How to earn VC/Angel Investor financial and technical talent support?

Over the years we have sat on both sides of the fence and had a lot of different offers ... all of them have been custom development for a specific niche market.

Easier question (for me to answer): How to get good technical staff ...

• Offer a cool challenging job that they get to prove themselves.
• Have a great work environment with people they can bounce ideas off and talk things through with.
• Allow them leeway to play. They stay interested and it usually results in better long term results as their playing is your adhoc R & D.
• Spend the time with them to layout the 1-2 year "dream time" and then break it down into 1-2 month objectives. These days I go down to the 1/2 week objective with juniors and the 1 month objective / direction with seniors.
• Ask for and expect their contribution to the product ongoing (same with ALL staff, clients and prospects) there is nothing like seeing your idea in a product to get developers, support, sales engaged in the product and customers evangelizing you.

If they are more junior staff then have a good lead and mentore that will give them enough leash to try but feel comfortable that they can reel them back in without significant project impact (I have 5 guys who can recover something fast which really helps).

Convincing people to invest: Well there are a few play book answers but really its much like engaging the developer above. This is a journey, at the end of it if we get it right the rewards are going to be lots of money but along the way ...

• To start with we will need 2 developers, then take on the sales, then the web guy and as sales start to grow we will need the support to keep everyone happy.
• At the 12 month point we think we will need 3-4 developers, 1 Sales, 1 website/Graphic designer, 1 support / customer care.
• THEN you convert it to more of a key milestones discussion. EG. Sales we expect to have 1 conversion per week. Support should increase at 1 person per 30 clients. Developers we should stay static at 4 until we start to branch out into the "addons" for the product.

All of this will result in a $ figure range you need for 6 months, 12 months and 2 years. You have minimum threshold you need to get to make it viable in the first place ... if they want to commit to $X then you will need another 4 investors ... if you reach the threshold then they are in.

That is the basic pitch / plan they want to know, and they will ask questions around their own specific areas of interest. The other main thing you have to answer in their heads is: Why you? Why your team? what is your background.

The best podcast to get a real understanding of what is required is this week in startups. I would start with some of the earlier shows which were a little more adhoc.

Below is a list of the major things that investors will look for in a company they’re thinking of investing in. Some investors look at up to a hundred business plans a week, and if your proposal does not include the information below, it is unlikely they will be interested.

An easy-to-understand executive summary

An executive summary is a summary of a business idea or business plan and is designed to give the reader a flavour as to what the project is about. The aim of the executive summary is simply to entice the reader into reading the complete business plan.

A realistic business plan

A business plan is a written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts. It has many functions, including enabling an entrepreneur to systematically evaluate the feasibility of his/her project, measuring success within his/her business and securing external funding. The business plan is a concise summary of information on all the important aspects of the proposed company (e.g. The Business, its Products and Services; Markets and Competitors; Marketing and Sales; Management Team; Financial Forecasts; Exit Strategy; etc.).

A convincing elevator pitch

When it comes to the stage of meeting the investors, you will need to have an "Elevator Pitch" prepared. This is a concise, carefully planned, and well-practiced description about your company that your mother should be able to understand that can be delivered in the time it would take to ride up an elevator.

Previous years’ accounts and achievable projections

For the investors to make an informed decision of whether to invest in your business, they will obviously want to know how much your company is expecting to make over the next few years. You should prepare some conservative financial projections for this purpose. Previous years’ accounts (if available) are also incredibly useful to back up your projections and justify your valuation of the company.

An experienced and committed management team

Investors will want to see a management team in place that is not only knowledgeable about the industry and product or service, but is also capable of successfully implementing the business plan and managing and controlling the company's operations. They should have a track record of having been involved with similar projects and having worked for other companies in the industry. The better team you have, the more money you will be able to attract.

A sound understanding of the industry the business is in

The investor will expect you to comprehensive understanding of the customer (target market), including market size, demographics, trends, pricing strategies, accessibility, growth potential, demand for products and services, and commitment to business development.

A breakdown of how much money has already been invested in the business

It will give the investor massive confidence if you have invested any of your own money in the venture or have obtained bank or government funding. They will also want to know what this money has been spent on and what you managed to achieve with it.

A clear idea of the equity stake you’re willing to give away and how much money you expect the investor to make

Angel investors usually take equity in the companies they invest in. The amount of equity they take will depend on several factors, including the amount of capital required, the level of risk and the maturity of the company. For example, companies who are already profitable will have to give away less equity than a pre-sales company. A study by NESTA in 2009 estimated that 35 per cent of investments produced returns of between one times and five times of the initial investment, whilst 9 per cent produced returns of multiples of ten times or more. Because angel investing is so high risk, the investors’ equity stake and estimated return on investment should reflect this. Angels are usually looking for businesses that have the potential to return at least 10 times their original investment within a 5 year period.

An ability to explain how the investment will be used

Investors will want to know what their money is going to be used for. They might even be able to help you reduce your start-up or expansion costs.

A clear exit strategy

In order to attract investment for your business, it's critical to supply an exit plan to investors so they can get their money back (hopefully with a healthy return) and exit your company. The exit strategy section of your business should also outline your long-term plans for your business. Possible exit strategies to consider: • Initial Public Offering • Merger/Acquisition • Buyout by partner in business • Franchise the business • Hand down the business to another family member

There are plenty of sites now that make it easy for you to find someone. I recently was in the same boat, and I found an investor that also knew a lot about how to get in touch with technical talent as well to put our idea through to fruition.