Step 4: My finance strategy
Congratulations!
You’re ready now to engage with investors.
It is very important to spend enough time and efforts to prepare the appropriate formats to present your green company. This is an almost endless process, during which you will repeatedly fine-tune the materials you have prepared. In this section we’ll provide you with different tools to define your fundraising strategy and to arrive well prepared to meet your investors, always taking into consideration your development stage.
→ But first… download our handy Fundraising Readiness Checklist:
Your business stage is SCALE.
→ Check out recommended materials & different tools below to define your fundraising strategy and to arrive well prepared to meet your investors.
Good luck!
1. Venture Capital
→ Get the Green Entrepreneurs Power Point pitch guideline and prepare your pitch according what are the most important things for Venture Capital:
- Overview: One or two sentences about what you do, for whom.
- Team: VCs want to know what qualifies you to execute your idea successfully.
- Market: What is the problem, why does it exist, and how big is the opportunity?
- Solution: Your value proposition: how you solve this problem faster, cheaper, and smarter.
- Business Model: How do you make money? Who pays, how much, from where?
- Customer/user: Who they are and how many? How will you reach/acquire them?
- Competition: List the major competitors; understand their processes and what your competitive advantage is.
- Financial Overview: What are the expected revenues, expenses three years out?
- Funding: How much are you raising and how are you going to use the money?
2. Corporate Venture Capital
Corporate Investors are big companies looking to make some money as well as being part of something they believe in. Therefore, they will want to get a feel for how and when they will be able to exit and earn the return on their investment. The most compelling issues you should perfectly master when approaching a Corporate Venture Capital include:
(1) Intellectual Property, Patents or Trademarks
Protect your intellectual property. This issue can quickly kill a deal. Register your IP or solve your disputes. Your intellectual property (IP) is potentially your most valuable asset and your investors know that.
The IP of your business can include trademarks, patents, copyrighted designs, and confidential information. Your company’s IP is extremely valuable; they can set your business apart from competitors, be used as security for loans, provide revenue stream if sold or licensed, and can be an essential part of your branding and marketing.
(2) Financials
Create and maintain a reliable capitalization table. Your company’s capitalization table is the first item any potential investor or acquirer will ask to see when considering an investment, acquisition, merger or strategic transaction. Here are some questions you might get asked.
- Key metrics does your leadership or management team focus on?
- What is the capitalization structure?
- How much equity and debt has the company raised?
- What are the company’s three and five-year projections?
- What key assumptions lead you to your projections?
(3) Financing Round
This group of questions helps the investors get a better idea of who the other players are. They want to know how much money has already been raised (if any) and where it came from. Knowing what the equity structure looks like is usually a key component.
- What will the proceeds from this round go to?
- Are there existing investors and will they participate in this round?
- Which round of funding is this?
- How much funding are you looking to raise in this round?
- Who holds equity and how much do they hold?
- Have you done crowdfunding before?
- Has anyone else invested in this round?
- Has an accelerator or incubator already committed funds?
- Does your company have any convertible loan notes?
(4) Exit Strategy
You should be prepared to consider your business’ s acquisition as a possible option, when approaching a Corporate Venture Capital fund. Here are some questions you might be prepared to answer.
- Do you anticipate going the merger and acquisitions (M&A) route?
- If you got the M&A route, who will be the likely acquirers?
- Considering the given market comparable, how will valuation of an exit be determined?
- Do you have any similar examples?
- Financially, where do you see your company in 5 years? Where do you see yourself in 5 years?
- When do you see this exit transition happening?
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