Dirty cash, I want you

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The “Ask”

“We’re asking for £250,000 for 20% of the business”

This slide is all about how much capital the founders are looking to raise, what the money will be spent on, and how (based on the metrics) that capital will help grow the business by x.

Below, you can see that fitness training app, Fittr, simply listed how much they were raising and what they would spend the money on. This is a very early stage startup and although investors obviously need to know much more than this, it does begin to show what they’re planning to do over the next year. It’s a very basic slide and we would expect that the team would have had a lot more conversation with investors that went into a lot more detail about their plans.

The Milestones/Plan

As well as ‘The Ask’, this is also an opportunity for founders to show that they understand what needs to be done to rapidly and significantly grow the business and how much it will cost to do so. It’s another opportunity for investors to see whether the founders are realistic, but also to try and gauge whether an investment into this company is likely to provide them with the returns they need to feel secure about risking their capital.

Below is the Milestones slide from Castle (the app for landlords). Their deck doesn’t state how much they were raising (or it was taken out of the public deck online), but it does give a much clearer idea of what the capital raised will help them achieve in terms of company growth. It doesn’t go into detail about how they’ll do that and what percentage of capital will be spent where though.

MetaCert is a blockchain-based security protocol company (check out all those buzzwords!). Essentially they do security for big messaging systems such as Slack and Hipchat. We like their ‘The Ask’ slide. It’s perhaps a little wordy, but using the title ‘Investment Opportunity’ instead of ‘The Ask’ instantly turns the tables and makes the investor the beneficiary, not the company. It also clearly states how much is being raised, who is already committed tot the round and what the money will be spent on. Bonus points for the fact that they’ve already identified the people they’re hiring and filled the positions. That shows commitment from the hires and confidence from MetaCert.

They then back all of this up with more detail on the Milestones they’ll achieve with the money.

FlowTab goes one step further and indicates what future rounds of investment will look like as well as an exit strategy. This is a great way for founders to show that they recognise how venture capital works and are prepared for a VC roadmap. It gives the founders credibility (if it’s done well) and shows investors that there is the potential for high returns and liquidity if they make an investment.

Initial Seed
 August 2012
Angel Round
 February 2012
Series A
 Q4 2013
Exit St...

Look back at MetaCert’s Milestones slide. Did you notice them talk about how long the money will last – 14-18 months runway. This may be a term you’re unfamiliar with and on that note, let’s learn some key financial terms…