Sep 25, 2012

By John Cho, Partner, KPMG Enterprise

When contending for an investor's attention, don't overlook the importance of arriving prepared or having done your homework. An entrepreneur should combine their passion for their business along with detailed business information. Potential investors want to know why people will care enough about the entrepreneur's product or service to purchase it, as well as how the business will make money.

To appease investors, entrepreneurs should focus on providing the most accurate financial information possible. Pricing, turnover, breakeven points, profit margins, production costs, overheads, competitive market share - investors want this information and more. For example, how will price combine with value to meet the business owners forecasts? How did the entrepreneur arrive at the business's income and cash-flow estimates?

A business owner should present this information accurately, transparently and without equivocation. Investors who discover inconsistencies in an entrepreneur's financials may walk away.

Some other key points to consider:

• Business owners should clearly outline what they intend to do with investor money - additional working capital may call for a different form of financing than the purchase of fixed assets.
• Business owners should explain and discuss their ideas in plain language. They may do business in highly specialized fields such robotics, financial derivatives or nanotechnology, but the language of making money is universal - it is best to keep things as simple as possible.
• Finally, business owners should not become discouraged if their pitch fails. Even unsuccessful pitches produce useful information, and investors should provide solid reasons for rejecting an idea. Entrepreneurs can use this feedback to improve their pitch until they get it right and make a deal that suits them best.

No matter what the outcome, the pitch process is an intense one with much to be learned and gained. Keep these key points in mind when building your pitch and keep pursuing the best possible deal for you and your company.

John Cho is a Partner with KPMG Enterprise™. He can be reached at 416 777 3994 or johncho@kpmg.ca.



The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG LLP. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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