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As the legal cannabis industry expands nationwide, both investors and entrepreneurs are still working to determine precisely how to operate in a dynamic market that has yet to define itself fully. At the cannabis-related events I’ve attended recently, the discussions have been focused on what types of products are capturing investor interest or how much money is being poured into certain product sets.

This kind of dialogue is vitally important, but what most companies in the legal cannabis community are dying to know is exactly how to pitch their own cannabis start-up to potential investors, which includes a range of audiences, including friends and family, angels, venture capitalist as well as private equity sharks.

Forbes.com recently outlined several questions that the typical start-up should be prepared to answer from members of the venture capital/private equity communities. While these questions are intense, they are designed to ensure that potential executives can clearly articulate what their company’s product or service actual is, what it does and why it’s truly unique.

Whether you’re in social media, medical devices, enterprise software or a legal cannabis provider, here are the key questions that each entrepreneur must be fully prepared to answer at a very deep level:

  • Why do users care about your product or service?
  • What are the major product milestones?
  • What are the vital differentiated features of your product or service?
  • What have you learned from early versions of the product or service?
  • Can you provide a demonstration of the product or service?
  • What are the two or three key features you plan to add over time?

It doesn’t matter if you have a Harvard MBA on your wall or you’re starting your company out of your basement – these questions are tough to answer with real clarity and detailed precision. But it’s doable. First, take a deep breath and follow these three steps:

  • Practice your questions and answers across your entire team.
    • Make sure everyone is talking to the same set of answers to the significant questions above. No one can go rogue or off-script. If investors sense confusion or inconsistency, they’re likely to pass.
  • Know your numbers and more importantly why.
    • Why are you asking for X amount of money?
      • The amount cannot go wholly to salaries, rent, and samples. Talk about planned projects, sales, and marketing, investments in infrastructure and human capital, facility upgrades or channel expansion.
    • What do you really need to win?
      • Be very specific. Ambiguity will lead to more questions, most without easy answers. If your business needs money for better equipment – talk about what you need and what it will do, not just now, but in 12, 24 and 36 months. If you want capital to hire away talent from other companies, explain why and how.   
  • Find a role for everyone on the team
    • Every person who meets with an investor has to justify why he or she is in the room. What differentiates each of you as founders? Why did the group come together around this specific concept? How will you reduce or eliminate redundancy within your team as it grows? Why should the investor trust your team members with their money?

For me, finding the appropriate voice for communicating with the investment community has been a long, personal journey. In the cannabis industry, I’ve had the opportunity to help a small farm refine their messaging and investment deck (aka a PowerPoint presentation), and for almost a year we have continued to improve and sharpen our message while we zero in on the most impactful pitch. Simultaneously, I have created an investment deck for use as I build my own cannabis product team and prototypes. I consider it a living document that needs to be updated and refined regularly as trends, regulations and business needs are constantly shifting.

I totally understand- this is volume work. You are going to be doing this over and again. Use every opportunity to meet with the investment community as a chance to refine your pitch and get better. All of the effort will literally be worth it in the end.

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