Simplify your message
Hook the investor with a two- or three-page executive summary that clearly explains the business opportunity and exit strategy. Cut the B.S. “I want to see a realistic portrayal of the opportunity,” says Bob Roy, Toronto-based managing director of venture capital at Roynat Capital. “If you say, ‘We project revenues of $100 million by the second year,’ no one will believe it.” Focus on your competitive advantage instead.
Toot management’s horn
“[Financiers] want to see a strong management team with a successful track record,” says Kevin Dane, vice-president and Toronto area manager for the Business Development Bank of Canada. This means not only how much you made for investors in your previous business, but also how your management team is suited to your new venture. Include this information in your business plan.
Buff your balance sheet
Incomplete or messy financial statements will take the shine off any opportunity, as they can suggest poor financial controls are in place at your firm. Provide your capital connections with audited income statements, balance sheets, statements of changes and notes for the current and past three years. “We need to look at the past performance to see if the growth forecasts are supported,” explains Dane. Fast-moving businesses may need to provide statements for the most recent quarter or month. If you can’t afford audited statments and your firm doesn’t carry much inventory, then a review engagement may suffice, says Jason Sparaga, president and CEO of Oakville, Ont.-based Spara Capital Partners Inc.
Pitch from the peaks
Time your rounds of financing to correspond with an achievement or milestone, such as reaching break-even or securing a big contract, advises Roy. Each win will demonstrate less risk to an investor.
