Page 18 - ITI VC Guide

18
Equity Funding Guide
1. The Product / Service
In simple language, this should explain what exactly the product / service offering is. This will clearly demonstrate the unique selling point of your offering, differentiation from other products, barriers to entry etc and how your product / ser- vice will add value to the purchaser.
2. The Market
A common mistake that entrepreneurs make
is to express their market in terms of a global figure representing all activity within their sector. The investor requires comfort that there is a commercial opportunity for your product/service and that the management team that has the ability to exploit this opportunity.
The marketing section should demonstrate who the customer base is likely to be, how the product / service will be priced, how it will be distributed to customers, an analysis of competitors and how you will deal with competing goods and services.
It is unlikely that there will be no rivals in your market sector and you should avoid comments like ‘there is no competition’ or, ‘our product is totally new’. If no one has thought of offering a similar or competing product, is it conceivable that there is no demand for your product or that customers do not realise that they need it?
3. Management Team
Most Venture Capitalists will tell you that they invest in people not ideas. The management team must sell their experience to investors as well as their understanding of the market which they are targeting.
This section must convey the message that the team has the full complement of skills required to deliver the plan. Indeed, it is prudent to identify skill gaps which must be addressed in order to deliver the plan as new investors in a business can utilise their networks to fill the gaps. Non-Executive Directors (NEDs) are an obvious