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7 Things that every investor looks for in a winning proposal

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Prepping for your big pitch

There’s an unfortunate reality about getting a startup off the ground: having a promising idea simply isn’t enough to get you funded. If you want to gather the capital necessary to get your business operational, you need to have a good idea as well as a solid bank of statistics, plans, outlines, and documentation to support that idea. Though it would seem like many ideas simply “sell themselves,” this is almost never the case.

The prudence of investors

You’re going to be pitching to potential investors, so remember that investors aren’t looking to give money away for free; they need to get something out of this. This is a risky endeavor, and they need to be assured that this isn’t just a good idea, but that it’s also a practical one with a genuine potential return. That’s the entire reason behind the standard formatting of a “pitch deck,” which theoretically tells investors everything they want to know.

So what is it that investors want to see in a successful proposal?

Ingredients for success

These are the things investors want to see in a winning proposal:

  1. A unique value proposition (UVP). First and foremost, your idea needs a unique value proposition; something that explains exactly what the company does and why it’s valuable, not to mention why it’s different than everything else on the market. This is a strong lead-in for any investor, as most prospective investors will only give ideas a cursory glance before dismissing them or probing for more information. Your UVP will also be useful later down the line, when you’re convincing clients instead of investors to do business with you.
  2. A detailed financial model. Ideas are powerful conceptually, but investors are going to be putting real, countable money into your startup. You need to be able to quantify everything in a detailed financial model; explain how you came up with the exact figure you need to get started, and how that money’s going to be used. Figure out and explain your cost basis, your potential for profits, and how you expect to grow over the coming years. The more detailed you are, the better.
  3. Thorough market research. It’s easy to form a hypothesis about how your idea might sell in a specific target audience, but again, investors like to see numbers here. What is it about your demographics that make your business so necessary? What hard evidence do you have to support your hypothesis? Thorough market research shows you’ve done your homework, and adds a layer of validation to your idea.
  4. Acknowledgment of the competition. You aren’t the only business doing this; chances are, even if your specific niche is unfilled, there are related businesses doing something similar already in play. Ignoring these competitors is a glaring flaw investors will see in your pitch deck immediately, so be sure to list at least a handful of your toughest competitors and explain why your business has an advantage over them.
  5. A reputable leader. Companies may be based on ideas, but they’re built and supported by people. All businesses, no matter how good they are in theory, target=”_blank” rel=”nofollow”need strong leadership if they’re going to survive. If you’re the one who’s going to make the decisions, you need to justify your acumen and experience, proving that you have what it takes to lead the business. Otherwise, you’ll need to find partners and employees with niche expertise who can compensate for your weaknesses.
  6. An expectation of return. This should be a part of your financial projections already, but make sure you have a specific callout for how you expect to return on your investors’ contributions. You’re asking them for a hefty sum of money, but what are you going to give back to them when you’re successful?
  7. Challenges and risks. Finally, your pitch deck shouldn’t all be blind optimism and pep talking. Be sure you include a section on the significant risks, challenges, and obstacles your business is going to face. This isn’t pretty, and it may not be fun to think about, but it’s a necessary admission for an all-around strong business plan.

If you can put together a pitch deck that addresses all seven of these items satisfactorily, you’ll be in a good position to convince any investor that your business is worth investing in. These are basic and practical factors that, when presented, show that you’re a competent entrepreneur and that your idea has real merit. The other benefit in including these factors is that they’ll force you to confront the weaknesses of your business early on—when you have time to correct them.

Larry Alton is an independent business consultant specializing in social media trends, business, and entrepreneurship. When he's not consulting, glued to a headset, he's working on one of his many business projects. Follow him on Twitter and LinkedIn.

Business Finance

Bankruptcy doesn’t mean what it used to; no longer the end

(FINANCE NEWS) With the way the world works now, bankruptcy doesn’t necessarily mean game over.

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When it’s over, it’s over. Perhaps you heard your best friend utter this phrase after a bad break-up. It’s true, most things that end, end for good. Except in this case, when it comes to the retail business.

We have seen a record number of retailers declare bankruptcy this year. Beloved teen retailers like Wet Seal have closed down their stores and malls have become ghost towns.

Reuters estimates that nineteen major retail chains have already shut down for good. While you may not miss the tight, neon dresses sold at Bebe, closures of all of these retailers result in a tremendous loss of jobs.

And it is not only job losses from the store in your hometown, often it is hundreds of locations across the nation.

For most of these retailers, bankruptcy was the definitive end to the business. After filing, most companies choose to close all locations and liquidate the assets. This is the most common path to take, until now.

Even with the surge of bankruptcy, those behind the business are finding alternative paths to keep the business alive.

Behind the scenes, there are three core groups invested in every business: the company’s creditors, vendors, and landlords. All of these groups have a vested interest in keeping the company alive even if they are in debt.

The most recent trend for bankrupt businesses has been to keep stores open and negotiate debt loans rather than shutting down everything. The truth is that a lot of these businesses still attract customers and have a large cash flow, even if they are technically bankrupt.

For instance, Toys ‘R’ Us manages to take in $800 million each year on average which makes it a viable business. Of course, they are $5 billion in debt, but with an extension and restructuring of their business, they could one day turn a profit. However, this will only happen if they are given the chance to keep their doors open.

There are other options to lending helping hands to bankrupt businesses. After the popular teen retailer Rue21 declared bankruptcy landlords agreed to reduce their rents 20% on average. Though these situations are not ideal, this mentality gives businesses a life beyond bankruptcy and save thousands of jobs in the process.

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Business Finance

Everyone’s favorite online retailer is set to accept Bitcoin by October!!!

(FINANCE NEWS) One big name online retailer is about to hop on the cryptocurrency train and start accepting Bitcoin at check out as soon as October.

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Crypto currently

There’s no denying that cryptocurrency has taken off like wildfire, but will Amazon be jumping on the bitcoin bandwagon?

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According to one top source, Amazon has already started flirting with the idea and could be ready to fully use bitcoin in October.

Kind of a big deal

The news broke via The James Altucher Report, which is run by the former hedge fund manager and venture capitalist James Altucher. Altucher uses his experience in the business realm, where he has cofounded over 20 companies, to offer realistic financial advice and insight.

He communicates via his popular newsletters, blog and podcast. According to Altucher, Amazon is geared up to change their payment options as early as October.

Already Testing the Waters

Last year, Amazon partnered up with Digital Currency Group, a major investor in Bitcoin, to act as an intermediary between them and their clients. Amazon’s role is to handle all transactions, many of which include the popular cryptocurrency.

Major companies like Google, Ebay and Paypal already accept bitcoin so it is just a matter of time until Amazon follows suit. Even Japan and Russia recognize it as legal currency.

Amazon + Bitcoin = AmaCoin?

Don’t think of bitcoin as Amazon’s only option. Some speculate that Amazon may one day create their own currency.

As a company that has already started testing drones as a future delivery method, custom currency does not seem so out of this world.

The blockchain option has been a refreshing alternative to using traditional banks, especially for those who do not have faith in the current banking practices.

There are questions

If Amazon jumps onboard and rolls out a plan to use bitcoin this year, Altucher anticipates a major surge in its value. Since they have yet to announce an official strategy, and because the option of them creating their own currency is still up in the air, it is unknown how Amazon will integrate it into their system.

Will Amazon find a different way to accept bitcoin? Perhaps a brand new way? If Amazon does start using bitcoin they will join many other tech companies that have already anticipated the growth in its value. Amazon isn’t the only company that has started transitioning over. Many other tech companies have already started to become intermediaries to manage digital transactions.

#AmazonBitcoin

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Business Finance

Pirate Bay is mining cryptos using their users’ CPU… those scallywags

(FINANCE NEWS) Cryptocurrency and mining and pirates. It all sounds like something out of a sci-fi novel, but trust us, it’s 100% real.

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Who pirates the pirates?

Well, pirates, naturally. Piracy is a fractal. There is nothing so small that someone won’t strap on an eyepatch, grab a parrot and snag themselves an unlawful piece.

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Such is the swashbuckling tale recently broken on Reddit about Pirate Bay, which is borrowing visitors’ CPU cycles to mine cryptocurrency.

TRANSLATION, PLEASE?

To translate that from Internet to English, “mining” cryptocurrency means volunteering your computer to verify blockchain transactions. We’ve covered blockchain in depth before, but the short version is it’s a particular security protocol that encrypts tokens representing money.

When you join a cryptocurrency exchange, you use that exchange’s blockchain to encrypt your stuff.

Some members of an exchange volunteer their computers to verify that transactions have taken place. Then they’re encrypted, never to be futzed with again. Those members get paid for their trouble with fractions of coins from the exchange.

The volunteers don’t actually do anything. The verification and encryption are automatic. That’s the point of cryptocurrency: no flighty or nefarious humans are involved in the bookkeeping. It’s all about the robots. That said, somebody owns the robots, and robot time is worth money. Therefore, miners.

SIXTEEN COINS – WHAT DO YOU GET?

“Miners,” in common currency dork parlance, are folks who invest in verifying transactions on a large scale, turning those fractions of coins into meaningful profit. It’s a smart way to make consistent money.

One big caveat: you need serious computing power to do it enough to matter.

Lifewire estimates an upfront cost of $3000 to $5000 to get real money out of the process. That said, their estimate also says 50 dollars a day in profit, which means over the course of a year you’re talking 3 to 5 times the money you put in. Ain’t chump change.

YAR

Which brings us to Pirate Bay. Pirate Bay is, as I’m sure the pure and innocent readers of American Genius would have no reason to know, a torrent site where various forms of media may be secured for free by nefarious means.

You’re shocked, I’m sure. Not everybody is, it turns out: as of this article, it’s the 88th most popular website on Earth. 25th in Canada! Canadians, man. They’re tricksy.

So, unsurprisingly, is Pirate Bay.

To state the obvious, swiping media and giving it away is not a working business strategy. Robin Hood did not have a positive P&L ratio. Typically – I’m told, I of course would have no way of knowing this myself – torrent sites support themselves through ad revenue. That wasn’t cutting it for Pirate Bay, plus they just wanted to get rid of the ads for an improved user experience, so they experimented.

Their first scheme was borrowing users’ CPUs while they were on the website, using unused processor cycles to mine cryptocurrency.

BROTHER, CAN YOU SPARE A CRYPTODIME?

The rollout was flawed. In fact the rollout was nonexistent: the only reason anybody even knew it was happening was somebody effed up the miner script and it started taking 100 percent of users’ CPU cycles as long as they were on the page. Oops.

But fair dues, Pirate Bay did exactly what tech folks should do when caught with their digital drawers down.

They fessed up in an official statement that explained their intent, addressed the problem people were complaining about, and invited further input. That’s more than can be said for, say, Uber.

More to the point, if the cryptocurrency mining plan goes forward, Pirate Bay will be providing a service to consumers in exchange for compensation at stated rates. The fact that it all comes in a novel form – the service is peer-to-peer, based on a model of free sharing; the compensation is provided voluntarily by people who aren’t receiving the services; the rates are measured in CPU cycles rather than money – doesn’t change the fact that fundamentally, “service to consumer for compensation” equals “business plan.”

For another time

Whether it’s a workable business plan or not is a question for Future Matt. Present Matt just has a question: if it does work, if Pirate Bay becomes a self-supporting enterprise trading encrypted, peer-to-peer money for an encrypted, peer-to-peer service, what then? At what point does it become more reasonable, and for that matter more ethical, to accept peer-to-peer transaction as a real thing and regulate it accordingly, as opposed to banning it outright?

Ask Piet Heyn. Better yet, order a mojito and run it past Captain Morgan. (It’s better because you get a mojito.) Back in the days of real pirates, when you wanted to rein them in, you just legalized them. If Pirate Bay establishes a legitimate revenue stream, that may well be the smart next step.

#PirateBay

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