Need to Raise capital?
The pitch is great!
The product or service is awesome.
The investors agree it is the best thing since sliced bread and are all ready to write out the cheque. Then one of them asks … but can you guys really do this if you raise the capital you need?
Now they are no longer talking about innovation, they are talking about capability.
Capability is the ability to perform actions. Capability is the sum of expertise and capacity. Innovation is one half. The power or ability to generate an outcome is the other. You need both to successfully raise capital and obtain sufficient venture funding.
Capability to investors is evidenced by:
- Experienced management team with deep industry experience.
- Available channels to market.
- Good strategic partnerships.
- Proven high growth experience.
- Availability of critical human resources.
- Can implement the goals in the “Use of Investor Funds” statement in their stride.
Innovation to investors is evidenced by:
- Satisfies a compelling (global) need.
- Targets a well defined (large) niche market.
- Has significant competitive advantage which is sustainable over the medium term.
- Supports high gross margins.
- Enables high scalability.
This can be drawn as follows …
- High Right gives the best returns. Meaning its a great innovation and the team to implement it is in place.
- High Left means great innovation, team not ready, best target a trade sale.
- Bottom Right and Left are not going to enthuse investors.
- Bottom Left and Right … forget it.
The moral of the story is to grab a good team around you that are fully capable of implementing not only your dream products global potential and high scalability but also the characteristics of a winning business team.
You will be far more successful at raising capital and venture funding if your “capable” team is in place when you start your pitch.