Pitching Florida Investors? Here's how to prepare.
The most important things to consider when seeking startup funding from Florida angel investors.
By Steve O’Hara, President, New World Angels
I am often asked in my role as President of New World Angels, Florida’s premier structured angel investment group, what are the most important one or two things an entrepreneur should do to get funded by Florida investors. It is rarely that simple, but here are the top two ideas I can offer entrepreneurs.
First, do your research on Florida investors! Florida has a number of angel investment groups, family offices and venture capital firms. While we might all look the same to you as a source of funds, each have our own focus, process and capability. You can waste a lot of your and our time by providing a one size fits all pitch.
How do we differ?
First, we all have inclinations toward industries. Some of us have one industry focus while others of us pursue other industries. I know one group that is highly focused on technology, if you have a new consumer product you should not expect funding from them. Another group focuses on medical technology, especially pharmaceuticals. Don’t bother them with an AdTech idea. At New World Angels, we are generally industry agnostic (although we are not interested in real estate deals). Take the time to read the website’s description and then take a look at the firm’s portfolio of investments to make sure you are applying to the right group.
Second, we all have different investment size capabilities. Many firms are interested in only a $100,000 to $200,000 investment while others will only invest if they can put at least $1+MM to work in the deal. At New World Angels, while we have done deal rounds as low as $0.2MM and as large as $2.25MM and we have almost $6MM in one deal through multiple rounds, our preferred investment size is between $0.5MM and $1.0MM for an initial investment. Despite this preference and deal size history, we get entrepreneurs approaching us for only $100,000 or to lead a $10+MM round. Know how much capital your plan requires and then target the firms that match your needs.
Third, know each investment firm’s investment approach. Does a firm lead deals or simply follow other investors? Leading deal rounds takes significant work and requires seasoned lead investor, which is why entrepreneurs often learn that an investor is interested in participating in a deal but not leading. At New World Angels, we lead about 90% of the deals into which we invest but there are not many of us willing to do so much upfront work. Our process is very disciplined. We look at about 250 deals each year, meet with 66 of them in person, bring 33 of these to our members. We form about 25 due diligence teams and then invest in about 4 new deals each year. It would be a lot simpler to let others vet the deal and simply sit back and evaluate once a term sheet exists (we know because we occasionally do that). However, we find that we gain greater insights doing our own diligence. It also provides an entrepreneur greater value and it generally builds relationship which allow us to stay involved over the longer term. If you are looking for someone to lead your deal, approach firms that lead deals and offer what you need.
OK, so you have done your homework on the investor landscape and you know the firms which you want to approach. What’s the next thing to do? No, it is not to network and try to find an end-run around the firm’s process.
Fourth, is clear communication. Combine your entrepreneurial plans and your knowledge of potential investors to create a clear and succinct, clear 30 second pitch, a 5 to 10 minutes pitch, and a full business plan. Investors need confidence that you have thought things through. Until you have these, you are better off not approaching formal investors. Do you need all three?
The 30 second and 10 minute pitch is critical in advancing within our screening process. The business plan picks up where the 10 minute pitch ends. It supports our due diligence. Too often, the 30 second pitch is ignored as part of this process but it is critical for multiple reasons:
If we meet you at a conference, it’s doubtful we will remember little more than your company name and the 30 second pitch. If your 30 second pitch is memorable, it increases the likelihood you will get a chance to deliver the 10-minute pitch.
Even after we see your full ten minute pitch, if the 30 second pitch resonates, it helps us remember the rest of your pitch.
We know your idea is so great that it can’t possibly be boiled down to 10 minutes let alone 30 seconds. Do it anyway!
The 10 minute pitch doesn’t need to communicate your whole business plan but should show us that you have thought through the major areas of the business such as market size, competition, market differentiation why you will succeed, your go-to-market plan, pricing, unit economics, cash flow and your exit strategy.
Your goal with both the 30 second and 10 minute pitches is to get New World investors to form a due diligence team and begin a deeper look. You are not going to close the deal with your pitch. But you can begin the deliberations with a compelling story.
So, take your time before you apply; know who will be naturally inclined to invest in your type of company. It makes you look well aligned and it increases your chance for funding.