Category Archives: fundraising

How to Find the Right Investors for Your Business

Under capitalization is the number one reason that businesses fail. Your budding business needs plenty of dry powder — capital to fuel growth and help weather the storms that will inevitably arise. While investors are the source of that dry powder, it should be more than just money that bonds you. Investor and Founder relationships are a partnership, so it’s important to identify who the right investors are for your company, what the “right fit” is, and where you can find it.

(In case you were wondering, the number two reason businesses fail is dysfunctional leadership who do not work well together. That also relates to fit. Stay tuned for a blog post on that.)

Here are some important things to keep in mind when finding the right investors for your business:

  1. Understand Your Options

Different types of investors can help you with different business goals, so it’s important to know what your priorities are before identifying potential investors. Do you need a bigger network, more industry expertise, more more money, or a combination of the three? There are three primary capital sources: angels, venture capitalists, and private equity.

  • Angel Investors are high net worth individuals that typically invest in businesses just bringing their concept to reality. They seek high returns through private investments of startup companies, and provide smaller sums of money than venture capitalists. Angel investors are typically former entrepreneurs or executives who cashed out early from their own successful ventures and bring their expertise with them.
  • Venture Capital investments are designed to fund companies with the potential for high growth. These investors seek to add value as well as capital to the companies they invest in to help grow and to achieve a greater return on the investment. Almost all venture capitalists engage in active involvement, and can provide expertise in business planning and strategy.
  • Private equity are capital investments usually made by private individuals or privately-owned institutions in exchange for a share of ownership in the company. Ownership is represented by owning shares of stock or having the right to convert other financial instruments into stock of that private company.
  1. Know What the Investors Can Bring to the Table

Since the most experienced investors are generally industry veterans, they have expertise and insight that can help you raise additional capital, manage your infrastructure and strategy, and more. At minimum, many investors (especially VC’s) will want a seat on your board as they actively help your business grow. You will want to partner with those who provide guidance and support, without micromanaging every decision you make.

Before courting potential investors, you should do your research: what is the reputation of these investors? What is their area of focus, and the stage of development they typically invest in? Since this partnership is a two-way street, you should ask questions to investigate what a partnership would look like. Ask about their most recent investments, their expectations of founders, how involved they like to be, and what they typically provide to the companies they invest in. Having this background knowledge will help you determine whether this partnership is the right one.

  1. Ensure Your Investor is the Right Fit

Since these investors will have a key stake in the future growth for your business, it’s important that they share a similar vision for what that future looks like. Do they buy into your mission? Start with a winning pitch deck: this singular document will be the biggest written impression you give a potential investor and the “hook” to capture them, and hopefully establishment some alignment of their interest with yours. It’s your opportunity to express the vision you have for your company, and chances are, only those that share this vision will look into forming a partnership.

Besides a shared vision, ask yourself if the potential investors mesh with the culture of your company. If they are actively involved in advising on the strategy and operations, it’s important that they jive with the existing culture you’ve created.

Most importantly, investor partners should be accessible to you for support, since they now have their skin in the game. Besides a capital boost, what else do you need from an investor? When chosen correctly, an investor can act as both a willing backer and a trusted advisor to help your business thrive.

Written by: Judson Sutherland, Founder & CEO

Sutherland, PLLC –

Top 5 Elements of a Winning Pitch Deck

Preparing for an investor presentation is no small feat, whether it’s your first time raising capital for your business or your twentieth. How will you win over your audience and land the investment? By hooking them with a rocking pitch deck.

With the limited amount of time given for your pitch, you must communicate your message with simplicity and clarity. These elements of a winning pitch deck will provide a roadmap for your presentation and will help answer the questions that investors want answered:

  1. Identity: The first thing that investors will want to dig into is who you are and why you’re there. Capture the journey of your founding team with your personal and professional history as well as that of the company. Investors really want to know what kind of person you are, and whether you can be trusted with their hard earned money.
  • Slide 1: Cover – Show off your brand with your logo and tagline.
  • Slide 2: Elevator Pitch – Present a brief snapshot of your business and what it does. Keep it simple and captivating.
  • Slide 3: Team – Highlight your killer team and the talents and skill set they bring to the table. This slide could also be placed at the end of the deck. At Founders Firm we believe the best investments are in people, so we encourage placing the “Team” slide at the front.
  1. Problem: What frustrations are your target customers facing? Why does it matter to you? Most investors care at least as much about the “Why” behind what you are doing as they do the problem you are addressing.
  • Slide 4: Problem – Illustrate the pain points of the market and why it matters.
  1. Solution: In a simple way, explain how your business is solving this problem, and how it’s doing it better than anybody else.
  • Slide 5: Solution – Explain what your company is doing to tackle the problem, and how.  What product or service are you offering, and whom are you serving?
  • Slide 6: Business Model – Break down the process for investors, from the development and operations to the customer experience and pricing.
  1. How: How does your company generate revenue? How do you plan to grow? Investors will want to know the upside of your vision, and money and results will talk!
  • Slide 7: Company Timeline  – Show the milestones and progress your company has made. These are key indicators of future performance that investors will want to see.
  • Slide 8: Current Customers – What is your market size? Who’s interested in your product, and where do you foresee growth?
  • Slide 9: Competition and “Secret Sauce” – Who are your current competitors, and what is their share of the market? What’s the secret ingredient that sets your company apart from the rest?
  • Slide 10: Financial Information – Showcase your key financial metrics in an easy-to-understand way for a quick reference for investors. Present your projections for growth. Make sure those projections are reasonable!
  1. The Ask: Ultimately, potential investors want to know how you plan to use the capital they invest, what you can accomplish with it, and what they will get for their investment.
  • Slide 11: Financing Details a.k.a. “Capital Needs” – Present the amount of capital needed, how it will be used by category, and what the company will build with it. Include a summary of the investment terms, e.g. “Convertible Debt with a $3mm premoney valuation cap and a 20% conversion discount.”

After creating a winning pitch deck with this formula, remember that your pitch is really about the people in the room. Play to your audience, and consider how the tone you set and the great content you present will win over your investors. Reach out to a trusted expert with experience working with investors who can advise you on your pitch deck before it goes “live.” Thoughtful feedback will give you the insight and confidence you need to give an irresistible pitch!


Why Courting an Investor is Like Dating: Here’s What Investors Look at Before Putting a Ring On It

Courting investors is a lot like dating. There are the coffee dates, the small talk, maybe even a little batting of eyelashes and making sure all of your good traits are front and center. But after the initial introductory stage, what makes an investor commit to the relationship?

Most venture investors want to invest early in a company that has huge growth potential. They are looking for a substantial reward to offset the risk of investing in an illiquid privately held company that has little to no revenue. Like a marriage, before putting a ring on it, investors need to know and trust where they’re placing their investment. They spend a significant amount of time analyzing the people, the product, and the performance of a company.

The People

Most experienced investors care significantly about the founders they are investing in, and want to know what kind of people they are. Throughout the courtship phase, they are trying to drill down on 3 strong indicators of future success:

  1. What is the character of the founders running the business? Do they have integrity? Are they trustworthy?
  2. When problems arise and things get tough, how do the founders react? What does their past history reveal? This is important so that investors can feel confident that they won’t be on the short end of the stick when the inevitable challenges arise.
  3. What is the dynamic among the founders, and between the founders and the company leadership? Is the team cohesive? Do they value one another? How well does the team work together? Does the team respect the company leadership, and are they willing to follow them?

Answers to these questions are crucial to building an investor’s confidence in taking the leap.

The Product

Experienced investors constantly track and measure their own enthusiasm towards the founders and their product. They gauge whether their enthusiasm increases with each interaction. If not, they are unlikely to invest. Founders need to show investors they have a solid product or service that is unique in some way from what is already out there, and they must demonstrate that people want it.

In the words of Mark Achler, a mentor at Techstars, “to paraphrase Field of Dreams, most entrepreneurs believe that if we build it they will come. But a great product without customers is a great product – not a business.” Founders must clearly demonstrate that customer demand exists at each new meeting. The combination of the building excitement, backed up by facts, will entice investors to invest because they want to be part of a winning team.

The Performance

Experienced investors also want to be confident that founders can raise all of the capital that the company needs to hit their targets; otherwise early investors will be left holding an empty bag. They want to see a clear track record with a history of successful performance by both the founders and the leadership team. This helps drive the capital raise. More importantly, it indicates a greater chance of future success.

It also helps if the founders have had a prior successful exit. However, a flawless record isn’t necessarily a prerequisite. In fact, having faced very challenging situations is probably better, as it gives the founders an opportunity to show how those situations were managed and how they rose again afterward. When talking to investors about their past experience, founders should be transparent. They should talk about their mistakes, and how they have learned from them. Investors are interested in how a founder’s experience has made them better equipped for their current venture.

After analyzing the people, the product and the performance of a company, investors will decide whether or not to move forward. Founders who give thoughtful attention to addressing what investors need to know will increase their chances of getting that ring.

Written by: Judson Sutherland, Founder & CEO

Sutherland, PLLC –