I attended a talk last night as part of the Georgia Tech Business Plan Competition Workshop Series (pdf). This was such a fantastic talk that I will have trouble putting it succinctly into this post.
“Transforming Innovative Tech into Business”
As with any other person who has been a VC or angel investor, Steve was incredibly sharp, and seemed like he would be impervious to BS either on the giving or receiving end. Steve began his talk discussing the pros and cons of starting a business in the Southeast. He went on a diatribe about how ludicrous the spending in California is. Then he pointed out that although there isn’t much VC investment in Georgia and the surrounding states, there is a better tax situation, and much better access to real estate, talent, and customers.
Steve continued by discussing the cyclical relationship between institutional investors, VC’s, and entrepreneurs giving some insight into how that relationship drove VC’s behaviors. Some interesting take-aways were that VC’s want the entrepreneur to get rich, and that they’ll only have to be brutal and cruel if they have to in order to make the returns they promised their investors.
After giving some insight in these areas, he began enumerating the things that you must convince investors of when trying to raise capital for a business.
- You have a large, fast-growing market segment
- You have a technological advantage that will block competition
- You have reasonable financial terms
- You have measurable milestones for success
He went on fleshing these out for most of the remainder of the talk, but kept peppering in useful tips. I’d like to point out some here:
- Get a good referral (from another investor, an attorney, etc.) If you’re plan comes pre-qualified it. You’re in.
- Make a 20 page business plan with a 2 page executive summary. No More!
- Power-Point deck using the 10-20-30 rule (10 slides, 20 minutes, 30 point type)
- In all of these documents, sell the company, not the product.
- Do your homework on the investors you’re presenting to and tailor the presentation. It will help you and impress them.
- Choose your investor wisely. Don’t just follow money; find someone that can help you with experience, expertise, contacts, etc.
Check out Steve Fleming’s website as well. Here you can find his blog as well as some useful information about starting companies.
Furthermore, here is a list of other resources and websites that Steve