bootcamp day 1

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Pitching to Investors Bootcamp

B O G O T A , 2 4 - 2 6 A U G U S T 2 0 1 6

L A N C E L A K I N G

J O N E W O R R E N

26 August 2016

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Agenda, Day 1

09:00 Introductions & Objectives

09:15 What’s in a great pitch?

10:15 Break

10:30 Review of Great Pitches

11:30 Value Proposition, Part I: The Lean StartUp Process

12:30 Lunch

13:30 Value Proposition, Part II:

15:15 Break

15:30 Principles of Communication

16:00 Pitch Clinic

16:45 Review & reflection

17:00 Adjourn

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INTRODUCTIONS

• Tell us who you are

• What your is your business

• What you hope to get from this Bootcamp

• 30 seconds…..

8/26/2016

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What’s in a great Pitch?

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THE 10 KEY COMPONENTS OF A PITCH

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Problem/Hook

Value Proposition Business Model Underlying Magic

Marketing & Sales Competition Team

The Ask & Financials

The Ask & Timeline

Summary

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The Investment Story

• Act 1

Pg 7

Hook/problem

Marketing & Sales

Competition

Underlying Magic

Summary

Value Proposition

Financials & The Ask

Timeline & The Ask

Business Model

Team

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The Problem Hook

• Examples Medium Hook Message

The Globe and Mail “Bringing Executive Pay Down to Earth”

“I know a guy who used to run a bank, back in the olden days. Nobody had heard of stock options then. He lived in a nice house, but not a mansion…“

This article argues for a more equitable distribution of capital to create a fairer society.

Inconvenient Truth

Images of a river, trees and birds, with Al Gore’s narration talking about Nature

This movie is about preserving human relationships with Nature

BeerLabs 60 second pitch

“Are you bored of mass-produced beers?”

I want to revolutionize the beer industry in China.

ABC Biomed “Every day, 483 people die of lung cancer in North America”

I want to cure lung cancer

http://m.theglobeandmail.com/news/opinions/margaret-wente/bringing-executive-pay-back-down-to-earth/article2291717/?service=mobile







http://video.google.com/videoplay?docid=-4295830951918801165

http://video.google.com/videoplay?docid=-4295830951918801165

http://www.youtube.com/watch?v=98f9Pckci2k




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The Problem Hook • Activity

1. Pick one person in your group to explain their business to the others.

2. Take 60s to write an answer to the following question: “Why are you starting this business?” Share with the group.

3. Now, with the help of your group, come up with a hook that explains the fundamental problem you are trying to solve and why you started the business. You can write, sketch pictures or use statistics.

4. Take turns

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The Value Proposition

1.What your product is

2.Who is the target customer

3.What value you bring your target customers

The Value Proposition provides a solution to your problem hook:

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• Activity

For _________________ (insert target customer)

Who _________________ (insert their need/problem)

We have developed _____________ (insert what it is)

That helps __________ _______ (list values)

1. Write your value proposition:

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• Activity

2. Share with your group.

3. Make sure there is a good “pairing” between your value proposition and your hook.

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The Value Proposition • Examples

Beer Labs is a microbrewery and bar in Shanghai where young professionals in China can go to brew their own personal beer and consume fresh food and drinks.

ABC Biomed has developed a proprietary oral drug for Stage 3 lung cancer patients designed to decrease tumor size and increase their quality of life.

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• Act 2

Hook/problem

Marketing & Sales

Competition

Underlying Magic

Summary

Value Proposition


Timeline & The Ask

Business Model

Team

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Business Model

A business model describes the value an organization offers its customers and illustrates the capabilities and resources required to create, market and deliver this value and to generate profitable, sustainable revenue streams.

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• Example: 10,000 Villages

Ethically conscious consumers with disposable income.

TTV provides a wide selection of unique hand-crafted goods from verifiably fair-trade artisans in developing countries.

-Retail -On-line -(Wholesale)

-Transaction-based -Mailing list w suggested products -Return policy

-Developing world artisans -World Fair Trade Org -Mennonite Central Committee -volunteers

-Retail sales -Speakers bureau -Tax breaks (non-profit)

-Marketing -Real estate procurement -Negotiate deals w artisans -Importing

-Brand -Salespeople -Real estate

-Pay artisans -Rent on stores -Web hosting -Pay staff

Business Model

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Components of a business model

How do you acquire customers?

How do you charge them?

How much do you charge them?

What are your fixed costs?

What are your variable costs?

What are the assets you have available to you?

Who are your key partners?

What are the key activities you need to engage in to deliver your value proposition?

• Checklist

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Business Model

• Activity

Either by sketching on the business model canvas, or writing down answers to the checklist, brainstorm components of your business model you need to explain to investors.

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Underlying magic

• Activity

- Describe your product or service(s) - Include photos or screen shots - Detail how your product is scalable and when you

plan to launch - Outline the next R&D steps to further build on or

improve your offering. - Include a discussion of intellectual property - How will you protect your IP?

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Visuals

Products Software Services

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Visuals

• Activity Products Software Services

Take 5 mins: What’s the best way to represent your product/service in a business plan or pitch presentation?

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Marketing and Sales

You will eventually need to answer all these questions:

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Marketing and Sales

• Activity

1. What is your pricing strategy?

2. Through which media will you communicate with your market?

3. What is your branding strategy?

4. Who are the Key Opinion Leaders (KOLs) in your field?

5. How long is your sales process?

6. Where do you get your prospective customers

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Competition

There is always competition

• Competition

Reference Competition Same category Substitute category

Economic Competition “Budget” Category

“We have no (real) competitors”

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Competition

• The Strategy Canvas

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External Analysis

• Competition Matrix

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External Analysis • Activity

Sketch a quick competition matrix for you and your nearest competitors (include the “status quo” option)

Value 1

Value 2

Value 3

Value 4

…

Your company

Company 2

Company 3

Status quo company

…

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Management team

Breadth of experience

Depth of experience

- Names - Domain credentials - Ability to work together - Past individual success - Past collective success - Next hires – gaps in your team

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Management team

• Activity

Names

Sergey Brin Mark Zuckerberg

Bill Gates

Domain Credentials

Ability to work together

Past individual success

Past collective success

?

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• Act 3

Hook/problem

Marketing & Sales

Competition

Underlying Magic

Summary

Value Proposition


Timeline & The Ask

Business Model

Team

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Financial projections

Beware the hockey stick graph!

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• Example Financial projections need to be based on verifiable assumptions

Pro forma income statement from Business Plans for Dummies (1997)

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• Example

Investment required = $800,000

Focus on R&D for v 2.0

Launch 2.0

Break Even

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• Example: current status Sources of Funding Existing financing ($) Projected financing ($)

Investment by founders $10,000 each = ($30,000)

0

Equity investment from angels

$150,000 $300,000

Equity investment from VCs

0 $500,000

Debt financing 0 0

Cash flow from operations

$2,000 per month $20,000 per month

TOTAL: $182,000 $820,000

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• Example: Use of proceeds Use of proceeds Amount ($)

Sales and marketing $250,000

Research & development

$65,000

Recruiting costs $5,000

Future salaries $75,000 X 5 years = $375,000

Legal and accounting $100,000

TOTAL $780,000

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Intellectual Property (IP) Valuation

Sources: American Institute of Certified Public Accountants; Licensing Executives Society

Cost Approach: How much does a non-infringing alternative cost? Income Approach: What is a reasonable present value of excess economic returns? Market Approach: How much have others paid for comparable technology?

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Risk analysis

• Example Type of Risk Risk Mitigating strategy

Supply chain risk Government upheaval in Nigeria

Secure alternate sources of goods in nearby countries

Market adoption

Customers won’t buy it

Complete market research to position the product

Financing risk We may not be able to sufficiently finance start-up phase

Develop alternate financing scenarios to ensure we meet key milestones

Executive risk This is the first venture for this management team

We have supplemented our team with industry leading advisors

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To-do: Gather the information

• Value proposition/positioning statement

• Business model

• Market Intelligence

• MarCom goals

• Pricing

• Competition

• Patent information

• List of past clients

• List of partners and stakeholders

• Logo

• Financial information

• Technology white papers

• Key employee information

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BREAK

8/26/2016

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The Investor Perspective: Review of Great Pitches

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Value Proposition, Part I

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Problem/Hook

Value Proposition Business Model Underlying Magic

Marketing & Sales Competition Team

The Ask & Financials

The Ask & Timeline

Summary

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Our Future Matters

WHAT IS A VALUE PROPOSITION? Our Framework….

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Our Future Matters

Talking With Scientists

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Our Future Matters

VALUE

What is Value?

• What are the different ways in which customers value products?

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Our Future Matters

Value Proposition - Definition

• A value proposition is a statement of the unique benefits delivered by your offering to the target customer.

• It describes the unique value of your product or brand and offers a compelling reason for customers to buy.

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Our Future Matters

A Tagline – Ad complement

– “We know money”

– “What Happens Here, Stays Here”

– “The City That Never Sleeps”

– “Built for the road ahead”

An Elevator Pitch – Social/conversation purpose

Value Proposition is Not:

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The value proposition statement should consist of the following components:

– What you are offering

– The specific value associated with your offering

– For whom you are creating value

– (…Why your product is different from everything else on the market)

Value Proposition

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Our Future Matters

Good: “Winners is a department store that offers fashion conscious consumers the latest brand names for up to 60 per cent off.” (Winners)

Bad: “Winners is an off-price department store owned by TJX that employs international sourcing and buying power.

Examples:

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Our Future Matters

Good: “Winners is a department store that offers fashion conscious consumers the latest brand names for up to 60 per cent off.” (Winners)

Bad: “Winners is an off-price department store owned by TJX that employs international sourcing and buying power.”

Examples: What is it?

For whom?

Values?

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Our Future Matters

Good: “A1 Industries has developed an economical and easy-to-use chemical additive that allows paint manufacturing companies to reduce the environmental impact of their products

Bad: “A1 Industries has discovered a chemical isomer additive that allows for a reduction of VOC emissions.”

Examples:

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Our Future Matters

Good: “A1 Industries has developed an economical and easy-to-use chemical additive that allows paint manufacturing companies to reduce the environmental impact of their products

Bad: “A1 Industries has discovered a chemical isomer additive that allows for a reduction of VOC emissions.”

Examples:

What is it?

For whom?

Values?

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Our Future Matters

Good: “Google is the world’s largest search engine that allows internet users to find relevant information quickly and easily.”

Bad: “Google uses a patented page-ranking algorithm to make money through ad placement.”

Examples:

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Our Future Matters

Good: “Google is the world’s largest search engine that allows internet users to find relevant information quickly and easily.”


Examples:

Are Internet Users really Google’s customers?

What is it?

For whom?

Values?

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Our Future Matters

Good: “Google is the world’s largest search engine that automatically provides advertisers with potential customers tailored to the ad content, increasing click-through rates and conversion rates.”


Examples: What is it?

For whom?

Values?

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LUNCH

8/26/2016

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Value Proposition, Part II

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Our Future Matters

VALUE PROPOSITION DESIGN

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Value Proposition Designer

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Our Future Matters

Right side: Customer Jobs

• What functional jobs are you helping your customer get done? (e.g. perform or complete a specific task, solve a specific problem, ...)

• What social jobs are you helping your customer get done? (e.g. trying to look good, gain power or status, ...)

• What emotional jobs are you helping your customer get done? (e.g. esthetics, feel good, security, ...)

• What basic needs are you helping your customer satisfy? (e.g. communication, sex, ...)

Besides trying to get a core job done, your customer performs ancillary jobs in different roles. Describe the jobs your customer is trying to get done as:

• Buyer (e.g. trying to look good, gain power or status, ...)

• Co-creator (e.g. esthetics, feel good, security, ...)

• Transferor (e.g. products and services that help customers dispose of a product, transfer it to others, or resell, ...)

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Our Future Matters

• Rank each job according to its significance to your customer. Is it crucial or is it trivial? For each job indicate how often it occurs.

• Outline in which specific context a job is done, because that may impose constraints or limitations. (e.g. while driving, outside, …

Customer Jobs • Activity

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Our Future Matters

Gains

• Which savings would make your customer happy? (e.g. in terms of time, money and effort, ...)

• What outcomes does your customer expect and what would go beyond his/her expectations? (e.g. quality level, more of something, less of something, ...)

• How do current solutions delight your customer? (e.g. specific features, performance, quality, ...)

• What would make your customer’s job or life easier? (e.g. flatter learning curve, more services, lower cost of ownership, ...)

• What positive social consequences does your customer desire? (e.g. makes them look good, increase in power, status, ...)

• What are customers looking for? (e.g. good design, guarantees, specific or more features, ...)

• What do customers dream about? (e.g. big achievements, big reliefs, ...)

• How does your customer measure success and failure? (e.g. performance, cost, ...)

• What would increase the likelihood of adopting a solution? (e.g. lower cost, less investments, lower risk, better quality, performance, design, ...

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Our Future Matters

1. Rank each gain according to its relevance to your customer.

2. Is it substantial or is it insignificant?

3. For each gain indicate how often it occurs.

Gains

8/26/2016

• Activity

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Pains • What does your customer find

too costly? (e.g. takes a lot of time, costs too much money, requires substantial efforts, ...)

• What makes your customer feel bad? (e.g. frustrations, annoyances, things that give them a headache, ...)

• How are current solutions underperforming for your customer? (e.g. lack of features, performance, malfunctioning, ...)

• What are the main difficulties and challenges your customer encounters? (e.g. understanding how things work, difficulties getting things done, resistance, ...)

• What negative social consequences does your customer encounter or fear? (e.g. loss of face, power, trust, or status, ...)

• What risks does your customer fear? (e.g. financial, social, technical risks, or what could go awfully wrong, ...)

• What’s keeping your customer awake at night?(e.g. big issues, concerns, worries, ...)

• What common mistakes does your customer make? (e.g. usage mistakes, ...)

• What barriers are keeping your customer from adopting solutions? (e.g. upfront investment costs, learning curve, resistance to change, ...

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Our Future Matters

1. Rank each pain according to the intensity it represents for your customer.

2. Is it very intense or is it very light?

3. For each pain indicate how often it occurs.

Pains

8/26/2016

• Activity

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YOUR SOLUTION

Part IV: Designing Your Solution

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Our Future Matters

Gain Creators • Produce outcomes your customer

expects or that go beyond their expectations? (e.g. better quality level, more of something, less of something, ...)

• Copy or outperform current solutions that delight your customer? (e.g. regarding specific features, performance, quality, ...)

• Make your customer’s job or life easier? (e.g. flatter learning curve, usability, accessibility, more services, lower cost of ownership, ...)

• Produce positive outcomes matching your customers success and failure criteria? (e.g. better performance, lower cost, ...)

• Create positive social consequences that your customer desires? (e.g. makes them look good, produces an increase in power, status, ...)

• Do something customers are looking for? (e.g. good design, guarantees, specific or more features, ...)

• Fulfill something customers are dreaming about? (e.g. help big achievements, produce big reliefs, ...)

• Create savings that make your customer happy? (e.g. in terms of time, money and effort, ...)

• Help make adoption easier? (e.g. lower cost, less investments, lower risk, better quality, performance, design, ...)

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Our Future Matters

• Rank each gain your products and services create according to its relevance to your customer.

• Is it substantial or insignificant?

• For each gain indicate how often it occurs.

Gain Creators

8/26/2016

• Activity

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Pain Relievers • Produce savings? (e.g. in terms of

time, money, or efforts, ...)

• Make your customers feel better? (e.g. kills frustrations, annoyances, things that give them a headache, ...)

• Fix underperforming solutions? (e.g. new features, better performance, better quality, ...)

• Put an end to difficulties and challenges your customers encounter? (e.g. make things easier, helping them get done, eliminate resistance, ...)

• Wipe out negative social consequences your customers encounter or fear? (e.g. loss of face, power, trust, or status, ...)

• Eliminate risks your customers fear? (e.g. financial, social, technical risks, or what could go awfully wrong, ...)

• Help your customers better sleep at night? (e.g. by helping with big issues, diminishing concerns, or eliminating worries, ...)

• Limit or eradicate common mistakes customers make? (e.g. usage mistakes, ...)

• Get rid of barriers that are keeping your customer from adopting solutions? (e.g. lower or no upfront investment costs, flatter learning curve, less resistance to change, ...

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Our Future Matters

• Rank each pain your products and services kill according to their intensity for your customer.

• Is it very intense or very light?

• For each pain indicate how often it occurs.

• Risks your customer experiences or could experience before, during, and after getting the job done?

Pain Relievers

8/26/2016

• Activity

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Our Future Matters


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Our Future Matters

Products & Services All products and services you want to offer

• Which products and services do you offer that help your customer get either a functional, social, or emotional job done, or help him/her satisfy basic needs?

• Products and services may either by tangible (e.g. manufactured goods, face-to-face customer service), digital/virtual (e.g. downloads, online recommendations), intangible (e.g. copyrights, quality assurance), or financial (e.g. investment funds, financing services).

Ancillary products and services

• Buyer (e.g. products and services that help customers compare offers, decide, buy, take delivery of a product or service, ...)

• Co-creator (e.g. products and services that help customers co-design solutions, otherwise contribute value to the solution, ...)

• Transferror (e.g. products and services that help customers dispose of a product, transfer it to others, or resell, ...)

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Our Future Matters

• Rank all products and services according to their importance to your customer.

• Are they crucial or trivial to your customer?

Products & Services

• Activity

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Our Future Matters

Write Your Value Proposition

Part VII

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Our Future Matters

The value proposition statement should consist of the following components:

1. What you are offering

2. The specific value associated with your offering

3. For whom you are creating value

(…Why your product is different from everything else on the market – if this improves clarity)

Recap:

• Value Proposition Content

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Our Future Matters

• Activity: 10 minutes


For _________________ (insert target customer)

Who _________________ (insert their need/problem)

We have developed _____________ (insert what it is)

That helps __________ ,_______,________ (list values)

1. Write your value proposition statement:

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BREAK

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Principles of Communication

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COMMUNICATION 101

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Sender Receiver Message

Entrepreneur Investor Pitch

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Communication Tools for Investors

The Pitch The Executive Summary The Business Plan The Elevator Pitch Technical White Paper Video Reference: “Communication Tools for Investors”, E101, V. Litinski

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Comparing Tools

• Pitch deck vs. Business plan Pitch Deck Business Plan

Anecdote Data

Big picture Granular

Emotional Rational

Visual/Oral Written

Very dynamic Less dynamic

Short (10 slides; 20 mins) Long (20 pages)

Used in early meetings Used for due diligence

Summarized in Exec Summary

Summarized in Exec Summary

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SUCCES

• Good communication techniques for ANY media

Simple Unexpected Concrete Credible

Emotion Story

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Simple

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Our Future Matters

Unexpected

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Concrete

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Credible

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Emotion

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Investors don’t invest in businesses. They invest in stories about businesses.

VentureHacks

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Telling Your Story

Inciting Incident

Confrontation

Climax Decision

Resolution

Act 1: Act 2: Act 3:

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Story

• Example: Spiderman

High school kid gets bitten by spider

Spider-man battles bad guys

Spider-man battles head bad guy

Wins

Things have changed for the better (or worse)

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Story

• Example: facebook

Pg 104

University kid has a good idea while at Harvard

Battles competition, non-believers, market forces

Looks for VC investment Gets VC

investment/gets sued

Grows to valuation of $100 B

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• Act 3

Pg 105

Hook/problem

Marketing & Sales

Competition

Underlying Magic

Summary

Value Proposition


Timeline & The Ask

Business Model

Team

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Pg 106

The Storyboard

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• http://www.marsdd.com/collections/

Additional Resources

26 August 2016 Presentation Title Goes Here

http://www.marsdd.com/collections/

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PITCH CLINIC

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Value Proposition

• In groups of 3:

• Practices your value proposition statement

• Get feedback from group members on content & communication value (succinctness, clarity etc.)

• Revise as needed

• Ask if you have questions

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SUMMARY & REFLECTIONS

8/26/2016

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