Dr. Earl R. Smith II

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

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There are many ‘types’ that investors routinely avoid. Angel investors and venture capitalists sit through a lot of presentations in the course of a year and see almost every kind of founder that they want to avoid. Of course, there is a complication. Sometimes the presenters unwittingly give the impression that they fall into one or another of these categories. It is never a tragedy when one of the bad apples is identified and avoided. But it is a tragedy when a legitimate proposal from a competent team is dismissed because they carelessly tagged themselves as one. Investors have to make lots of decisions in relatively short order. It is important not to give the wrong impression in these early meetings. A bit of creative preparation goes a long way towards avoiding such an outcome.

One of the best way to assure that you are taken seriously is to red-team your presentation. This is a proven method for improving the chances of success. It is not rocket science nor is it very difficult. It is a straightforward and logical approach to a recurring challenge. If you are out to win, read-teaming has to be one of the tools in your toolbox. The process is designed to make sure 1) that the proposal correctly addresses concerns of the investors; 2) that the information offered would meet their needs; 3) that key questions are answered and superfluous ones avoided; and 4) that the team presents and defends in a highly professional, well informed and effective manner.

A red team review is arguably the most important step in the entire cycle of preparing for and delivering a presentation to potential investors. This approach which will improve chances for getting funded. The core of the process is a group of people who will evaluate your request for funding, and your company, from the investor’s perspective.

Red team members read your materials as if they were evaluating it for funding. This means that they will not be advocates for your company. Quite the opposite; if your presentation has serious problems or if they don’t get what you’re trying to say, it will more likely be, “This is not making sense as an investment!”

That in itself is more than a lot of VCs will do. They are in the business of finding opportunities and making investments; not critiquing your presentation. Many times all you will get is “Thanks for coming in – we will get back to you if we are interested.” But a red team goes the extra step; its purpose is to help you improve your chances of getting funded. In that role they play hardball; team members can be very critical, step on your toes if necessary, and pull no punches. A red team member who holds back honest and incisive criticism because of a fear of hurting someone’s feelings is not helping the effort.

Red teaming can be a very unsettling experience for some founders but the goal of each and every member of the team is to help improve the presentation, value proposition, business plan and chances of getting funded. Remember, to make a success you occasionally have to break a few egos!

Here are some guidelines to follow for forming and running a red team review:

• Because of their experience, members of our red teams need to be able to emulate the process and mindset of the VCs that the company is going to present to.
• You should pick at least three people to serve on the team.
• They need to be knowledgeable in the company’s space.
• Team members must have no prior connection with the company that is presenting.
• They must be willing and able to commit the necessary time and attention to the process.
• You should insist that members are given at least two days to read the materials to be used in the presentation and do a bit of personal research.
• Team members must be committed to helping the you improve their chances of getting funded.

Benefits of a Red Team Review

This independent review procedure emulates the investor community’s initial-review decision making. It simulates first meetings with VCs and critically reviews the presentations. The process also delivers an in-depth, interactive debriefing of a funding request. The results will provide you with guidance and direction on what must be done to improve your probability of being funded.

1. Red team members read and research materials and discuss them among themselves prior to your actual presentation.
2. The team then sits through your presentation as a simulated initial meeting with a potential investor. The focus of the evaluation is on how well you presented your business plan, value proposition and answered the threshold questions that an investor is likely to ask.
3. Finally, the team delivers a thoroughly interactive debriefing. The focus is on specific recommendations for resolution of major issues. They also present recommendations and guidance on improvements relative to strengths, weaknesses, opportunities and threats.

© Dr. Earl R. Smith II

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Related Articles:

• The Money Chase: Who They Do Not Invest In

• Funding Strategies for New Businesses

• Angel Investors to Avoid

• Angel Investors – The Good, Bad and Very Ugly

• Presentations from the Investor’s Perspective

• Protecting Investor Interests: Quick Assessment, the Short List

• Moving the Ball

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Dr. Smith is Managing Partner of The Federal Circle. The Federal Circle partners with teams and existing companies. We help them up their game and win big in the Federal space. We also arrange funding for acquisitions and expansion by acquisition. Our model is based on the belief that, if you select the very best and work with them in a highly professional and focused manner, the results will be truly amazing. He is the author of Amazing Pace: Turbo-charged Business Development – a book that shows how Advisory Boards can dramatically increase revenue. Dr. Smith is also the author of Dream Walk: Parables for the Living – a book of Raven Tales and exploration.

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