Capital Formation and Fund raising
Capital formation for a company involves going public, fundraising drives from individuals or groups, loans as well as developing of secondary markets for purposes of pulling funds together. One of the most popular forms of fundraising in the world today is Crowdsourcing or GoldCrowdFunding. This is when a startup or an NGO seeks for funds from people globally. This will definitely depend on if the project speaks to potential donors as well as commitment to the project by the founder. This method of fundraising has helped many organizations to raise thousands of funds, build a networking base and support from people beyond their borders.
SUGGESTED SLIDES IN POWER POINT PRESENTATION TO ANGEL INVESTORS
There is usually a ten minute time limit for a presentation, so presenters should try to limit their presentation to ten to fifteen slides. The slides should not be dense with information. The presenter should not read the slides, but should deliver orally information not appearing on the slides. The idea is for the audience to glance at each new slide and quickly absorb the information that it contains, but then to shift their attention back to the speaker. Thus, slides should be easy to read and comprehend quickly, even from the back of the room. Fonts should be large and colors should be chosen that are easy to read. Avoid having the words on the slide be of a color that blends into the color of the background. White or light colored backgrounds usually result in the most legible slides.
While most inventors and technologists are rightfully proud of their innovation, the audience is primarily interested in the business aspects of the company. Much of the audience will not have any technical education, so avoid dwelling on the technology and avoid using undefined technical terms or acronyms.
The first slide should explain the problem being addressed by the company.
The following slides should include the following (note that is some cases, one slide can serve more than one purpose; try to have as few slides as possible without making any one slide too busy):
The solution to the above problem. Do not spend more than 2 minutes total on the technology or science.
Current status information. Is the company already in business? Does it have revenues?
Description and size of the market—both US and worldwide. This is not how much the company hopes to sell, but how much everyone in the industry will sell. Do not exaggerate the size of the market by, for example, giving the market size of the entire industry for cars and trucks if the company is only manufacturing wind shield wipers. If the market is growing, try to find authoritative information about projected growth per year and the longer term trend. For example, some publication may have projected that the market will grow by 10% per year for at least the next five years.
Business model—how the company makes money.
A brief explanation of the marketing plan. Investors do not believe that “If you build it, they will come.”
If manufacturing or assembly is required, will that be done directly by the company or will it be outsourced. If outsourced, has the contract manufacturer been identified?
Explain the competitive landscape and why the company can best the competition. Sometimes a matrix listing several of the key competitors plus the company and explaining their individual strengths is helpful.
The company’s sustainable competitive advantage. This may be patents (if so, explain how many and their status—are they applied for or issued. If applied for, how long ago and has the Patent Office given comments? How many patents are there? Have international patents been sought?) Alternatively, the advantage could be trade secrets; trademarks; a head start on any competition; or a strong relationship with a key customer, manufacturer, or supplier. Try to explain why if the company is successful, it can avoid competition from copycats.
The senior management team. List each person by name, his or her role, and his or her qualifications. Limit to one slide, and do not provide so much information that the slide is dense. Companies or research institutes in which a senior executive or scientist has played a key role in the past should be listed. It is not sufficient just to say, for example, that the Marketing Director has 15 years of financial experience. If the company has a governing board with outside directors or has an advisory board, a second slide should list each of those persons and their key qualifications— for example, former Dean of the Harvard Medical School or former CEO of X medical device company.
If the company is already in business, its historical financial statements for the most recent year (or To Date, if less than a full year in business.) Then project financial results for 5 years after funding. For example, in a company was launched in January 2010 and has revenues, the Projections chart would have a column for actual results to date and a column marketed “Estimate” for the rest of the year. The rest of the columns would be for the next five years, and would be based on the assumption that the company would be funding in 2010. Actual numbers are more helpful that graphs or charts with columns. It is only necessary that each column contain three numbers—total sales, total expenses, and EBITDA. However, it is recommended that the slide also show when the company is projected to reach cash flow breakeven.
Amount of investment sought and use of proceeds. If part of the capital has already been raised, so state.
Exit strategy. The only persuasive strategy for most companies at this time is sale to a larger company. It is helpful if the presenter can suggest classes of companies that might be interested in acquiring the company. Actual examples of similar acquisitions and their prices are also helpful.
Pre money valuation. Also, explain what that term means in practical terms—what percentage of the company will be sold to the investors if all of the capital sought is raised. State what instrument is being offered (example: convertible preferred stock, common stock, convertible promissory notes.)