by Kim Lavine
He tore up my business plan and threw it in my face. I closed the deal with that group 3 months later. This is how I did it. Every group might be a little different, but this is how it worked for me.
PHASE I – Application
Submit an application with the usual financial information, including Balance Sheet and Profit and Loss, along with a Business Plan. If you get past this, you move on to the next step.
PHASE II - Preliminary Review
A committee of Angels reviews your application to determine if there is interest. If they like what they see, you get invited to a Pre-Screening Meeting, where you meet with one of the committee members, probably your “Quarterback,” who sees how you do in person and is responsible for shepherding you through the process. If they don’t like what they see, you’ll get your application back. If you are lucky, they will provide comments about what you need to fix.
PHASE III - Screening Meeting
After you met with your Quarterback and you’ve presented a strong enough opportunity for investors, you’ll be asked to present to a select group of the Angels, anywhere from ten to twenty people. These are members who have expressed advance interest in your concept and want to consider the opportunity before it gets to the whole group. If you make it past this gauntlet, you will be asked to present detailed financials for preliminary due diligence, which means a lot of CPA’s and CFO’s will be rifling through your books, taxes and financial statements to make sure everything you’ve done since fifth grade has been correct, drafting all kinds of crazy Sources and Use documents. You’ll learn more about Sources and Use documents soon. Don’t worry—having a lot of debt is not necessarily a bad thing. Just make sure everything is 100percent accurate because they’ll find out if it isn’t.
PHASE IV - Screening Checklist Review
Believe it or not, they’re just now getting serious! If you’ve survived exposing every financial detail to their scrutiny, brush up your PowerPoint presentation, because you’re about to go before a whole ballroom of them.
PHASE V - Full Presentation
I didn’t get this far, which was a good thing—although I thought it was horrible at the time! Keep reading about what to expect and how to prepare.
PHASE Va – Post Presentation
After you make your pitch, the group is polled, which might mean that your Quarterback goes back to his office and starts calling people, trying to rally the troops to come to a consensus. This can be compared to catching mercury; you’ll never know how hard your Quarterback works for you during this process until you close the deal, so be really, really nice to him while you’re taking him to the mat.
PHASE Vb - Deep Dive
Okay, now you start your second course of Due Diligence. They will look at your Intellectual Property, Contracts, Sales Contacts, credit card statements, bank accounts, maybe even make you take a physical--before they get interested in something else and wander off.
PHASE VI – Everything you’ve done up to this point has been easy!
Your Quarterback has enlisted interested investors. A Term Sheet is drafted, outlining the general terms of the investment opportunity being offered. Active negotiations are conducted determining every little aspect of how the business will be run, from its corporate structure, the make-up of its Board of Directors, to what you will be paid.
An Excerpt from MOMMY MILLIONAIRE.
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