created as a basic Excel Sheet to show money in and money out on a monthly basis, usually for 3-5 years. They will give you an idea for your costs, the amount of money you require in investment, and how long it's going to take you to reach profit.


Not sure what to include in your cash flow projections? Download my investor deck template here where the financial slide explains what information to include.


✅ Assumptions

Financial assumptions are critical components of all business plans because they include income and expense assumptions. e.g. how many customers you will acquire per month, what's your assumed churn rate etc. I usually add assumptions as a second sheet on the forecasts' Excel document because this is a good way for readers to easily check back and forth and cross-reference the two documents.


✅ Competitor analysis

A competitive analysis identifies your competitors and evaluates their business strategies to determine their strengths and weaknesses relative to your startup. It's a good idea to create an Excel sheet with the companies on one axis with various features on the other.


e.g.,

1. Name/Website

2. Year founded & location

3. Funding to date (+ any key acquisitions)

4. Pricing

5. USP

6. Target market

7. Marketing strategy

8. What you do that they don't

9. What you do better

10. What you both do well

11. What they do better

12. What they do you don't


You can also create a features analysis of your core competitors, which is much the same as the more generic competitor analysis but at a features level e.g., provides customer support, free delivery, free domain name.


✅ CAP table

A Capitalisation Table is a document that shows the breakdown of a company's percentages of ownership, any equity dilution, and the value of equity for each round of investment by founders, investors and any other owners. This is an essential document for DD because it reflects the legal and equitable standing of each shareholder with regards their rights and ownership of the company, and it shows the various valuations of the company at each stage of investment.


Proof of customer contracts (if any)

A table of contracts is a good way to show your market appetite. It's not essential but a great means of validation if you already have customers. If not, include a slide of a pipeline of warm leads in your investor deck to show that there are active conversations taking place.


Business plan (depending on the funding type)

Some types of investors will be more traditional than others in their requests for documentation. For example, Enterprise Ireland require a business plan for their various grant applications. This is a lengthy and time-consuming document that acts as the blueprint of the company. It has its uses but it's as boring to write as it is to read - so an alternative, more agile form of a business plan is this fast, effective and concise once-pager: Ash Maurya's Lean Canvas model.


Statutory documentation

If you've registered your business, you'll need to show your prospective investor all the relevant legal documentation such as your company's constitution, articles of association, Form A1s etc. Moreover, if you've filed its accounts or if you've been audited, these statutory accounts will be considered in detail by your prospective investor. In the absence of this documentation, show your most recent management accounts and be prepared to discuss them.


Key questions for which you must have a polished answer


How will I be repaid my money?

What happens when my money runs out?

How are you taking in this money? (Convertible loan note, pure equity play?)

What is the valuation of your company? How do you stand over this valuation?

What are you looking for from this investor? (A seat on the board, cash only, connections?)

Who else has invested?

How are you different to your competitors? What do you have that they don't?

What is your monthly burn rate? Does this increase pro rata as you scale?

What is your growth strategy? Does this mean more funding down the line?

What salary are you, the founder, taking from the company?

How much have you, the founder, invested in the company?

What is your exit strategy? Can you prove this is a viable option?


This might seem like an overwhelming amount of work but don't be put off, you know your startup better than anyone, so it's just a matter of formalising what you already know and contextualising it in a way that's suitably digestible for your prospective investor.


To keep you on the right track, here's a FREE downloadable checklist: Download checklist here.


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