Tom Balderston, Managing Principal at SustainVC, spoke with MFN about how founders should set up their deal rooms. He offers a practical exercise to better visualize your competitive landscape, which is helpful for investors to see.

VIDEO TRANSCRIPT:

Tom Balderston: A good exercise is actually drawing on one page a picture of the competitive environment. Who are the companies, who are nearest by, who overlap? It’s helpful to just sketch that. Another thing to sketch is your company organization chart that should also be in the deal room. Think about what your org chart is going to look like in a year or two years, because that gets to use of funds, and that’s another critical aspect of the company specific deal room.

What are you going to do with the resources? You raise a related question, which sometimes company managements don’t think about, but should, is, why do I need to raise outside money? If I could grow the business using cash flow that’s generated from early sales, then I don’t need to raise outside money. Maybe not raise outside equity, which is quite expensive. Maybe I can do this with a combination of loans and grants and wait until I raise outside equity capital that’s been over the last 15-20 years. It’s been typical for many companies, to get started and think, “Well, the first thing I need to do is go raise money. ” That’s a mistake. I think the first thing you need to do is figure out product market fit and go find a customer. And if you can do that, then that’s a natural avenue for growing the business and firming up your story as you go.

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