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The success of any company is ultimately determined by its ability to attract customers for its products/services. Your funding presentation must therefore include information on target market segments and why customers in those identified markets will be attracted to your value proposition. The less theoretical and speculative you can be, the better. Most investors are attracted to firms that plan to become dominant leaders in their defined markets and are less inclined to invest in “me-too” firms.

 

If you are aspiring to grow a large publicly traded company, or one that may be acquired by a large company, your target market segments must be large enough to allow you to grow to $100 million–plus with modest market penetration. Most presentations that capture the interest of top VCs, for example, identify billion-dollar-plus market segments and detail plans to capture 5% to 15% market share within five years.

 

That equates to revenue run rates in the range of $100 million. Another way of looking at this is to realize that professional investors who invest high growth in early-stage firms are generally looking to realize a ten times return on their invested capital. If the investment is being made at later stage, like the last round before a pending IPO, the required returns may drop to three times due to less time required to realize a return of capital plus profit.