1. WHAT IS THE OPPORTUNITY?

• Define the opportunity in an executive summary (no more than 2 to 5 pages). This exists first and foremost to convince the founder, if the founder is a complete believer, so much easier to convince investors.
• Thereafter you'll need a 15 point Powerpoint presentation for investors. A detailed biz plan isn't essential at this point.
• Define the size of the marketplace. i.e. A $250 billion dollar market is more attractive than a $15 billion market.
• Is the market crowded or relatively vacant? i.e. How many competitors.
• What % of market share do you hope to gain?
• Is it in a growing or contracting industry? If contracting, that's unattractive for investors.

2. VALUE

• What problem are you solving? i.e. provide a visual comparison of how things are typically accomplished vs. your solution, ideally a lot less steps via your solution.
• Do you have a sustainable competitive advantage (in order to assure continued increase in shareholder value). Sustainable competitive advantage would be a patent, exclusive distribution relationships, proprietary technology, etc. If your venture is superior due to only a better execution, that's unattractive for investors.

3. FOUNDER

• Destined for success Founder - or doomed to Flounder?
• Is the founder suffering 'Founderitis' - i.e. controlling the venture too much, or is he/she willing to let go of some level of control, to delegate functions to competent team members? If founder suffering from Founderitis - unwilling/unable to emotionally let go of the baby to let it grow, venture is doomed for failure, hence unattractive for investors.
• Does the founder have the skill sets to be a CEO? If not, is he/she willing to step aside?
• Is the founder flexible/agile (able to adapt business model quickly). If not, very unattractive for investors. No one wants to place their money where the founder will prohibit the growth of shareholder value.
• Is the founder coachable/trainable or dogmatic in his/her beliefs, ideas, vision, etc. If so, valuable mentors with limited time will not wish to waste their time on someone uncoachable, making the venture again unattractive for investors.
• Does the founder lack the ability to make fast decisive decisions key to the growth of the venture.
• Is the founder commitment phobic, and too insecure, prohibiting progress.

4. THE TEAM

• What domain experience do team members have for the industry within which you operate?
• What is the track record of team members in taking companies either to M&A or public?
• Does the team have a healthy internal eco system, whereby the organism is on cruise control once objectives have been defined? If not, the departure of one or two superstars could seriously impair the ability of the remaining team to execute the venture, hence making it unattractive for investors.
• The team must be or be able to become a self sustaining organism, where the various parts function efficiently enabling the whole to accomplish key objectives.
• Do advisors have domain experience. If not, how can they help your venture.
• Can advisors open doors for you in mission critical areas?
• Advisors should get either consulting fees, profit sharing or equity. 1 or possible 2 out of 3 is OK, but all 3 hurts the health of the company since the goal is to build shareholder value. Profit sharing going out lowers overall profitability which negatively impacts shareholder value.

5. LIQUIDATION POINTS / EXIT STRATEGY

• Is the venture a better M&A target or more appropriate to go public? If so, by whom and for how much?
• What are the liquidation points?
• Define funding rounds, M&A timeline or timeline for going public, and how either of these impact preceding employees/investors.
• What ROI are your investors expecting? Can your venture realistically deliver.

6. BUSINESS MODEL

• Has the business model been validated?
• Can it be adapted quickly if inappropriate for new market realities?
• What are the revenue models? How many are there? If too many, condense to a few, focus and execute them well rather than diluting the venture's energy in too many directions. Investors prefer a few ideas executed deeply rather than many explored to shallow degrees.
• What is the cost of customer acquisition?
• Focus on building relationships, alliances, strategic partnerships.
• In a fast moving economy, time if your biggest adversary, hence focus on orchestrating the talents of others.
• Outsource, outsource, outsource - whenever possible to remain focused on core business (there's no value in reduplicating existing solutions in most cases which is why consolidation occurs in most industries).

7. FIDUCIARY RESPONSIBILITIES

• Who does the company belong to? Do founder(s) and employees realize that once the venture receives funding, they are in reality working for the shareholders, and should be focused on acting as good stewards for the shareholders.
• In reality founder(s), employees and investors are partners in a venture to create value.
• A founder(s) purpose upon receipt of investment capital is to do whatever it takes within legal means to increase shareholder value.
• Some CEOs will place employees first, hoping that in turn happy employees will then work harder to please customers which in turn should increase shareholder value. Employees, investors, customers, the order of importance can change according to company philosophy.
• Adding value, creating value and sharing the wealth are key ingredients.

BIG PICTURE CONCLUSION:

If you simply focus on 'adding value' as a philosophy of life... good things tend to happen naturally.

© Copyright Pardeep Singh 2003. All rights reserved.