We work with a lot of early stage and high growth tech companies that have a capital raise in their short to medium term business plans, and we are often asked to connect these companies with potential angel and VC investors.
Most of the investors we know like to see some written material on an investment proposition before agreeing to meet with a company seeking investment. This could be as simple as a one or two page “drop sheet” summarising the company and proposition, although some investors also like to see a more detailed “deck” (an information memorandum or similar document) before going further.
It’s more efficient for the investor this way – they often don’t have time to meet everyone looking for money and, frankly, it is easier to say a polite “thanks but no thanks” to someone you haven’t met. Essentially, you want to make the consideration of the investment as easy as possible for the investor.
Unfortunately, many NZ tech companies are tragically poor at producing succinct and up to date drop sheets and decks when asked for them by potential investors. Perversely, it is often even harder getting tech companies to update their drop sheets and decks as the capital raising process drags on, even though the hard work of writing something from scratch has been done.
The upshot of this is that good investment leads are lost because companies fail to stump up with a drop sheet or deck while the prospect is “hot”. This is particularly the case where investment leads have arisen through more casual conversations with investors, whether at conferences or when investors are passing through NZ. These sorts of leads are often perishable and you need to strike while the lead is hot.
So – if you might want to raise capital in the foreseeable future, wrap a wet towel around your head, write up, and keep up to date a drop sheet and deck for use at short notice. Your cap table will thank you for it!
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