How do PE Investors Evaluate Your Business
If you are walking into the den to pitch your company you should get a feel on how a potential investor will be evaluating your idea. I know there are a ton of advice that focuses on the business idea. The following few examples are part of the whole but not the whole:
- Market Size
- Management Experience
- Business Model
- Ability to attract clients
- What problem are you solving
- Can you identify the people who want the solution
- Can the people who want the solution afford to buy it
- etc. etc.
These are great things to think about but I would like to add the following for consideration:
- The Idea: This is probably the superset of all questions asked above so answer them.
- Management: Why did I pull this one out because in Louisville “You always bet on the jockey not the horse”.
- Timing: First is this an idea or product that will take years to catch on or is it a little too late? Second how long will it take to grow the company and how long will it take to get my cash back.
- Valuation: Too frequently a management team does not address the valuation question in the pitch – preferring for the investors to set the price. Hey that falls under that quaint rule “Who ever names the price first loses.” – Don’t believe it – name the price get your money and grow your business.
Look I hate to add four more things to the mix but thinking about them before you do your pitch really will help.
Tags: Funding, investor pitch