London, United Kingdom, May 06, 2005 --(PR.com
)-- “The biggest deal breaker for a startup or early stage company seeking funds is the inability of management to quickly establish confidence among investors,” according to Brian Lewis, president of Grosvenor Capital Markets, Inc. (www.grosvenorcapital.us)
Lewis provides consulting services for companies seeking seed and angel funding and says Grosvenor receives an average of 15 new deals a week at its New York and London offices. He said very few of them pass muster.
In an interview here, Lewis said new companies also make the mistake of “overselling” themselves in their business plans.
“Most new entrepreneurs feel compelled to fill their business plans with more words than are needed. Very few professional investors want to see a full blown business plan in the initial contact stages; they want a pithy, compelling executive summary laced with authoritative third party validation,” he said.
The business model is important, of course, as is the market potential for the product or service upon which it is based. “But if you can’t prove your case in a clear, logical and compelling way in a page or two at the outset, you are not going to get your foot in the door. And, if you can’t establish the qualifications of your management team right off the bat, your angel will fly away,” Lewis said.
The Grosvenor Capital president also points out that these days investors are not likely to be looking for the kinds of enormous returns they sought in the heady days at the end of the last decade. “Huge returns are no longer the lure they used to be for this class of venture investor. Smart angel investors today are looking for realistic, albeit lower, profits and they are willing to wait longer for them—as much as four to five years.”
Lewis said that the average early stage investor today sees ten or 12 proposals a month, will put about $50,000 into a deal he or she likes and is most likely to be favorably influenced by the recommendation of another investor. “That’s why it is important to do as much one-on-one networking among investors.”