Download - Pitching the plan 12 12_12
Pitching the Plan: The Investor Perspective December 12, 2012
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Experts
• Chuck Goldman -‐ Founder, Apperian • Arnie Sco< – Investor, Hub Angels • Tom Egan, LaunchCapital
• Mirena Bagur – President, CONTeXO Group
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Agenda
• PROCESS • PLANNING AND MARKETING MATERIALS
• PRESENTATION SKILLS • INTERACTING WITH INVESTORS
• Q&A
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PerspecTve
• Map Analogy: Detail and Overview Balance
• Watch for Zoom In vs. Zoom Out moments
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PLAN -‐ Strategic Financing Plan
• How much outside capital should you raise now?
• Generally -‐ the least capital you need to get to next major valuaTon milestone (with 90-‐120 day / 10-‐20% cushion). You need enough cash to:
• Hire criTcal team members at (start-‐up) market compensaTon
• A<ract Customers / Convert beta customers to paying customers
• Acquire criTcal technologies, systems and resources
• How much capital will you need later?
• ConTnued R&D
• Sales and R&D Development Teams
• Sales and MarkeTng Efforts
• Growth and Expansion
• Impact on valuaTon and diluTon
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The Fundraising Sales Process
• Financing Plan • IdenTfy and qualify opTmal and backup investors
• Gather direct and indirect contact informaTon and prioriTze
• Contact through trusted source • OpTmizing first impressions -‐ Don’t Pitch! Get a MeeTng!
• Be prepared for diligence • Contracts and paperwork • IP and Market Diligence about opportunity (freedom) to operate
• Reference customers or thought leaders
• Close, or move on
• Deal syndicaTon & Investor CoaliTon PoliTcs 6
Deal Size, Funding Sources and the Company Lifecycle
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Deal Size
FF Commercial Rollout
1.0 Beta Alpha Lifecycle Stages
2.0, expansion
Idea
Angels
Early VCs
VCs
PE; II
Source: The CONTeXO Group, Spring 2012
The “Right” Investors
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Create a shortlist - don’t use a shotgun approach
Funds available
Stage Size Geography
No direct competitors in portfolio
Track record
Relevant portfolio
Fundraising Sales Process
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Prepare Engage “Pitch” Due Diligence
Pique Interest Inform/
Evaluate ValidaTon Investment
Marriage
6 months -1 year
4-6 months Investor Process
Entrepreneur Process
Investor Screening Process
• Who is the referral source? Credible?
• Does the company fit my criteria?
– Geography – Sector – Investment size/Stage
• Is the team credible? (honest, authenTc, upfront, confident, humble, passionate)
• Do I get excited about:
– CEO – Do I ‘like’ him/her
– Target Market – Unmet need/problem being solved
– Technology being developed
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MARKETING MATERIALS
• Matching Materials and Process to Investor Type and Seqng
• Pre-‐first mee*ng/ Investor Conferences
• The 1 Page Summary (the “Teaser”)
• The 5 Page “ExecuTve Summary”
• The 15 – 20 page “Slide Deck” -‐ foundaTon • The 10 second oral presentaTon pitch (the “Elevator Pitch) • The 30 sec – 2:00 min oral presentaTon (the “Quick ConversaTon”)
• One-‐on-‐one VC mee*ng
• The full Business Plan – Formal presentaTon
• Back up materials
• Financials • Tailoring the emphasis of materials for the specific investor (similar to tailoring a
resume) vs. Consistency across all iteraTons
• Tracking distribuTon of materials 11
PresentaTon and Slide Deck OrganizaTon 1. Cover Slide
2. Problem or Opportunity + Metrics + Core Customer 3. Company Value Proposition + Investment Rationale 4. Product/Service Solution 5. Product/service Value Proposition 6. Addressable Market 7. Business and Revenue Model 8. Sales and Distribution Model 9. Competitive Landscape/Competitive Advantage 10. Defensibility / Barriers to Entry/IP 11. Team 12. Current Status 13. Funding Requirements, Cash and Use of Proceeds 14. Risks and Plans 15. Exit Strategy and Options 16. Investment Rationale/Summary Slide
+ Appendices or backup slides 12
Improve Your Odds by Building a Great Team
• Balance skill sets – complement • Only people make things happen
• Aligned motivations • Prior success • Passionate
Investors bet on the Jockey A Team + B Idea vs. B Team + A Idea
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Management Team and Advisors
• List top executives and key advisors – Include choice words about them
• Experience with startups, domain experience and customers • Don’t put their whole resume on the slide
• Show current staffing gaps and strategy for filling • Board of Directors
– Scientific Advisory Board – Key Opinion Leaders
• Don’t list advisors unless they are actively involved
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General PowerPoint Dos and Don’ts “Presentation is a visual not a reference”
Do • Use one topic per slide • Limit text on each slide • Use pictures, graphs, video’s
– Not all bullets • Choose fonts and colors that are easy to read • PowerPoint is the accessory to YOUR presentation • Spell Check
Don’t • Use sounds with slide transitions • Overdo the ALL CAPS, bolded, italicized or underlined text • Use too many different fonts • Overuse special effects – focus on the content • Have technical difficulties – test before the meeting
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PRESENTATION SKILLS: Part I
• Know your material cold! Don’t wing it.
• Use note cards & appendix slides for easy access to informaTon.
• DON’T READ your presentaTon.
• You should have answers to likely quesTons, even if you don’t intend to cover such material in your core presentaTon. AnTcipate the quesTons – be surprised only once!
• It’s okay to not know everything – no one does. Unless someone asks you something that you clearly should know, it is okay to directly state that you don’t have an answer and that you will get back to someone. This builds credibility with your audience.
• When possible, know the room. Arrive early, walk around the speaking area and pracTce using the microphone and any visual aids.
• Wear clothes that represent you and which reinforce your authority and confidence.
• Work to control filler words such as “Um” “Ah” Eh” or “Like”. Try to limit distracTng repeTTve hand or body gestures.
• Realize that audiences want you to be interesTng, sTmulaTng, informaTve and entertaining. They’re rooTng for you.
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PRESENTATION SKILLS: Part II • PrioriTze and eliminate less criTcal points.
• Be flexible – be prepared to be interrupted.
• Understand the goal of your presentaTon. Is it to inspire, to educate, to connect, to get a<enTon, to get a second more personal meeTng? Your focus should help you prioriTze.
• Modulate your pace, pitch, volume, tone and enthusiasm – like when you are telling a story. This helps keep the audience focused.
• Use humor, personal stories and conversaTonal language where possible. Your use of easy to understand analogies can help you draw in the audience and create tracTon.
• PracTce. PracTce. PracTce! Rehearse out loud with all equipment and with a Tmer. Allow Tme for the unexpected. GO SEE OTHER PRESENTATIONS!
• Every slide should be consistent with your corporate image – each should bear the company name and should have a background or theme consistent with the company type or culture.
• Slides should HELP the oral presentaTon, not BE the presentaTon. Avoid wriTng down your presentaTon on the slides.
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PRESENTATION SKILLS: Part III
• Always bring a backup copy of the presentaTon with you in paper and on a flash drive (it is also useful to have it available by web email).
• The professionalism of the powerpoint may convey informaTon to the audience about your credibility. If it looks like a last-‐minute effort, it probably was.
• Without minimizing the above rule, spend more Tme building a great business and less building a great presentaTon.
• The deck is just a tool. If the computer or projector cease working – you should be able to carry on with your presentaTon without geqng flustered. Remember, this is just a tool, it is not the presentaTon.
• Stand up (unless it is one-‐on-‐one)
• Leave Tme for quesTons.
• RELAX, BREATHE and SLOW DOWN
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Interacting with Investors Basic Principles - Overview
• Research the investor in advance • Realize investors are thinking about exit strategy • Pay attention to what you say during the presentation banter • Communicate • Be likeable • State your value proposition up front • Come prepared with sufficient data (including back up slides) • Enjoy yourself and let it show • Keep the presentation within allotted time • Be realistic about valuations in the market • Make due diligence easy
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DO
Interacting with Investors Cautionary Overview – Don’t do the following
• Give investors a reason to turn you down • Bash the competition • Hype • Condescend, talk down or be arrogant • Be vague about your technology • Deluge investors with facts • Act desperate for funding (even if you are) • Act like you don’t need money • List ‘the company is undervalued’ as a reason to invest • Overprice your rounds so you can keep stepping up valuation
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DO NOT
VC Glossary
21 Source: Eugene Hill, SV Life Sciences Advisers, LLC at HST921, Spring 2012
What We/They say… and What We/They Really Mean… Acquisition Strategy the current products have no market
Basically on plan revenue shortfall of 25 percent
Currently revisiting the budget financial plan is in total chaos
Cyclical industry posted a huge loss last year
Entrepreneurial CEO totally uncontrollable, bordering on maniacal
Funding Interruption investors tapped out; unwilling to fund again
Ingredients are there in two years we might find a workable strategy
Investing heavily in R&D trying desperately to catch the competition
Long-selling cycle yet to find a customer who likes the product
Possibility of a slight shortfall a revenue shortfall of 50 percent
Repositioning the business multimillion-dollar investment recently written off
Somewhat below the plan revenue shortfall of 75 percent
Too early to tell results to date have been grim
Turnaround opportunity lost cause
Unique no more than six competitors
Upgrading the management team the organization is in complete disarray
Window of opportunity without more money, the company is dead