As a member of the local Angel group selection committee, I’ve seen a lot of startup presentations to investors, and I’ve never seen one that was too short – maybe short on content, but not short on pages! A perfect round number is ten slides, with the right content, that can be covered in ten minutes. Even if you have an hour booked, the advice is the same.

I’ve published these points before, but based on interest, it’s time for an update. Remember the goal is an overview presentation that will pique investor interest enough to ask for the business plan and a follow-on meeting, not close the deal on the spot. If you can’t get the message across in ten minutes, more time and more charts won’t help.

Every startup needs both a business plan and an investor presentation, completed before you formally approach any investors. The approach I recommend is to build the investor presentation first, by iterating on the bullets with your team, and then fleshing out the points into a full-blown text-based business plan document. Here are the ten slides you need:

1. Problem and market need. Give the “elevator pitch” for your startup. Explain in analogies your mother could understand, and quantify the “cost-of-pain” in dollars or time. Fuzzy terms like “not user-oriented” or “too expensive” are not helpful.
2. Solution product & technology. Here is how and why it works, including a customer-centric quantification of the benefits. Make sure to communicate the relevance of your product / services to market needs. Describe your technology patents and “secret sauce”.
3. Opportunity sizing. Define the characteristics of the overall industry, market forces, market dynamics, and customer landscape. Investors like $1B markets with double-digit growth rates. You need data from industry experts like Forrester or Gartner for credibility.
4. Business model. Explain how you will make money and who pays you (real customer). In this section, you need to be passionate about recurring revenue, profit margin, and volume growth. Implicit in this is the go-to-market strategy.
5. Competition and sustainable advantage. List and position your competition, or alternatives available to the customer. Highlight your sustainable competitive advantages, and barriers to entry.
6. Marketing, sales, and partners. Describe marketing strategy, sales plan, licensing, and partnership plans. Here is also a good place for a rollout timeline with key milestones. Make sure your marketing budget matches the scope of your plan.
7. Executive team. Qualifications and roles of the top three executives and top three on your Board of Advisors. They need domain knowledge and startup experience. Highlight their level of involvement, and quantify their skin in the game.
8. Financial projections. Project both revenues and expense totals for next five years, and past three years. What is the current valuation of the company? Show breakeven point, burn rate, and growth assumptions.
9. Funding requirements and use of funds. What is the level of capital funding sought during this stage? What equity is the company willing to give in return for the investment? Show a breakdown of the intended uses of these funds.
10. Exit strategy. What is the timeframe of return on investment? What is the planned exit strategy (IPO, merger, sale, including likely candidates)? What is the timeframe for the exit? What is the rate of return expected for the investor?

Hand out copies of the slides before the presentation for note taking, with proper cover sheet, with brochures, product samples, or other marketing material you may have. Offer to do a demo later, but don’t try to squeeze it in the presentation.

My last recommendation is practice, practice, practice. The CEO should give the pitch, and prepare by playing “presidential debates” – asking your team to be the opponents, and check you on timing. Investors hate long rambling presentations. Show some energy and enthusiasm, and remember if you lose their attention, you have lost the deal. Have fun!

New entrepreneurs often seem to confuse viability with fundability. Certainly a non-viable business should be not fundable, but many viable businesses are also not fundable. Thus when an investor declines your funding request, you need to curb your anger and understand the real reason for this outcome.

In my experience, here are the most common issues that cause funding requests for viable businesses to be rejected, in priority order:

1. Inadequate business plan. Some investors say half the ideas pitched to them don’t have any plan at all, even though some have great potential. Other entrepreneurs skip just some of the elements in The Four Cornerstone of Every Business Plan. None of these get funded. Investors know that entrepreneurs who start a business without a written plan almost always fail.
2. Inexperienced team. Investors bet on the team, more than the business plan. Your business model may be very attractive, but if you are new to this, you may not be fundable. If you can find a partner who has deep domain knowledge and a track record of building businesses, I can assure you that your luck will improve.
3. Business domain is high risk or not squeaky clean. Certain business sectors have historical high failure rates and are routinely avoided by investors. These include food service, retail, consulting, work at home, and telemarketing. Also, don’t expect investor enthusiasm for your gambling site, porn site, gaming, or debt collection business.
4. Opportunity is not large or growing. Investors are looking for a large and growing market, to offset the huge risk of funding a startup. Rules of thumb include an opportunity projection that exceeds a billion dollars, with at least double-digit growth. Smaller numbers may easily make a viable business, but won’t attract investors.
5. No sustainable competitive advantage. The market may be large and growing, but you need some “secret sauce” or intellectual property to keep the big guys from jumping in, once they get the picture. Sleeping giants do wake up, and investors hate to see their money used to build a market for Microsoft, IBM, or Procter & Gamble.
6. Financial projections are too conservative or too optimistic. Investors won’t fund people who won’t push the limits, or inversely won’t recognize business realities. More rules of thumb. Your five-year revenue projections better reach at least $20M, but should not exceed Google’s actual revenues of $3B in the fifth year.

Don’t expect a straight answer on your rejection reason from most angels or venture capital people. They will probably tell you all looks good, but come back later, after you have finished the product, signed up a few customers, or reached some other future milestone. This is called “not burning any bridges,” in case you start to show traction and they want back in the deal.

Thus you need an experienced advisor who can do his own analysis of your plan, and follow-up informally with all investors to give you the real reason for your rejection, so you can fix it. I find it completely disheartening to see founders banging their head against the same wall over and over again with every investor, without even realizing their problem.

There were at least a half million startups last year, and only a few thousand received investor funding. In fact most of the others avoided all these rejections by simply using their own money (bootstrapping), or using the old standby funding source of friends, family, and fools.

Even if you don’t intend to “walk the gauntlet” of external investors, it will be worth your while to navigate your startup into a category that is both viable and fundable. Isn’t your personal risk just as important as investor risk?

After struggling to create your business plan for months, every entrepreneur likes to think that their document is inspirational and will reach someone who is smart enough to see the brilliance of the idea, intuitive enough to recognize their business acumen, and enthusiastic enough to offer the money required to make it happen.

Every serious investor, on the other hand, has a stack of these in their in-basket (email or real plastic) awaiting review, and is looking for the flaw or less-capable entrepreneur in each that predicts failure, allowing them to discard it like another piece of junk mail. Many VC firms and investment banks receive as many as ten plans per day, so it’s hard to get them salivating.

Thus, I think it’s helpful to know some of the most common turnoffs that investors encounter in plowing through this stack of requests for money. Here is what I hear from investors that you shouldn’t do, and can attest to from my own meager efforts:

1. Tease or spam the investor. Every investor is annoyed by persistent messages that say “Give me a call to hear about the most disruptive technology since the wheel.” You can bet that if he ever sees a real business plan from you, it will go to the bottom of the pile. Asking him to check out your website first and comment is equally bad.
2. Send the plan without a summary. An Executive Summary is a one page elevator pitch of the whole plan (may be separate from the plan), which gives an investor a net perspective on the key business parameters. Too many plans don’t have a summary section, or the summary is all you get. You lose in either case.
3. No plan in the Business Plan. Many plans investors see are really modified product specifications, which tell you more than you want to know about the internals of the product, but almost nothing about how and when you plan to sell it and make money.
4. Embarrass your English teacher. Obvious draft markings, handwritten, or unprofessional results, like misspellings and grammatical errors in the plan, will only convince investors that your business will be run the same unprofessional way. Remember, investors invest in people before ideas.
5. Fill the text with acronyms. Remember that the people reading your plan are smart, but not intimately steeped in the acronyms of your technology. They assume heavy use of acronyms in inconsiderate, lazy, or maybe an intentional obfuscation of facts. Stick to laymen’s terms.
6. The base plan is a book. Avoid being excessively wordy or redundant in your plan. The base plan should be in the 20-page range. Stick to the facts, state them clearly, and do not repeat them unnecessarily. At best, long plans make your business seem complex and more risky.
7. It’s all in an appendix. Investors don’t mind supporting documents with the base plan, but the base should make sense and be complete without jumping to an appendix. Making the total plan heavier, with ten appendices, or a hundred pages is not impressive.
8. Don’t be negative. Don’t say things about your competitors or customers that you wouldn’t be able to defend if they were in the room with you. I see lots of statements about poor usability, poor quality, fat and slow, all without even anecdotal data. Investors read these as unprofessional and even unethical, unless supported by third-party data.
9. Prototypes and demos attached. Remember that early prototypes and demos usually break or don’t work for unfamiliar users, and we can’t see all the work and love you have already put into them. Pictures and words leave a much better impression at this stage.
10. Letters from your friends. Introduction letters from friends of the investor are always appreciated, but letters of praise from your friends don’t carry the same weight. Customer testimonials and vendor contracts are much more impressive.

When you send a business plan to an investor, remember that the purpose is not to sell your product or service, but to sell you and your business model. You are looking for scarce investor financial resources, and your competition at this stage is your peers who may have more convincing and credible proposals. You need real brilliance, not turnoffs, to win.

For more on how to avoid common mistakes, read Akira’s article, Why Business Plans Don’t Get Funded.

Modern investors love to first read a two-page summary of your business plan, formatted like a glossy marketing collateral sheet, with text well laid out in columns and sidebars, and a couple of relevant graphics. This one had better grab their attention, or they won’t look further.

You may have already found several articles, web pages, or books about writing the perfect executive summary. They all offer a list of requirements that might take 50 pages to address, but of course they ask you to write concisely.

Before you start, remember that the goal of the executive summary is to provide a printed version of your best elevator pitch, to provide a positive first impression to the reader. Think of it as a selling effort, not an attempt to fully describe your startup. Here are the key components:

1. The problem and your solution. These are your hooks, and they better be covered in the first paragraph. State your value proposition, and what specifically you are offering to whom. Skip the acronyms, history of the company, and the disruptive technology behind your solution.
2. Market size and growth opportunity. Investors are looking for a large and growing market. Spend a few sentences providing the basic market segmentation, size, growth and dynamics – how many people or companies, how many dollars, how fast the growth, and what is driving the segment. Skip the comment that you are conservatively estimating your penetration at 1%.
3. Your competitive advantage. Identify your sustainable competitive advantage, like unique benefits, cost savings, or industry ties. Don’t kill your credibility by saying you have no competition. At minimum, you compete with the way things get done currently. Most likely, the investor has already seen multiple plans with similar solutions.
4. Business model. Who is your customer, what is the price, and how much does it cost you to build one? Do you now have real customers, are just starting development. Outline your sales and marketing strategy (direct marketing, sales channel, viral marketing, and lead generation). Identify key quantities, such as customers, licenses, units, and margin.
5. Executive team. Remember that investors fund people, more than ideas. Why is your team uniquely qualified to win, and what have they done before? Explain why the background of each team member fits, by naming roles and names of relevant companies. Include outside advisors if they have relevant experience.
6. Financial projections and funding. You need to show your summary revenue and expense projections for three to five years. Investors need to know the amount of funding you are asking for now, and what they get. The request should generally be the minimum amount of cash you need to reach the next major milestone in your plan.

The above outline need not be applied rigidly or religiously. There is no magic that fits all startups, but make sure you touch in each key issue. You need to think through what points are most important in your particular case, and capitalize on your strengths. Key points skipped are red flags, and investor first impressions will go negative.

A final important element is not even in the executive summary, it is the paragraph you use in the email that introduces your company and has the executive summary attached. Less is more here, so include the grabber, show your passion and commitment, and be sure and ask for something (like a follow-on meeting or specific feedback). That’s your metric to see if you have their attention.

You’ll find some additional tips in this Inc.com article,  How to Write an Executive Summary, that incorporates thoughts from Akira Hirai, Cayenne’s CEO.