You have a great business concept. But you don’t have enough funds to make it succeed, so you need others to invest in your business. How can you get them to make the commitment? Here are some of the key points that you will need to make in order to get them to “yes.”
The Business Concept — Be able to clearly articulate your business concept in language that fits your audience. This “elevator speech” should take three minutes or less for the initial “pitch,” and should provide a basis for you to expand and provide details in subsequent presentations. This also means that if your audience is well-versed in your industry, you should use the appropriate technical terms or “jargon.” However, if they are not, you must be able to explain your business concept in layman’s terms.
The Management Team — Investors want to know that you and your management team have the experience and skills to make this concept succeed. If you are lacking certain key team members, make sure that the investors are aware of this – as they may be able to recommend appropriate additions to your team. You should also be able to explain your management compensation structure, because investors want to make sure that your management team has an adequate stake in the future success of the business. Ultimately, investors want to know that their investment isn’t funding exorbitant management salaries.
The Market — Investors want to see that you understand and have thoroughly researched the market for your product or service. You must be able to identify the market and its size as well as potential customers and distribution channels for your product or service. They want to know that you are able to justify the prices you plan to charge, that you can realistically support your growth projections, that you can identify actual or potential competitors, that you are able to describe barriers to entry for new competitors, and that you can discuss your competitive advantage.
The Business Itself — Be ready to explain how your business will operate. You will need to identify the timelines for getting your concept to market, your sales channels, your target customers, your revenue model, your marketing approach as well as your manufacturing, distribution and logistics. You will also need to explain how the business will ramp up to the sales levels shown in financial projections and when the business will reach break-even profitability and break-even cash flow.
The Funding Request — You’ve gotten their interest. Now they need to know how much money you are seeking and what you plan to do with the funds, how much ownership you are willing to give up in return for the funding, and whether or not you expect more rounds of funding.
Payoff to the Investor – Before saying “yes,” investors want to know how and when they will get their return. You must be prepared to justify the exit strategy and time horizon as well as provide the investor with a reasonable expectation of what kind of return to expect.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Getting potential investors to write you a check is always a challenge, however, by following these guidelines you will greatly increase the probability that they will say “yes.”
