How to Make Your Executive Summary Shine | Get that VC Meeting

What are the steps to get venture capital? It's a question that came in from a YouTube viewer, irborneranger89, or irborneranger89, I don't know, hard name. Anyway, wrote in, I want to get venture capital, how does it work? What I mean to ask is what are the steps from finding one to closing the deal? So, I used to be in the VC business. Here it is. This is how you do it. This is the process that you have to go through, and hopefully you get some advice here that can help you actually go and land a deal. Okay, most businesses never make it. They'll get rejected by VCs mostly without even a response. So here's the process. It usually starts with connecting with a VC. Okay, now VCs typically have targeted funds. Okay, they look at specific industries and they create a fund around it. So when you are researching your VCs, you can go online, you can find out all the different venture capitalists out there. You can see who's recently raised a fund. Do they have money? If they don't have any open money, then you can make a connection, but they're not going to invest in you. So focus on the ones that have money. Next, see if they have an interest in your industry. VCs want to see rapid growth. They want to see at least 30% a year return on their investment. not in the first year, but compounded for when they exit. And they want to be able to get out of your business in 5 years. So that's being acquired, that's going IPO, that's management buyout, whatever it is. So you have to have a business that can throw off those kinds of returns. So it's typically something like software or technology. If you can't ramp up fast enough, it's not that you don't have a great business, it's just not a great business for venture capitalists. So this is all still part of a research phase. I haven't even gone and contacted them yet. The last thing I would do is look at, do they have any portfolio companies already who you can help? So have they already invested money into a business, into a different startup, that you can give some advice, some momentum, some guidance, some help with somehow? If the portfolio companies can work together, then you're not just bringing an investment opportunity to them, you're bringing a new partnership that can already help someone they've already put money into. So you're bringing more to the table. Okay, once you've found these different VCs, the next step is to reach out and contact them. And that's pretty easy. They all have an email or phone number that you can dial into. You can send them a message. You can find out who the VC is. You can see who's accepting the business plans and send it off to them. The most important thing the VC is going to look at, and this was me, I was on the screening side of things. I was seeing all the deals that were coming in and you had to get through me before you got to talk to the people who are going to raise the money. You have to have an executive summary that makes sense. Think about 2 pages. It defines everything in your business plan. That has to make sense. It has to be written in plain English. What we had, uh, an industry term we use was the grandmother test. It has to pass the grandmother test. Your executive summary has to be something that you could show your grandmother or somebody who knows nothing about your business and they could read it and understand it. So it has to be in plain English, has to not be filled with jargon, and it has to just make plain common sense. And a lot of companies, when they write their executive summary, even their whole business plan, it's so technical, so filled with jargon, that when they read it, it makes sense, because that's the world you live in. But remember, VCs, they're generalists. They're not specialists on a specific product like you are. So you have to make it make sense for them. If they can't understand it, they're gone. So show other people your executive summary and your business plan. Make sure it makes sense. That's the first thing I'll look at, okay? If your executive summary is not a winner, it's gone. Delete. Trash can. It's gone. Maybe not even a response. If they like it, they're gonna dig deeper. The next thing they're gonna look at is your team. They're gonna see, has this guy done it before? Is there any startup experience at all here? The term in the VC world is, is this the horse for the course? And so you want to build as much momentum as you can here. If you've never had experience building a startup, try to get people on your board. Try to create a board of advisors, not a board of directors, which has more legal implications, but an advisory team. Get people who can lend their name to the project even if they're not actively involved in the business. Show that you're not just a one-man show or a couple-man show. Get people who've had some experience on your advisory board. An advisory board is a loose term. It's just really getting somebody who will lend their name to the project and say, "Hey, I believe in these guys and I'm going to help them out." The next thing they'll look at is your financials. First, do you have any revenue? If you have revenue, you're already separated from 99% of the people who apply. Most people just come with an idea. If you can have something that has some revenue, you're way ahead of everybody else. And they're not expecting you to be huge. That's why you're coming to them. That's why you need money. The easiest money to raise, though, is expansion capital. You figured out how something works and there's a demand for it, and now you're ready to blow it up. And you need money to help do it. So get some revenue, get some momentum, as much as you can. I know it's hard at the start, and it's not going to be glamorous to say, "Hey, I have $10,000 in sales." But that's $10,000 more than most people. So you're already ahead of the game, and the more money you have coming in, the better it is. They're not expecting you to have it all figured out, but show some momentum. And then they're going to look at your projections. Can you throw off enough of a return that they can make money? Do you have enough growth potential in your business? If, if it's a great, you know, profitable company idea, but it's not going to grow at least 30% a year return for the investor, then they're not going to be interested. And then they're going to look at the rest of the plan. So it starts with the executive summary, then the management team, then the financials, and then the rest of the plan. Very detailed. Hopefully this is helping you. The next thing is if they like you, they're going to call you in for a meeting. You're going to come in for a meeting, they're going to just scope you out. You know, you've written a great thing on paper, and now they want to see who the person is who's presenting this idea, and they're going to challenge you on your business plan, and they're going to challenge you on your financials, and you better have an answer for everything. Every number in your financial statement, you have to have a reason for, and I know a lot of it you're, you're picking out of the air, but you have to be able to back it up. Where you're spending the money has to be clearly defined. How much do you need and where's it going to, and why do you need to spend this much money on this initiative? You have to have solid answers for that. If you waver, you're not gonna get the money. They're not gonna think you have the confidence to build this thing up. So practice, drill it, be able to explain every single number, every line in your executive summary, in your business plan, you have an answer for. Practice, practice, practice, and it'll help you win the pitch. If they like you, so that first meeting goes well, The next thing you're gonna talk about is evaluation. Now that should already either be in your business plan or you have a clear sense of what it's gonna be. Because if they don't like your valuation, then they're not gonna fund you. Before they waste any more time, they have to know how much it is that you want and how much of the company they're gonna get for it. And know what your bottom line number is. Know what you are willing to accept and what you are not willing to accept. What you're gonna walk away from. If you can agree on that, all of that, they like your valuation, they like your plan, they like, you know, meeting you, all of that's gone really well, the next thing they're going to do is due diligence. And this is usually a couple weeks. They're gonna dive deeper into your business. They're gonna learn more about your industry, learn about your competition. They will ask for more records and information for your company. If you have an office, they're gonna want to see it. You have a team, they're gonna meet them. They're gonna dive as deep as they can to get to know your business. If all that goes well, then they're going to think about what are the holes that you need to make this thing really take off. So for example, you might not be the best CEO for this business. You know, if you have some software company, maybe your best place is going to be leading the tech team, but not actually growing it as the CEO. That might be the advice that comes back, and that might be a deal breaker. Are you willing to step out of your role as CEO for somebody who's actually built up a software company before? And take it to the next level. They're gonna come up with a list of suggestions to help you grow your business. This is how they see it growing. They're gonna give you X amount of dollars and they'd like to see these changes made. Some will be now and some will be in the future, but this is their direction. You have to be on the same, same page. You have to believe in that same vision with them. If everything is good, if you agree, they're gonna give you a term sheet. They're gonna say, this is how much money we're gonna invest, this is the valuation, and you're gonna have a limited amount of time, very short, to make a decision yes or no. Because what they don't wanna happen is you shop the deal. So you get a term sheet from one VC and then go to another one and say, hey, this VC gave me this deal, so can you do better? So you have a really small window to make a decision. And then from there you say yes to the one that you like, and you go forward. So that's kinda A to Z of how to raise money from a venture capitalist. The biggest challenge typically is right up front because 99% of business plans don't get pulled in for that first meeting. So really do a good job with your executive summary, with your business plan, the management bios, the team you've built, and the financials, and hopefully some revenue momentum, and that'll give you your best chance of getting that first meeting. And it's up to you to seal the deal. If you have any more questions about it, leave it in below, leave it in the comments, and I'm happy to walk you through it. That's kind of a high-level overview of the whole process in a couple minutes. For those of you watching, like the video, thumbs up below. I'll do more for you. And I want to hear what you have to think. Leave a comment underneath. Let me know. You have a question, leave it below. I'll make a video response for you guys. Thank you so much, and I'll see you soon.