I think you have to do all of the above to reassure them. But, most important, is a strong/proven management team.

No matter how good the idea, no matter how string the product, no matter how thought-out the biz plan, a weak management teams will screw it up. Whereas, a weak idea, a weak product, a weak biz plan and a strong management team is still a recipe for success. And VCs know it.

In an initial VC presentation (~15 slides, 30 minutes) you want to cover what's the problem and how you're solving it. Goal of the initial meeting is - easy enough - get the next meeting. So don't go into details, but get them thirsty for more:

You need to cover three aspects:
1. Management
2. Market
3. Technology/USP

and then of course they'll expect a financial plan. You can cover exit strategy orally.

1. Management: you need to have people on board that are stars in the industry, have done it before (CEO-role, not only technical). If the management team is not complete, make clear what you're looking for to complement it. If the CEO is not the CEO to stay, also make that clear. If management team is weak, try to have a strong Board of Directors or Board of Advisors. (I take that back: have a strong board anyway).

2. Market: Most large VCs are looking for the $1B+ market. Ideally in hypergrowth (50%+ CAGR). You need to cover how you access the market (marketing strategy, distribution strategy, sales strategy). You need to have a detailed understanding of the market - players, business models, segmentation.

3. Technology/USP: Here is important how you differentiate from competitors and how those competitors can't move into your space. For example Intellectual Property, patents, brand (not so much these days anymore...).

Exit strategy is important - as you mention. Large VCs are looking for companies that they can take public at $100M+ valuation after 5 years.

Finally, you need to find a VC of course that invests in your space. Aerospace is not a favorite for most VCs.

Most VCs get hundreds/thousands of business plans. So being introduced is important - talk to your board, advisors, CPA, bank etc. who they know.

Hope that helps.

Gunther

Hey- My two cents is can you bootstrap it?

Its been a long hard road for us, but we have found the people and resources by just doing this every day. Now such a long time later we have some fruit. I have been told time and time again the energy spent getting VC's you can find customers- hell you can find customers that will pay you to develop if you sell it good enough.

Hey email me if you want to chat more- I'd gladly talk more about what has worked for us and what hasn't

-Kevin
kleversee at gooru dot com dot.au

David,

My response is based on the work I've done on the VC side of the business. Other firms have their own set of requirements so some or all of this information may not apply to them.

In another post, a person named Kevin suggested "bootstrapping" (self funding). If you can afford to do it, it's a good solution. Why give up a part of your venture to a VC if you can create enough cash flow by bringing in new clients by yourself? Also consider debt funding through a bank for the same reason. However, this can be difficult since banks prefer hard assets to secure a loan (equipment, land, buildings, and your personal property).

From a VC perspective, the items that we need answered prior to an initial meeting:
1) What is our working relationship with the person that introduced you to us?
2) What is their relationship with you?
3) Does your venture fit within our business portfolio?
4) Is the venture secured by hard assets (equipment, land, buildings, and your personal property)?
5) How much money do you need and for how long?
6) How much money have you invested in the venture to date and how much will you be investing during the next two years?
7) Name and contact information for your top 5 clients and top 5 suppliers.
8) What experience do you have in this industry?
9) What is your business and educational background?
10) Who are the key people on your team and what is their experience in the industry, their business background, and their educational background?
11) What does your pro forma Profit & Loss and Cash Flow statements show for year 1, year 2, and year 3? Note: Our expected return on investment will depend on the risk associated with your venture and how long we need to be in the venture. Also, a 5-7 year exit strategy is a very long time. Two to 3 years is a better timeframe.

Unless the VC is a rich uncle, forget about it.

Keep in mind, your chance of raising money is 1:500 from VC's and 1:200 from angels. As for your management team, you need atleast 1 member that has grown reveneus from $0 to $100 million in one of his/her past start-ups.

Oh, and don't waste your time with a business plan, they don't read it.