What’s our funding history? Who’s on the cap table? And how are we going to use the new money?
After explaining your business, invite investors to join as financial contributors. Address your funding history, cap table, and plans for the new investments. Before you make the “ask,” you must explain some basics about the funding history and your current ownership structure.
Include the following:
CapTable Overview:
Show a detailed CapTable, explaining the share distribution among founders, existing investors, and potential employees through the option plan. Share valuations from the latest funding round, including any financial instruments like convertible loan notes or debt.
Rationale for Seeking Investment:
Explain why seeking new investors is important. Clearly state the fundraising goal and how it supports operational and growth plans for the next 18 months. (Refer back to the Financial Slide).
Investment Details:
Outline expected investment sizes, whether a lead investor is sought, and the ideal co-investor profile. Share the anticipated pre-money valuation or total enterprise valuation (TEV).
Valuation Methodology:
Justify the valuation using traction, growth, unique tech, and industry expertise. Discuss valuation metrics like Price/Sales Revenue (P/S) and specify if using Last Twelve Months (LTM), Next Twelve Months (NTM), or ARR.
- To calculate P/S, divide your pre-money valuation by the LTM’s sales revenue, NTM projected sales revenue or ARR.
- Industry Benchmarking: Show awareness of industry standards by comparing with similar companies' revenue, growth, and recent funding rounds in your sector. This helps investors arrive at a fair valuation, justifying their ROI expectations for a future exit. Use reference reports from the likes of Techcrunch or Pitchbook to highlight the position in the market.
Long-term Vision:
Highlight the long-term vision. Investors determine startup valuations based on potential returns over 5-10 years. Early-stage valuations often depend on supply and demand, with competing offers indicating a favorable position. Prioritize finding the right investor fit over the highest valuation to avoid challenges like down-rounds.
The Ask Slide – Answering Key Questions: This slide addresses vital questions:
- What’s the funding history?
- What's the cap table like?
- How much is being raised?
- How will the funds be used?
- What milestones will be achieved?
Here’s an example of a slide where all these questions are answered:
Conclusion:
Conclude this info-packed section, showing ambition and alignment with investor expectations. While usually the last slide, it sets the stage for a summary slide reinforcing why the startup is an exceptional investment. A clear and transparent presentation builds confidence for a successful partnership towards a future exit.
Congratulations on reaching the last slide! Here, it’s a great practice to use a summary slide to highlight why your startup is an excellent investment choice, reminding investors of your key points and reinforcing the potential value of your venture.
