investor pitch andrew_chung__clean_tech_academy_2012_
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Investor Pitch – The Essence of Telling Your Company’s Story
Andrew Chung, Partner, Khosla VenturesCleantech Open Academy 2012, San Jose, California
2 Clean Tech Open Confidential Information
About Lightspeed
• Venture assistance model
• 6 investing partners, $3B under management
• $300M Seed Fund: high-risk, higher-return experiments
• $1.05B Main Fund: 50% Cleantech, 50% Info/MedTech
”“"Our willingness to fail gives us the ability and opportunity to succeed where others may fear to tread.”
-Michael Jordan
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…With Green Technologies!
MATE
RIALS
OIL
Waste Water
Water Desalination
PVC
Plasticizers
Glass
Feedstock Processing
Distributed Solar
DieselGasoline
Other Hydrocarbons
Motors
Appliances
Batteries
Geothermal
AGRICULTURE / OTHER
PLASTICS & CHEMICALS
CELLULOSIC ALCOHOL
ADVANCED HYDROCARBONS BATTERIES / OTHER
MECHANICAL EFFICIENCY
ELECTRICAL EFFICIENCY
OTHER
DISTRIBUTED GENERATION
Utility Scale Solar
Butanol
SyntheticNatural Gas
CellulosicEthanol
Lighting
Engines
Cement
Drivetrains
Feedstocks
Polyurethane
Polyethylene
COAL
EFFIC
IENCY
Storage
Wind
Generators
Agronomy
Nuclear
Storage
Other
Homes
Smart grid
UTILITY SCALE GENERATION
Grid-Scale Storage
ADVANCEDCARBOHYDRATES
BUILDING MATERIALS
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Biodiscovery
KiOR
NanoH2O
Coskata
Soladigm
Virdia
LanzaTech
Gevo
LS9
NRG-Dynamix
Seeo Tula Transonic
Great Point Energy
Stion
EchoFirst
CaitinAmyris
Altarock
Mascoma
Soraa
Ecomotors Topanga
Sakti3
Calera
MATE
RIALS
OIL
COAL
EFFIC
IENCY
Danotek
NordicSolum
PSP
TerraPower
Pellion
Liquid MetalBattery
Avogy
Cogenra
Lightsail
Segetis
Varentec
ADVANCEDCARBOHYDRATES
CELLULOSIC ALCOHOL
ADVANCED HYDROCARBONS BATTERIES / OTHER
MECHANICAL EFFICIENCY
ELECTRICAL EFFICIENCY
AGRICULTURE / OTHER
PLASTICS & CHEMICALS
BUILDING MATERIALS OTHER
DISTRIBUTED GENERATION
UTILITY SCALE GENERATION
Izar
EtagenRecapping
Climate Corporation
Reluceo
Quantumscape
Arcanum
Range
Khosla Ventures Green Portfolio
Sunborne
Bidgely
Nu-Tek Salt
Unreal Foods
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AC: At a Glance
• My areas of interest– Science: Cleantech & Medtech– IT: Internet, Mobility, Education
• 1 of 6 partners at Khosla, also lead China activities
• Launched Lightspeed Ventures’ cleantech practice
• Bain Capital, TL Ventures, Bain, Trilogy, Wharton, Harvard
• Ex-IT entrepreneur: founded startup, sold to public co.
(NSDQ: SZYM)
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What to present to a VC?
Operations Sales pipeline Distribution Policy/regulatory issues
Financials Projections Fundraising needs
4
5
Mission statement
Management team
Market
Technology Overview / value prop Competitive differentiation Economics Development timeline
0
1
3
2
For each section, we’ll discuss:
What I'm looking forCommon issuesSample slides
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Some ground rules
General reminders
Know your audience
Be conscious of time
Get to the point
Simple and clear slides
Be ready to jump around a lot
Your delivery
Enjoy the stage
Inspire confidence
Look them in the eye
Don’t overgesticulate
Coordinate team roles before your pitch
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A few caveats before we dig in…
• Not all VC's look for the same stuff
• Cleantech is vast, so different sectors require different emphasis
• Sample slides are illustrative and most use dummy data
• Presentation order will depend on you
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For Starters…
Highest-efficiency thin-film module in production
Lowest production & capital costs in the industry
Scalable manufacturing with industry-standard equipment
Stion: Silicon Efficiency at Thin-film Cost
Courtesy: Stion’s Web site
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Management Team
What I'm looking for
Is there a balanced skillset across team?
Deep technology expertise
Industry execution experience
Entrepreneurial experience
Common issues
Homogeneity
Theory over substance
Lack of clarity about recruiting needs and timing (emphasis on CEO, VP-level hires)
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Management Team (Sample)
Tom Cruise – President & CEO 30 years of executive management and startup experience C- or VP-level at 5 startups, 3 successful exits (AAA, BBB, CCC) - cumulative value of $300M MBA, Wharton School; B.S., Materials Science, UC Berkeley
Jack Nicholson, Ph.D. – Founder & CTO 20 years at Sandia National Labs: Photovoltaics Team Lead Professor, Materials Engineering, Stanford University Ph.D., Materials Science, M.I.T.; B.S.E., Electrical Engineering, University of Washington
Demi Moore, Ph.D. – VP of Engineering Applied Films: Head of Engineering, led commercialization of 5 thin-film production lines Unisolar: Production Manager, Employee #25 Ph.D., Electrical Engineering, University of Toledo; B.S.E., Electrical Engineering, Northwestern
Kevin Bacon – VP of Business Development Complete Phase II of development MBA, Duke University; B.S. Electrical Engineering, Stanford
Technical Team: First Solar, Miasole, SunPower, Stanford, Harvard, MIT, Berkeley
Key Hires Needed: COO, CFO, materials engineers
Management Team
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Market
What I'm looking for
Does this market support a$1B+ company?
Massive end-markets ($1B+)
High-growth markets
Potential to dominate
Ability for startups to compete
Common issues
Too much time spent explaining a familiar market
Lack of clarity on targeted segments and true addressable market (it’s all about TAM)
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Market (Sample)
$0
$5
$10
$15
$20
$25
$30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E
$ Bi
llion
s
The solar market has grown at 40%+ CAGR since 2000
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Market (Sample)
Target Industry: Key Addressable Markets
0
20
40
60
80
100%
Product Category 1
Product 3
Product 2
Product 1
51
Category 2
Product 8
Product 7
Product 6
Product 5
Product 4
18
Category 3
Product 11
Product 10
Product 9
16Billions of units
1-2 years
3+ years
Time-to-market
Note: Dummy data used
Category Share
Mar
ket S
hare
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Tech: Overview
What I'm looking for
What is the product or service that you’re offering?
Concise, but sufficient background
Technology that is IP-rich and defensible
Clear value prop to customer
Common issues
[25 mins into your presentation] “What is it you do again?”
Not tailoring the technical depth for your audience and stage of meeting
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Tech: Overview (Sample)
Courtesy: GreatPoint Energy’s Web site
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Tech: Overview (Sample)
Courtesy: GreatPoint Energy’s Web site
Produces methane in a single step and in a single reactor Pipeline grade product No need for external water gas shift reactor No need for external methanation reactor Produces CO2 as a valuable sequestration-ready byproduct
Significantly reduces operating temperature Lower cost reactor components Lower maintenance costs and higher reliability Eliminates costly high termperature cooling
Utilizes steam methanation Eliminates costly air separation plant
High efficiency 65% overall efficiency Thermally neutral reaction process No need for integrated power plant
Process Advantages
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Tech: Differentiation
What I'm looking for
How is your offering different? Tech approach Product performance Cost economics Stage of development
Thoughtful understanding of competition
Common issues
Another “me too” technology
Assuming your approach is unique
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Tech: Differentiation (Sample)
Energy Storage Competitive Landscape
Delta EpsilonTau
Beta
Sigma
Alpha
Omega
Gamma
Increasing Power Density
Incr
easin
g En
ergy
Den
sity
Note: Dummy data used
Our Company
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Tech: Economics
What I'm looking for Common issues
Does your product/service make economic sense? Production costs
Capex
For “incremental” tech (e.g., ethanol), ability to compete with existing alternatives
For “displacement” tech (e.g., thin film), ability to achieve significant cost improvement
Industry costs are moving targets
Not understanding sensitivities associated with feedstock price changes, subsidy changes, etc.
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Tech: Economics (Sample)
0
1
2
$3/gge
Wholesale@ $50/bbl
$1.2
Soy-basedBiodiesel
$2.5
Corn-basedEthanol
$1.5
Today (Lab)
$2.8
Pilot(Q3 '08)
$1.9
Commercial(Q4 '10)
$1.3
Production cost
Our costs will be competitive with existing fuels
Feedstock
Processing
Note: Dummy data used
Our technology
Cost level with current tax credit
Note: gge = “gallon gasoline equivalent”
Existing fuels
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Tech: Development Timeline
What I'm looking for
What is your future development roadmap?
Technical progress made to date
Key future milestones and risk assessment
Key capital equipment required and scale-up needs
IP portfolio development plan
Common issues
Long time-to-market (3+ years)
Lengthy “design-in” time requirements
Dependence on other emerging technologies
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Tech: Development Timeline (Sample)
2012 2013 2014Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Development Roadmap
Sub-10% 10-25% 25-50% 50-95%
Yield
Capacity Scale-up 5L pilot 20L pilot
Commercialization 10K L production 100K L production
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Ops: Sales and Distribution
What I'm looking for
What is your go-to-market strategy?
Review of sales pipeline and notable customers
Potential engagement with relevant channel partners
Common issues
Sales cycles that are too long (esp. for utilities or local governments)
Long payback time / limited ROI for end-customers
Fragmented customer base
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Ops: Sales and Distribution (Sample)
Current Sales Pipeline
Alpha Energy $2,000,000 MedBeta Utility $1,000,000 HighGamma Industrial $800,000 MedDelta Energy $750,000 HighEpsilon Utility $600,000 LowPi Industrial $500,000 MedTheta Energy $300,000 HighNu Utility $300,000 LowRho Industrial $300,000 HighSigma Energy $200,000 HighTau Utility $150,000 High
TOTAL POTENTIAL $6,900,000
In discussion withkey distributionpartners
Target Customer Potential Deal Likelihood
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Ops: Policy/regulatory Issues
What I'm looking for
What key government policies or regulations drive your business? Subsidies Tax credits Emissions credits Compliance laws
Understanding of how they will evolve over time
Associated risks and sensitivities
Common issues
Business models dependent on: Short-term policy windows Pending legislation
It’s all about the stimulus package!
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Financials: Projections
What I'm looking for
What does your financial plan look like?
Any recent historical results
3-5 year forward projections Simple P&L Headcount Timing for cash flow breakeven
Any debt assumptions
Common issues
Too aggressive
Too conservative
Not knowing how sensitive financials are to externalities
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Financials: Projections (Sample)
Operating MarginRevenue Gross Margin %
-20
0
20
40
60
$80M
0
20
40
60
80
100%
2007 2008 2009 2010 2011 2012 2013
Financial Plan
6 10 15 25 45 75 120-1.5 -3.5 -5.3 -7.0 1.2 7.7 17.2
HeadcountCash Flow ($M)
Note: Dummy data used
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Financials: Fundraising Needs
What I'm looking for
How much do you need to raise and why?
Funding history
Total target raise
Amount available for new VC’s
Use of proceeds and achievable milestones
Board seat expectations
Valuation expectations
Common issues
Large initial rounds with limited proof points
Lack of flexibility in round structure
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Financials: Fundraising Needs (Sample)
Funding history Seed (6/07): $500K – angel investors Series A (6/08): $2.5M – Alpha Capital, Beta Ventures
Series B financing: $12-15M target equity, $2-5M add’l debt Insiders to take $2-5M Expect 2 investors (1 financial, 1 strategic), each with board seat
Targeted milestones Complete Phase II of development 2 MW pilot line completed Secure initial distribution partners Recruit top-tier CEO Carry company through end of 2010
Series B Financing
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Now it’s your turn…
Operations Sales pipeline Distribution Policy/regulatory issues
Financials Projections Fundraising needs
4
5
Mission statement
Management team
Market
Technology Overview / value prop Competitive differentiation Economics Development timeline
0
1
3
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Parting thoughts:Be passionateBe confidentBe open to new ideas
Andrew Chung, [email protected]
GOOD LUCK!