How do you get ready for investor scrutiny?

Prepare for investor scrutiny by understanding our business, showcasing milestones, introducing our team, and presenting financials transparently. Use market research to prove demand, craft a compelling pitch deck, and address potential risks. Articulate how we'll use the investment for growth and share future plans. Practice our pitch, ensure legal compliance, and anticipate due diligence. Leverage our network for introductions and be ready for various outcomes. Confidence, honesty, and a compelling business case are crucial when engaging with investors.

The investors will also want a clean house. I'd say that apart from getting the numbers together it's equally important to ensure you have zero non-compliances. That would mean ensuring that the founders have the share certificates issued in time, all board and general meeting documents are in order, proper and valid agreements are in place wherever necessary, etc. Getting a health check done before an investor comes on board can help the startup immensely.

Having a monthly dashboard that has all the key metrics captured is a good way to not only know your numbers but also helpful to be used for investor updates from time to time

Ensure that your financials are appropriate to your raise. By this I mean, if you are a pre-seed or seed, then the level of detail that I would expect in your forecast is much less than those at a Series A or beyond who have historic data. However, be prepared to justify the assumptions you have made, possibly by comparibles to similar companies in your space. Wise early-stage investors will know a lot of your forecasts are based on assumptions, but need to feel comfortable that those assumptions are realistic.

Have clarity around the core assumptions that underlie all aspects of your business and associated plans, along with what you plan to do to continue to test and evolve your thinking and approach for the most critical ones.

Customer champions who can vouch for your product or service, signups that show you oversubscribed, LOIs. These are just a few examples that can show validation of the problem and solution to investors in a pre-seed stage.

Be also prepared to be ask to share pipeline, customer list, and even to organize customer calls with the investor during the due diligence, specially in B2B context.

Most decks have the team slide at the end, but I prefer to have it upfront. Your VC needs to trust you have the team to get it done and that your product/service will work. De-risk the team aspect, de-risk the solution, and then go in to opportunity, roadmap, competitors, why us why now.

I'd suggest to have annexes attached to your pitch to be ready (and to show that you are ready) to answer to the likely questions that might be asked, like details on the technology, how did you come up with some specific numbers, details on the sales cycle, etc.

Most of my portfolio companies do pitch practice with me or other 'friendly' investors to ensure that you are getting the key messages across from the Investor perspective. I would also suggest that you don't do your first pitch with your hottest/key potential investor; you are likely to refine and improve your pitch as you go along, so give yourself the chance to make mistakes in the first pitch or two!

Know why you're different! These are valid sources of competitive advantage - Proprietary technology: If unique and better than the competition - Efficient cost structure: Due to economies of scale and process efficiencies - Strategic partnerships: Access to resources and customers that wouldn't be accessible otherwise - Intellectual property: Such as patents, trademarks and copyrights - First party data: If not replicable by the market While these are not - Low prices: They lead to price wars and deterioration of margins - Being first to market: It doesn't prevent competition to eventually catch up - Market share: Unless it leads to bargaining power - Hype: You can't count on it to last forever - Complexity: It decreases over time

Investors will want to look at legal documents that back up your great story. So make sure there are good records of your IP ownership, your Founder arrangements, the contracts in place with key suppliers and customers... Keep good records of decision making and minutes of meetings which shows you have governance in place as well.

All of the above are excellent points. But to all this, the founder must be able to weave a compelling narrative- why him, why his idea, why his startup. Of course numbers and DD are important aspects of getting investor ready. But don't put yourself second to your startup. Investors are investing in YOU and you drive the project. After many many interactions with founders, investors and mentors, I am of the opinion that ultimately we are bags of chemicals and if you can tap into that formula, you are investor ready.

Put together a data room for your fundraise in advance of your fundraise. This collates much of the info that investors might ask of you and ensures that you maintain momentum in the deal process. As an investor it is a red flag if I have to wait days for a piece of info - conversely a dataroom shows that the company has prepared for the fundraise. The list of what to include is specific to you, but should likely include pitch deck, financials, CVs of founders, employment contracts, patents and corporate documents as appropriate. It doesn't have to be a static folder either; some of the best founders update it during the DD process, induding a Q&A document that gives answers to questions that are regularly asked.