Appel also says market size is important.
“Outlining the size of the market the entrepreneurs are targeting and whether they have a vision for local or global growth will help investors understand the size of the opportunity in front of them,” he says.
Traction
Is the business already making sales?
Chong says investors want to know if the company is already taking cash from customers.
“The more cash you’ve taken from customers the more validation you’ve received. They’ll want to know how you’ll keep making sales and the channels of those sales,” he says.
Appel says whether the business’s product is in research and development or has been commercialised will determine what stage it’s at.
“Based on the stage, outline the key metrics which will vary for each business demonstrating traction achieved and how sustainable the model is,” he says.
Traction could also incorporate elements of the company’s business model.
“We need to be able to see that the product or service can be delivered into the market at good margins and at volumes that drive a profitable business,” Birkill says.
“Too often we see businesses with good traction in their target market that have little prospect of making a profit because (for instance) they don’t understand how to cost their overheads into their pricing model.”
Team
Who will deliver the business? Who are the management team and what’s their track record? Appel says it’s important to outline to investors who the team is that’s building and running the business and why they’ll succeed.
“We are investing in the entrepreneur’s vision, passion and their ability to execute, which combined, are critical elements in our assessment process,” he says.
Birkill says that assuming a business’s market opportunity is real and the technology solution is solid, team is most important consideration.
“We need to feel we really ‘gel’ with the key managers,” she says. “Does the team have the right skills and experience to deliver the business? Are they passionate and motivated? Can we work together over the next two to five years in a collaborative fashion?”
Chong asks how team members will help a business get to its destination.
“I like teams with technical and business backgrounds,” he says. “I also like teams where there’s someone who has domain knowledge expertise – they either know the industry or have experienced the problem first hand.”
Financials
Birkill says these should be “top level” in terms of detail and include key assumptions around things such as market penetration, pricing and staffing.
She says this section will also include how much money the company is seeking to raise.
Appel says it’s important to understand where the funds raised are going to be spent.
“Is it growth capital, in which case the funds will be spent on product development and international expansion,” he says. “Or is it to be focused on marketing to build awareness for customer acquisition? The answer to this will depend on the stage the business is currently at.”
Chong says there should be “a clear ask”.
“Investors want to know how much money you want and what you’ll use it for,” he says.
