Launching a new company is not easy as founders usually have limited resources to find the right product-market fit that will allow their company to first survive and then thrive. The first priority of entrepreneurs should be to find some customers and/or develop their startups’ products and services according to their targeted customers’ needs.
At the same time, extensive research carried out on more than 8,000 companies (Cooper, GimenoGascon & Woo, 1994 & Dahlqvist, J., P. Davidsson & J. Wiklund, 2000) has concluded that the amount of initial capital is among the very few factors that contribute both to marginal survival and the growth of new companies.
This is even more so in the technology industry where the “winners take all” strategy has been largely demonstrated by the dominance of the FAANG. So, it would be a pity for founders to ignore one of the very few variables that they can control to increase their chances of success: increasing their amount of initial capital.
Contrary to the perception of some entrepreneurs, a vast majority of people who invest in a company want their investee to succeed. This is because the investors want their loan or investment back after a certain period.
Irrespective of their type, all investors (public vs private, subsidy /equity or loan) prefer to see the same elements to get a certain level of comfort before investing in an early-stage startup. There is a reason why it matters to them: experience has shown them that these are key success factors that can contribute to the success or failure of a startup.
In other words, besides the financing part itself, formalising a presentation will enable/force you to think about the structural elements of your business.
Part 1: Introduction
In this introduction, Nicolas Servel introduces the different types of financing options available, with an emphasis on venture capitalists as they are often most likely to make significant investments in early-stage companies.
Part 2: The purpose, the team and the problem
This section presents the first key items that matter to investors: the purpose of the company, the team and the problem that the company will solve.
Part 3: The solution, value proposition and targeted market
Contrary to what most founders do, it is only once the problem has been clearly identified and defined that the solution (or the product) can be presented. This forces entrepreneurs right from the start to think from a demand perspective. They can then define more precisely what benefits these products will bring to their targeted customers and the size of this market.
Part 4: The competition, business model and go-to-market strategy
In this part, Nicolas Servel discusses what matters to investors when you describe your competitive landscape (and barriers of entry), the business model you are envisaging (i.e., how your company will ultimately make profits), alongside the go-to-market strategy.
Part 5: Conclusion
To conclude, entrepreneurs should highlight their current track record, any commercial traction, and their action plan. As a result of these factors, entrepreneurs will be able to formalise their financial forecast, and lastly, their demand (and use of proceeds) to the investors.