Frequently Asked Questions
The DLA Venture Pipeline’s mission is to provide value-added services to start up technology companies and the venture capital community. Below is a list of the most frequently asked questions.
How does the Venture Pipeline Group work with companies?How many pages should the Executive Summary be?What are the key components that must be in an executive summary?What are the most common mistakes we see in the business plan process?How long will it take to raise money?How many venture funds do you send my plan to?How do you introduce our plan to the Venture Capitalists?Do you decline to work with certain companies?How early-stage are VCs willing to go; and when should we seek venture capital?Do you attend investor meetings with the companies?How does the Venture Pipeline get paid for its services?Most of my target investors are not located near my company's headquarters. Can the Venture Pipeline help introduce my company to investors outside my region?How do I get the process started?
Q. How does the Venture Pipeline Group work with companies?
A. The emerging growth companies we work with tend to be at varying stages, with some needing more assistance than others. Typically, we advise on the overall executive summary, business model, and fundraising approach. We approach it from the VC's perspective - delivering critical feedback to the entrepreneur, with the idea being to rectify potential issues. Our ultimate goal is help the entrepreneur create a defensible, fundable and validated business story from which we can connect them with targeted funding sources. For more information please review,
The Process.
Q. How many pages should the Executive Summary be?
A. The Executive Summary has to make a great first impression. It's typically the first opportunity a prospective investor has to learn about your company and determine whether or not he/she wants to take a meeting. Many entrepreneurs think the document needs to be no more than 1-2 pages. This is a fallacy. It needs to be as long as necessary to tell your macro story as a compelling investment opportunity. In most cases, this can be accomplished in 6-8 pages.
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A. We believe the following macro elements should be addressed in the executive summary.
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Brief history / description of your company
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Overview of market problem and target market (including competitors)
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Overview of products and services that address the market problem
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Discussion of revenue and business model
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Background of management team (summary)
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Summary of company's financial performance to date (where applicable)
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How much money you need to raise and why
Q. What are the most common mistakes we see in the business plan process?
A. The following list can be used as a checklist of things to avoid when preparing and submitting a business plan:
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Grammatical and spelling errors
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Written in narrative, rather than outline format
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Misunderstanding the difference between total market and addressable market.
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Approaching the financial model from the top down.
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Leaps of faith (unsupported assumptions)
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Focusing on the technology and not the business
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Ignoring or dismissing the competition
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Projections that are too aggressive or too conservative
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Not providing basic contact information
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Q. How long will it take to raise money?
A. The short answer is - it depends. There is no right or wrong amount of time to raise money. We've seen deals happen in less than two months and we've seen deals take a year. Typical average is 6-9 months.
Q. How many venture funds do you send my plan to?
A. The short answer is - it depends. After the executive summary and investor presentation are finalized, we will help you create a list of all venture funds that fit your particular business profile. We work together to pare it down to a manageable targeted list and systematically approach the agreed upon fund targets. We will not overshop or shotgun your plan out to the investment community. Typically, we send your plan out to targeted funds, 4-8 at a time, soliciting feedback along the way, and refining the pitch as needed. We seek your approval on every funds we send it to.
Q. How do you introduce our plan to the Venture Capitalists?
A. We know the vast majority of the venture capitalists that will review your plan. Once we have an approved list of targeted funds, we will forward your executive summary to our contact(s) with a brief overview of your company. Typically this is an email message that highlights the positives and explains why we (Venture Pipeline) like the deal.
Q. Do you decline to work with certain companies?
A. Yes. However, we always provide feedback as to our reasoning. In many cases, venture capital is not the logical answer for some companies. Oftentimes, we'll suggest raising an angel round, or bypassing the venture capital approach altogether. There are numerous alternative routes for raising money, outside of the venture capital channel, and we're happy to provide suggestions. The challenge is, raising venture capital is a very time-consuming task, and if we're leading you on, suggesting you can raise money - we are taking you away from running your business, wasting your time and the VC's time - and that doesn't benefit anyone.
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Q. How early-stage are VCs willing to go; and when should we seek venture capital?
A. It varies dramatically among VCs. Considerations from their perspective include the industry of the company, as well as the experience of the management team. In general, your chances of garnering interest, are greatly enhanced if you can show some form of market validation. One mistake many entrepreneurs make, is to go out on the venture financing road too early. Nearly every VC maintains a deal database, and when they pass on your plan, it gets logged in as a "pass." Once this happens, it is nearly impossible to get them to take a second look at your plan. Our goal is to work with companies, before they start shopping themselves broadly. The good news is, we do know what funds invest very early, and if need be, we will make a selected few introductions, to test market the waters, before too many doors are closed. We adjust and modify as necessary for future introductions.
Q. Do you attend investor meetings with the companies?
A. No. We don't attend the investor presentations with you. We want the investor(s) focused on you and your presentation. After your presentation, we will solicit feedback from you, the entrepreneur, on how the meeting went. We can also get feedback from the potential investor, with their candid assessment. We net the combined feedback and work with you on next steps.
Q. How does the Venture Pipeline get paid for its services?
A. The Venture Pipeline Group is a value-added benefit for DLA Piper clients. There are no fees to either the company or investor for services or introductions.
Q. Most of my target investors are not located near my company's headquarters. Can the Venture Pipeline help introduce my company to investors outside my region?
A. Yes. The Venture Pipeline is a national group within DLA Piper. We have representatives on both coasts who can make the right introductions to the right investment sources. There are very few funds where we do not have a high-level contact.
Q. How do I get the process started.
A. You can start by e-mailing us your executive summary,
venturepipeline@dlapiper.com.
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