Raising capital for a pre-revenue startup is a daunting task. The process is often competitive, and investors are looking for startups that stand out from the crowd.
Here are ten things a pre-revenue founding team should have in place before pitching to an angel group:
1. Compelling Idea:
The starting point for any startup is a unique, compelling idea. This idea should be differentiated from existing solutions in the market, and there should be a clear explanation of why it’s better.
2. Strong Team:
A competent, well-balanced, and committed founding team is one of the most important things investors look for. The team should have a mix of industry expertise, technical skills, and previous startup experience.
3. Market Research:
Detailed understanding of the market you’re entering is critical. This includes the size of the market, its growth potential, the competition, and the pain points of the target customers.
4. Business Model:
Explain how your startup will generate revenue. This includes details on pricing, sales, distribution, cost structure, and other relevant financial information.
5. Financial Projections:
Although your startup is pre-revenue, you should still have financial projections. This includes projected revenue, expenses, and cash flow for at least the next three years.
6. Proof of Concept/Minimum Viable Product (MVP):
A proof of concept or a minimum viable product demonstrates that your idea can be turned into a real product or service. This might still need to be fully developed, but it should be enough to illustrate the potential.
7. Customer Validation:
Evidence that customers want your product or service can significantly enhance your pitch. This can come in the form of surveys, testimonials, letters of intent, or even pre-orders.
8. Go-to-Market Strategy:
Clearly articulate how you plan to attract and retain customers. This includes your marketing, sales, and distribution strategies.
9. Scalability:
Investors are looking for businesses that can scale. Explain how your business can grow rapidly while maintaining or improving its financial performance.
10. Exit Strategy:
Although it might seem premature, investors want to know how they will get a return on their investment. This could be through an acquisition, an IPO, or other means.
Remember, every investor is different, and what they look for can vary. Some may emphasise the team more, while others focus more on the business model or financial projections.
It’s essential to do your research and tailor your pitch to the specific angel group you’re approaching.