Preparing to Succeed

As you are searching for investors to invest in your business, you need to prepare for what lies ahead. 

Investors ask questions. Lots of them and they expect you to have the answers. Being able to have the answers ready before they are asked is key. Being able to provide documentation & support to your answers is a winning formula. 

Why Does Preparation Matter?

Investors put their money in your business. They want to feel warm and cozy inside knowing that you are taking care of their interests and their money. Being prepared and showing that you're taking it all seriously makes you stand out among their other opportunities, thus increasing the chances of successfully funding your venture.

Great ventures fail when investors can't put their trust in you. If you're taking over a week to produce the documentation investors request, doubts will begin to settle in.

Investor thoughts to Avoid
  • "Why doesn't he/she already have this?" 
  • "If it's taking so long to produce basic docs, are their customers getting the same experience? They can't survive long-term if that's the case"
  • "Are they just making this stuff up as they go?"

The Stages

Once you've gotten the attention of an investor. You MUST keep the momentum going. 

Investor's processes will vary widely and the documents they request will vary also. 

That's why it's best to think of the fundraising process in terms of stages that you go through with each investor. 

  • Pitch
    • Get the investor interested enough to hear more. 
    • Hook the investor with a well-crafted pitch deck that includes an overview of the company, the team, and the ask
  • Due Diligence
    • If you're lucky enough and the investor is interested, you'll progress into the due diligence phase where it's crucially important that you have a "due diligence package" at the ready
    • Recommended conetents of the due diligence package are outlined below

The Pitch

Pitch Deck

PowerPoint presentation designed to introduce investors to your company, excite them about you, and make them feel certain about the prospects of investing in you. 

Pitch Decks are a work of art and they should incorporate an emotionally driven narrative of the venture

Expect that this document will be passed around to a lot of associates and decision makers 

Design the deck to be self-sufficient

Amount Requested

Know exactly why the amount you are requesting is the amount you need. 

Do not guess the amount. Calculate it using empirical data and assumptions. 

This amount will likely show up as one slide within your pitch deck, but it's very important so it gets its own mention

Use of Funds

Know exactly where the funds will be deployed. 

How much of it is going toward investment in people, R&D, Customer Acquisition?

Use empirical data & assumptions to support the use of funds assumptions.

This will also be a slide within your pitch deck but it's very important


Delay this topic as long as possible to avoid dismissal early on

But you may be asked this question early

Provide a range and make it clear that the price is negotiable

Do not include this in the pitch deck

Due Diligence

Financial Model

You will be asked for a financial model. 

The numbers within the financial model are very important, but what's more important is the level of THOUGHT you're showing to have put into the future financial prospects of the venture. 

A good financial model shows that you are intricately aware of what it takes to operate the venture

Financial Statements

This is different than the the financial model. Financial models look into the future. Financial statements show the past performance. 

Unless the venture has not formally started yet, It is a BIG red flag to have no financial statements or to have errors within them. 

A bookkeeper is usually not qualified enough to produce trustworthy financials. 

Read note at bottom

Cap Table

The capitalization table shows the ownership structure of the business. 

Investors want to  see who else holds a stake in the company

It's not a detraction to have zero prior investors, but it is preferable to see a few investors already in place. 

Having a LOT of small investors is a bit of a red flag

Traction Summary

A summary of the progress your venture has made since inception, including:
- Key customers & metrics
- Key partnerships
- Key vendors & suppliers
- Team growth
- Advisers

A brief reference to your traction should be made in the pitch deck

Org Chart & Hiring Plan

Show the team structure as it currently exists and show how your team will grow over time.

What key hires will you make? Which functions will you fill first? When will you hire them? 

Put a LOT of thought into this!

The pitch deck should have a slide that includes the key team members and bios

Go To Market Strategy

A strategic plan showing how you will penetrate the market and how you will acquire your customers

This will be required if you are pre-revenue

Otherwise, you may not be asked for this, but it's recommended to have

Competitive Analysis & Market Research

An assessment of the market and existing competitors

Outline how you fit in, the opportunities and how you're going to carve out a niche and dominate it

Product + R&D Roadmap

An outline of how the product will progress and improve from its existing version into the next generation. 

Compare it to the competitors and outline key features and functionalities

Include timeline

This is especially important if you have a significant innovation component at the core of the venture


You may be asked for legal documentation supporting your claims

- Investor Related Docs
- Key customer contracts
- Key partnership & vendor contracts
- Patents & IP

Caution on Providing Quality Financial Statements

You can ruin your reputation very quickly by allowing errors into your financial statements. Most investors see enough of them to spot errors - they're often glaring. Small  and irrelevant things are ok,  but material errors, disorganization, poor structure & presentation, and lack of consistency are a big red flag. 

It is an industry standard and expectation that you (management) are guaranteeing the accuracy of the financial statements, even if you hired someone else to prepare them. It's an implied guarantee and you will be held liable for material errors, should disputes arise.

There is a reason it takes 5 years to become an accountant (masters are a standard now). It takes even longer to earn a CPA license. Most bookkeepers do not have an accounting degree or sufficient training to produce reliable financial statements that would be compliant with Generally Accepted Accounting Principles.

Make sure your financial statements are prepared by someone with a CPA license or sufficient experience and technical knowledge in accounting. 

The financials do NOT need to be audited (that's expensive) or formally reviewed by a CPA but they do need to be correct to the best of your knowledge.