6 laws of successful pitching

Gail Geronimos – Achaeus – Australia sings from the same hymn book with her sound words of advice to those pitching for investment.

On Gail’s blog you can download a paper detailing her 6 laws of investment pitching. Check out her blog at www.pitchingtoinvestors.com 

Here is a quick teaser summary: – with my comments

law 1:  Understand the investor  – is this the next, “best” investment for them – “so tell us about the investment not just your product”
law 2:  Have a good business plan –  – “dreams and visions are not enough – show us how you will get there”
law 3: You have 20 seconds to increase my heart rate – “be different its abut standing out from the pack”
law 4: Answer the question“Oh yes I have seen some people dig big holes here (and not money pits either), acknowledge different view points – remember the line between confidence and arrogance”
law 5: Get an Introduction“be credible and it will happen – remember in the investment game every referral reflects the referer don’t expect introductions immediately they are earned”
law 6: Execute/demonstrate how you will build the business

Would Trade Me have sold for $750m under the new Financial Advisers Act?

Is the new proposed financial advisers act is bureaucracy gone wrong? My fear is that this sort of policy is going to slow the economy and scare off the wrong people.

Check out Andrew Simmonds take on the impact of the new act on the legendary and inspiration trademe deal 

http://bit.ly/bZ74az

Pre Money Valuation of >$1M check your logic

Escalator Angel day last week was a great chance to reset the dial for many entrepreneurs, well I hope so.

Here is one investors company valuation model – not to different to the VC model we use in our workshops:

Work out what realistic valuation you expect to get on exit. Hint more trade sales are hit at around US$30M than any other mark (NZ$40M). Then calculate valuation today.

So if you wind the clock back 5 years (to today), based on a 30x return and a exit valuation of $40M, that mean today’s valuation must be $1.5M post money … say $1M pre money plus $500K investment for 33%

You need an independant advocate when raising capital

Finding investor – EASY, 
Getting and investors attention – HARD
Negotiating a good deal – NEEDS SPECIALIST help. 

Here is a great interview with a entrepreneur who was grateful for an independent advisor when raising capital.  Many entrepreneurs end up with the wrong deal because they simply took the first investors offer.

Listen to interview the 
 http://www.youtube.com/succinctstories#p/a/u/0/Ua64VBNXw_s

New directors liable for previous capital raising

Did you qualify your investors in your company as “qualifying” under the securities act as “eligible investors”. Friends or close business associate ..yeah right  

Recently we have seen a few companies with long lists of existing shareholders looking at raising capital. 

Andrew Simmonds has kindly made me aware of a recently published cash where new directors were held accountable….

A recent High Court case (summarised in the Minter Ellision newsletter) puts a slightly different spin on the DD required by incoming investors/directors re Securities Act breaches.

The ins and outs of the case are a bit complicated, but it suggests that directors who join a company within 6 months or so of an illegal share issue could be personally liable for amounts invested in that share issue, if the company fails to pay the amounts back when requested to do so.  This will mean that early stage companies are going to get greater scrutiny of past share issues by incoming investors.

This will hopefully still not cause a problem for you, but I thought I should bring this new development to your attention.

Kind regards
Andrew Simmonds – www.simmondsstewart.com

(reference case summarised in the Minter Ellision newsletter http://www.minterellison.co.nz/publications/CorporateGovernance18March2010.pdf )