KEY LESSONS FOR ENTREPRENEURS STARTING A BUSINESS PART 2

6. Perfect Your Elevator Pitch.

An “elevator” pitch is intended to be a concise, compelling introduction to your business. Your elevator pitch can be modified depending on your targeted audience e.g. investors, customers, employees, or partners. Here are a few tips for coming up with a great elevator pitch:

* Start out strong.
* Be positive and enthusiastic in your delivery.
* Remember that practice makes perfect.

* 60 or 120 seconds in length so you don't bore your audience.

* Avoid using too much industry jargon.

* Convey why your business is unique.

* Pitch the problem you are solving.
Invite participation or interruption by the listener—this shows they are interested and engaged.

7. Nail Your Executive Summary and Pitch Deck.

An executive summary typically is a 1-2 page high-level summary of your company that can be presented to potential investors. A pitch deck is a 10-15 page PowerPoint presentation that lays out more visually the business for prospective investors. You absolutely have to nail both documents. You must clearly articulate:

* Your vision and mission

* The problem you are trying to solve

* The experience and passion of the management team

* The product and its key differentiating features

* The big market opportunity you see

* Your technology or proprietary innovation edge

* The competitive landscape and competitor shortcomings

* Believable projections showing a big upside in the business

* Examples of early buzz or customer traction

Review other executive summaries and pitch decks to help you improve your own. If you have friends who are successful entrepreneurs, ask if you can see and learn from theirs. Plenty of examples are also available online. For example, check out the pitch decks used by Facebook, Airbnb, LinkedIn, Buzzfeed, YouTube, and WeWork.

8. Understand Financial Statements and Budgets.

You must be on top of your expenses and learn how to thoroughly understand financial statements and budgeting. Many startups have failed because the entrepreneur wasn’t able to adjust spending to avoid running out of cash. Establishing a detailed, month-by-month budget is important, and this budget must be regularly reviewed.

Understanding your financial statements will also help you answer questions from prospective investors. Here are some financial statement questions you can expect to get from investors:

* What are the company’s three-year projections?

* What are the key assumptions underlying your projections?

* How much equity and debt has the company raised; what is the capitalization structure?

* What future equity or debt financing will be necessary?

* How much of a stock option pool is being set aside for employees?

* When will the company get to profitability?

* How much burn will occur until the company gets to profitability?

* What are your unit economics?

* What are the factors that limit faster growth?

* What are the key metrics that the management team focuses on?

9. Keep Your Investors Constantly Informed With Both Good and Bad News.

It’s good practice to keep your investors updated on a monthly basis via email. The updates don’t need to be incredibly detailed, but here are some general items you want to consider including in your updates:

*The progress summary of the company

* the Summary of product development

* Team and recruiting update

* Recent press or PR

* Key metrics you are paying attention to

* Financials, including monthly burn rate and current cash position

* Strategic issues you are facing (and ask for advice)

* You want to maintain great relationships and connections with your investors. And you don’t want them to be surprised when you need to go back to them for additional financing.

10. Get All Employees and Consultants to Sign a Confidentiality & Invention Assignment Agreement.

To make sure employees and consultants keep the company’s proprietary information confidential, the company should typically require them to sign a Confidentiality and Invention Assignment Agreement. This form deals with the confidentiality issues, but also provides that the ideas, work product, and inventions that the employee or consultant creates which are related to the company business belong to the company and not to the employee or consultant.

Venture capitalists and other investors in startups expect to see that employees and consultants have signed such agreements. In an Merger and Acquisition (M&A) transaction where the company is sold, the acquirer’s due diligence team will also be looking for these agreements.

Reference
Richard Harroch