As an entrepreneur, investor, and mentor-to-many living in Northwest Montana, I often look at business plans and meet with lots of entrepreneurs looking for funding guidance. So, I was pleased when my friend and colleague Liz Marchi recently joined me for a webinar to share insight on the questions every entrepreneur should be prepared to answer when fundraising.
Liz is the founder and coordinator of two angel funds in Montana and has been a passionate advocate for entrepreneurship for over a decade. She's also a dear friend and whip smart about start-ups. It was a fun hour of discussion about fundraising with some delightfully insightful follow-up questions from the audience.
We had such a great response to the webinar that I wanted to share some of our advice with all the entrepreneurs out there, particularly those beyond the big cities where mentorship and advice can sometimes be tough to find. So, here we go:
The 3 Questions You Should be Prepared to Answer When Fundraising:
1. How does your company make money? You'd be surprised at how difficult it can be for many entrepreneurs to answer this question. But whether you're a tech, food, product, or service entrepreneur, you have to be able to explain how much it costs to produce your product or service, how much you're selling it for, and how much is left over for profit.
2. Why will customers pick you over not buying at all or buying from a competitor? This question shows us your understanding of 1) Who are your customers? Are you B2B, B2C, something else? and 2) What is your competitive risk? In investing, this is sometimes summed up by "Will the dog eat the dog food?" Because building a great product doesn't always mean it will sell.
3. How will investors make money? This question is less about whether you will have an IPO or sell to a larger company. What we're really looking for here is a sense that you respect an investor's money and acknowledge that the investor's goal is to grow that money via her investment in you.
Some of the follow-up questions included:
•When is a good time to start speaking about and marketing your product while still protecting your "secret sauce"?
•Is a 20 minute pitch ideal and what are the most important slides on a pitch deck?
•I am a non-tech person who has hired a developer to develop and market my app. Will my not being in the tech world hinder me?
We enjoyed answering all of the great questions (you can listen to the conversation here: mftr.org/refinepitch ) and I'm looking forward to my next webinar: Why Buzz Matters & How to Create It (you can register at mftr.org/creatingbuzz). Mobile Future is sponsoring this free webinar series. Why? Because every entrepreneur is a mobile entrepreneur! Mobile Future is also sponsoring The Mobileys, a fun business plan competition where a group of rock star investors, business execs, and entrepreneur supporters will reward (with cash and other prizes) a few super startups who are inspiring and making the world better through early-stage wireless apps, services, and/or products. It's fun and could make a big difference for an early stage start-up. If you have a start-up that fits this description then join us! We'd like to learn more about you.