I’ve raised VC funding at 4 different companies (for multiple rounds), and in the process have pitched well over 100 of them. It can be brutal.
It’s hard to give specific advice based on the level of detail you’ve included, but a few things leap out:
a) it’s highly unlikely you’ll raise $1m, have it last two years, and at the end of that time go public. That’s very optimistic. Don’t put those numbers in your pitch because you won’t look credible.
b) drop the words “or whatever the investors wish” from your vocabulary. When you say that to the VC, they hear “I’m weak; I’m looking for someone else to make the company decisions”. The thing is, at the stage you’re at now, it’s all completely guesswork. But you MUST do everything to make it look like it’s all figured out. You have to have absolute confidence in your sales projections, and where you will take the company. And when they say “you should do X instead”, you have to be ready with the reason why you already thought about X and decided against it. They want to invest in somebody strong to make them money; they don’t want to be making the money themselves.
c) if I understand right, you’re at the idea stage. That’s really early to be approaching VCs. If you have a super winner, it can be done, but typically, you’ll want to have at least a prototype (or equivalent in publishing), and a few potential customers. I’ve been involved with several dozen companies either directly or as an adviser from the beginning, and I’ve never seen anyone funded without at least 6 months worth of solid work on it before funding began. There are exceptions, of course.
Here are the docs you want, in this order:
Executive Summary
Funding Presentation
Business Plan
The Exec Summary is 2 pages max that tells the VC why they will make money. It’s like a resume for the company; it’s job is to get you in to make a presentation. They get hundreds of these things every week, so you have really stand out. be consise, cover everything they want to hear (more about that below) and sell your strong points.
The Presentation is more detail; it’s what you’ll talk to in your pitch to them. 15-20 screens. Don’t be too long! You’ll have an hour to talk with them, and you should leave 15 minutes for discussion. Have it completely practiced and already know the answer to every question they’ll ask. Don’t know the questions? Again more below, but don’t worry: you’ll have to present to many of them before you get funded. So go get bloody on the first 2 or 5, and hone your documents and presentation as you go.
Oh, another thing about honing: different VCs have different needs. They have different amounts they want to invest, they have different market segments they like, etc. They look around at the world, and say “hmmm, everyone else has a wireless play; we need a wireless play”. So if you’re a wireless company, that’s good, and if you’re not, you’re not. It’s like dating. don’t feel bad if they don’t like you; it’s just not always a good match. All that being said, when you go into a VC, you should do everything you can to look like what they’re looking for. If they like investing 5-10m, ask for 5m, and have a good plan for it. If you ask for 2m, you won’t be the girl they want to dance with. Same thing with market segment, etc.
You may not even need a complete business plan for the amount of money you’re going to raise. I know nothing about your business, but $2m for the first 18 to 24 months isn’t a bad guess. That’s a relatively small VC investment. They’ll ask you for all sorts of docs that would be part of the biz plan (detailed financials, marketing plans, sales plans, resumes, etc.); and you’ll have to have all the answers that it will take to build a business plan, but you may not need the complete doc.
What they care about (in approximate order of priority)
team
market size
differentiation
sales/marketing strategies
product/service
Notice that what the product actually is, is at the bottom of the list. They get a million great ideas that they don’t fund.
The most important is team. Do you have people that are experts in this field? previous patents or recognitions? that have had relevent successes before? i.e. sold a company or taken a company public in this field. This is critical. They know that most great ideas that get funded don’t end up being what actually gets built, because the market changes or the technology changes, or other. A great team will roll with the changes and come through.
You need to demonstrate a big market size, and share that you’ll sell. Ideally, you’ll be able to say there will be $1b of sales every year for folks selling the sort of thing you are, and you expect to get 25% of that market. Sound crazy big? that’s what they’re looking for, and they’re getting people promising it. You need to find real justification of why you’re going to sell oodles of your product or service.
You need to have differentiation; you need to have an “unfair advantage” over your competition. If anyone else can build what you have in a couple months, then you won’t impress the VCs. This “unfair advantage” could be a patent, or a 6 month headstart in your technology, or a sales channel you’ve built up, etc.
Sales/Marketing Strategy: who is your customer? how will you make them aware your product exists? how will you get the product to them? will you sell direct or through channels? what channels? how will you price it? How big a team will you need, and what will they each do?
there’s some stuff for starters anyways. You’re welcome to email me if you’d like.