Getting Funded at your Business Stage – Pitch Perfect?

As legal counsel, we are often approached to write or review and adjust business plans.  These can be for entities in early-stage (startup, seeking seed capital, recruiting a founding team), mid-stage (emerging, expanding, and proceeding to IPO), or late-stage (buy-back, restructuring, or receivership).  The common question is, however: what are the financiers seeking, and what is the most reliable “Unique Selling Proposition?”

Early-Stage:

In a recent article, one writer wrote that assessing the team was paramount for early-stage financing; followed by a good idea, and then the presence (or promise) of a viable market.[i]  I agree!  In addition, I would further agree with the author’s assertion from his polling of some VCs, that these three elements should be considered in that order.  I would say the team should be good, but not perfect.

Now, what about the rest of the business world –entities at other stages of their existence as going (and hopefully staying) concerns?  The article is silent on this, and so I will provide my own observations.

Mid-Stage:

In the mid-stage, the emphasis should move to a well-defined vision, a solid success record, and a workable strategy.  I separate the strategy from the vision, because there “must” be some basis on which to build your persuasive case that more money will help you further that vision.  That basis, is your success record; and in your pitch, you will layout the strategy as to how you will get that done.  What defines success, and what is “enough” success for intended sponsors, will differ from case to case.  This can be anything from a raw number of units moved over a certain time, through back-orders, to actual market share gained.  There will also be some financiers who are particularly impressed by large social media followings with no revenues, as this can be monetized through advertising, co-branding their own or their partner wares, or cross-selling of additional offerings in the product or service mix of the pitching entity.  Situations will vary and will always be assessed on a case by case basis.

Late-Stage:

In the late-stage, the emphasis should move to a tangible and tested commitment, a well-developed brand, and good prospects going forwards.  Commitment as the top factor, should be something that has endured to that late stage through all of the challenges that the founder has or founders have faced.  Running a business is hardly ever a piece of cake, and if a principal has stayed the course to that late stage, than he or she is likely to continue fighting to keep the fires burning – or so financiers would likely conclude.  Similarly, if at that late stage there is no well-developed brand, then into what, precisely, are the financiers being asked to pump their money – smoke and mirrors, or a dream?  Good prospects going forwards, alone, will not open wallets if there is no brand and no commitment at that late stage.  However, where all three are present, then even if outer factors look insurmountable or the financials are not quite on point, there might still be an opportunity to get the needed funding on livable terms.

Essentially, it all centers on presentation, hitting these points as and when they need to be hit, and the content of the pitch – which need not be perfect, just right for the stage of the pitcher, and the taste of the audience pitched.  Where there is a will, there is likely still a way …. you just have to find it, and surround yourself with people who can help you do that at the stage where you need it done.

Good luck!

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Author:

Ekundayo George is a sociologist and a lawyer.  He has also taken courses in organizational and micro-organizational behavior, and has significant experienced in business law and counseling (incorporations, business plans, contracts and non-disclosure agreements, teaming and joint venture agreements), diverse litigation, and regulatory practice.  He is licensed to practice law in Ontario, Canada, as well as in New York, New Jersey, and Washington, D.C., in the United States of America (U.S. business advising, outsourcing and cross-border trade, technology contracts, and U.S. financing).  See, for example: http://www.ogalaws.com.  An avid writer, blogger, and reader, Mr. George is a published author in Environmental Law and Policy (National Security aspects), and has sector experience in healthcare, communications, financial services, real estate, international trade, eCommerce, and Outsourcing.

 

Mr. George is also an experienced strategic consultant; sourcing, managing, and delivering on large, high stakes, strategic projects (investigations, procurements, and consulting engagements) with multiple stakeholders and multidisciplinary project teams.  See, for example: http://www.simprime-ca.com.

 

Hyperlinks to external sites are provided to readers of this blog as a courtesy and convenience, only, and no warranty is made or responsibility assumed by either or both of George Law Offices and Strategic IMPRIME Consulting & Advisory, Inc. (“S’imprime-ça”) including employees, agents, directors, officers, successors & assigns, in whole or in part for their content, accuracy, or availability.

 

This article creates no lawyer-client relationship, and is not intended or deemed legal advice, business advice, the rendering any professional service, or attorney advertising where restricted or barred.  The author and affiliated entities specifically disclaim and reject any and all loss claimed, no matter howsoever resulting as alleged, due to any action or inaction done in reliance on the contents herein.

 

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[i] Nic Brisbourne.  Early State Startups Don’t Need a Perfect idea, They Need a Great Thesis.  posted on theequitykicker.com.  Visited September 3, 2013.  Web: http://www.theequitykicker.com/2013/07/22/early-stage-startups-dont-need-a-perfect-idea-they-need-a-great-thesis/