THE CAPITAL NETWORK<br />Roundtable Breakfast - Pitching the Plan<br />January 12, 2010<br />
Strategic Financing Plan & Execution<br /><ul><li>How much outside capital should you raise now?
Generally - the least capital you need to get to next major valuation milestone (with 90-120 day / 10-20% cushion). You ne...
Hire critical team members
Attract Customers / Convert beta customers to paying customers
Acquire critical technologies, systems and resources
Cover 4-6 months of cash burn (not accounting expense)
Deal with unanticipated opportunities or setbacks
Counterpoint: Consider the time cost & disruption of raising capital incrementally
Optimizing capital raised for:
Business Outcomes (Business Growth / Market leadership / Flexibility
Personal Outcomes (Wealth / Control / Operating Role)</li></li></ul><li>Strategic Financing Plan & Execution<br /><ul><li>...
Continued R&D
Sales and R&D Development Teams
Sales and Marketing Efforts
Growth and Expansion
Impact on valuation and dilution
Debt vs. Equity
Strategy > Optimum investor base
Funds
Groups
Individuals
Friends & Family</li></li></ul><li>Strategic Financing Plan & Execution<br /><ul><li>Dilution Impact Comparison – Assume y...
Authenticity – Be genuine: Tailor your messaging not your company, your ethics, your vision or your passion.
Forthrightness – Be upfront with the problems, risks and unknowns – “I don’t know” is a better answer than B.S.
Confidence – Have confidence in the vision and in your ability to assess and overcome the problems, risks and unknowns.
Humility– Accept that you don’t know everything – learn from everyone (including investors) and from every meeting.
Passion – Be passionate about the problem, your solution, your team and your vision - not about the money you will make.</...
Identify optimal (and backup) potential investors
Gather direct and indirect contact information
Prioritize Prospects
Upcoming SlideShare
Loading in...5
×

Tcn Pitching The Plan Roundtable 1 12 10 Halpern Deck

2,052

Published on

How to create a venture finance plan, find and contact investor and deliver an effective pitch to obtain early stage high growth capital.

0 Comments
6 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
2,052
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
6
Embeds 0
No embeds

No notes for slide

Tcn Pitching The Plan Roundtable 1 12 10 Halpern Deck

  1. 1. THE CAPITAL NETWORK<br />Roundtable Breakfast - Pitching the Plan<br />January 12, 2010<br />
  2. 2. Strategic Financing Plan & Execution<br /><ul><li>How much outside capital should you raise now?
  3. 3. Generally - the least capital you need to get to next major valuation milestone (with 90-120 day / 10-20% cushion). You need enough cash to:
  4. 4. Hire critical team members
  5. 5. Attract Customers / Convert beta customers to paying customers
  6. 6. Acquire critical technologies, systems and resources
  7. 7. Cover 4-6 months of cash burn (not accounting expense)
  8. 8. Deal with unanticipated opportunities or setbacks
  9. 9. Counterpoint: Consider the time cost & disruption of raising capital incrementally
  10. 10. Optimizing capital raised for:
  11. 11. Business Outcomes (Business Growth / Market leadership / Flexibility
  12. 12. Personal Outcomes (Wealth / Control / Operating Role)</li></li></ul><li>Strategic Financing Plan & Execution<br /><ul><li>How much capital will you need later?
  13. 13. Continued R&D
  14. 14. Sales and R&D Development Teams
  15. 15. Sales and Marketing Efforts
  16. 16. Growth and Expansion
  17. 17. Impact on valuation and dilution
  18. 18. Debt vs. Equity
  19. 19. Strategy > Optimum investor base
  20. 20. Funds
  21. 21. Groups
  22. 22. Individuals
  23. 23. Friends & Family</li></li></ul><li>Strategic Financing Plan & Execution<br /><ul><li>Dilution Impact Comparison – Assume you need $4m over 2 years. </li></li></ul><li> CREDIBILITY<br />Credibility is critical in fundraising – it leads to investor confidence, lower risk assessments and ultimately fundraising success. <br /><ul><li>Honesty – Don’t make up answers, information, customers, results, etc.
  24. 24. Authenticity – Be genuine: Tailor your messaging not your company, your ethics, your vision or your passion.
  25. 25. Forthrightness – Be upfront with the problems, risks and unknowns – “I don’t know” is a better answer than B.S.
  26. 26. Confidence – Have confidence in the vision and in your ability to assess and overcome the problems, risks and unknowns.
  27. 27. Humility– Accept that you don’t know everything – learn from everyone (including investors) and from every meeting.
  28. 28. Passion – Be passionate about the problem, your solution, your team and your vision - not about the money you will make.</li></li></ul><li> <br />The Fundraising Sales Process<br /><ul><li>Financing Plan
  29. 29. Identify optimal (and backup) potential investors
  30. 30. Gather direct and indirect contact information
  31. 31. Prioritize Prospects
  32. 32. Systems – Prospect Tracking
  33. 33. Contact / Get Introduced – Networking and Social Networking
  34. 34. Optimizing first impressions
  35. 35. Don’t Pitch! Get a Meeting!
  36. 36. Create an internal champion
  37. 37. Sell the opportunity to participate in value creation
  38. 38. Close, or move on
  39. 39. Deal syndication
  40. 40. Investor Coalition Politics</li></li></ul><li>Marketing Materials <br /><ul><li>Matching Materials and Process to Investor Type and Setting
  41. 41. The full Business Plan - When and Why?
  42. 42. The 5 Page Executive Summary
  43. 43. The 1 Page Summary (the “Teaser”)
  44. 44. The 15-20 Slide Deck
  45. 45. The 10 second oral presentation pitch (the “Elevator Pitch)
  46. 46. The 30 sec -2 min oral presentation (the “Quick Conversation”)           
  47. 47. Tailoring the emphasis of materials for the specific investor (similar to tailoring a resume) vs. Consistency across all iterations
  48. 48. Tracking distribution of materials</li></ul>              <br />
  49. 49. The Pitch Deck – Purpose and Overview<br /><ul><li>Use as organizing and homework tool
  50. 50. Selling the Investment Opportunity
  51. 51. Solutions are more important than technology or “coolness”
  52. 52. Value creation is more important than revenue model
  53. 53. What do investors want to know
  54. 54. How to anticipate and address investor concerns: Risk Analysis
  55. 55. Optimize pitch and presentation; Use of Appendices
  56. 56. Problem: The Perfect Deck vs. Running Your Business
  57. 57. 10/20/30
  58. 58. Do you need each item and each slide?</li></li></ul><li>The Pitch Deck – Organization<br />Cover Slide with Logo and Contact Info<br />Problem – Core Customer Introduction<br />Solution – When and where to use pictures and demos + Global Vision<br />Value Proposition and Differentiation – The Value Triangle<br />Business and Revenue Model – Who is your customer – how do you get paid?<br />Sales and Distribution Model – How do you get product/service to Customer<br />Defensibility<br />Team<br />Total Market / Addressable Market / Competitors / Current Advantages<br />Current Status<br />Risks and Plans<br />Financial Overview / Cash Burn<br />Funding Requirements<br />Vision, Contact Info and Tagline<br />Appendices<br />
  59. 59. The Pitch Deck – <br />Page 1 - Cover Slide with Logo and Contact Info<br /><ul><li>First Impression
  60. 60. Use of tagline may be useful to assist recall and give an overview
  61. 61. Include contact information
  62. 62. Include name of the investor/group to whom presentation is delivered</li></li></ul><li>The Pitch Deck – <br />Page 2 - Problem – Core Customer Introduction<br /><ul><li>Who has a problem?
  63. 63. What is the magnitude and frequency of the problem per customer?
  64. 64. Cancer Drug vs. Aspirin vs. Vitamin?
  65. 65. Does the pain create pain for 3rd parties?
  66. 66. Can you quantify the pain per customer or industry wide?
  67. 67. Can you explain WHY the pain exists?
  68. 68. For consumer products – can you explain desire?
  69. 69. How did you discover or determine the existence of the problem?</li></li></ul><li>The Pitch Deck – <br />Page 3 - Solution<br /><ul><li>Explain if it is a product, a service or a mix
  70. 70. What does it do:
  71. 71. Provides customer with cost savings or time/cost efficiencies
  72. 72. Drives revenue to customer
  73. 73. Drives customer’s acquisition of customers
  74. 74. Provides customer a same priced product that provides additional critical benefits
  75. 75. Allows customer to offer its customers a superior value proposition
  76. 76. Decreases risks to customer
  77. 77. Leverages customer’s existing customers or solutions
  78. 78. Don’t get too detailed
  79. 79. Unless you are a deep engineering company – don’t get too detailed
  80. 80. Assume technical matters will be validated later
  81. 81. Diagrams or pictures of product may be useful to explain complex matters</li></li></ul><li>The Pitch Deck – <br />Page 4 – Value Proposition and Differentiation<br /><ul><li>What does your solution do better, faster or cheaper than the existing solutions
  82. 82. How much better, faster, cheaper?
  83. 83. When is 2% savings in time or cost huge?
  84. 84. Can you itemize the specific ways in which your solution is “better”? Do you have data to indicate that such items are meaningful to the customer?
  85. 85. Can you quantify value proposition to the customer?
  86. 86. Can you quantify a Return on Investment (ROI) for customer based on comparison of solution cost to quantifiable solution benefits?
  87. 87. ROI to customer should be a portion of the incremental value created by solution; the remainder
  88. 88. Example:
  89. 89. SellCo spends $25 to create a solution that it sells to BuyCo for $50. BuyCo obtains $100 in gross benefit from solution (a 2:1 ratio).
  90. 90. Higher margins for SellCo often represent higher ROIs to SellCo’s customers. </li></li></ul><li>The Pitch Deck – <br />Page 5 – Business and Revenue Model<br /><ul><li>Explain who YOUR customers are.
  91. 91. If your customers are resellers, explain who THEIR customers are as well.
  92. 92. How do you get paid?
  93. 93. When and how much do you get paid? Average $/customer?
  94. 94. What is your cost structure – fixed vs. variable portions?
  95. 95. Is the business model well understood or newer? Ex. Digital consumer goods
  96. 96. Streamlining and prioritizing multiple revenue lines
  97. 97. Examples:
  98. 98. Direct Sales
  99. 99. Indirect Sales
  100. 100. Razor and blades business model
  101. 101. Auction / Arbitrage
  102. 102. Digital Marketplace
  103. 103. Publishing / Digital Publishing
  104. 104. Subscription
  105. 105. Advertising
  106. 106. Professional Services
  107. 107. SAAS
  108. 108. Licensing
  109. 109. Maintenance Contracts
  110. 110. Insurance
  111. 111. Loyalty business models
  112. 112. Freemium business model
  113. 113. Premium business model
  114. 114. Professional open-source model
  115. 115. VAR
  116. 116. Multi-level marketing business model
  117. 117. Cost Savings Share
  118. 118. MLM
  119. 119. Franchise
  120. 120. Data Broker
  121. 121. Sponsorship
  122. 122. Government Contractor</li></li></ul><li>The Pitch Deck – <br />Page 6 – Sales and Distribution Model <br /><ul><li>How you deliver solution to customers.
  123. 123. Marketing and distribution strategy
  124. 124. How you create customer relationships
  125. 125. How you incentivize and compensate sales
  126. 126. Explain geography and expansion strategy
  127. 127. Discuss critical distribution partners and options</li></li></ul><li>The Pitch Deck – <br />Page 7 - Defensibility<br /><ul><li>Not just Intellectual Property in the legal sense
  128. 128. Patents, Trademarks, Copyrights
  129. 129. How unique is your solution?
  130. 130. Ease of replication?
  131. 131. Know how and Trade Secrets
  132. 132. R&D development lead
  133. 133. No-“out” Contracts
  134. 134. Relationships and Team
  135. 135. “First Mover”
  136. 136. Monopoly </li></li></ul><li>The Pitch Deck – <br />Page 8 - Team<br /><ul><li>Current Team
  137. 137. Experience with startups, with industry and with customers
  138. 138. Soft commitments from prospects
  139. 139. Board Members
  140. 140. Board of (technical) Advisors
  141. 141. Key Thought Leaders</li></li></ul><li>The Pitch Deck – <br />Page 9 - Market<br /><ul><li>Size, growth and characteristics of YOUR market
  142. 142. How much can you and your direct competitors sell in the coming years
  143. 143. Target market and addressable markets
  144. 144. Avoiding silly statistics
  145. 145. Hard data about your marketplace
  146. 146. Business model or technological shift in that marketplace
  147. 147. Monopoly problems
  148. 148. Distribution bottlenecks
  149. 149. Other concerns that would compress margins or eliminate expansion opportunity
  150. 150. Current major competitors and why you will beat them
  151. 151. Avoiding the “no-competition trap”
  152. 152. Explaining their trends of growth or contraction</li></li></ul><li>The Pitch Deck – <br />Page 10 – Current Status<br /><ul><li>Solution Development
  153. 153. Context of development timeline
  154. 154. Critical development partnerships
  155. 155. Team
  156. 156. Critical distribution partnerships
  157. 157. Customer Acquisition
  158. 158. Customer conversion rates</li></li></ul><li>The Pitch Deck – <br />Page 11 – Risks and Plans<br /><ul><li>Technology risks – Will the solution work?
  159. 159. Business Model risks – Can you sell the solution at margin?
  160. 160. Supply risks – Can you acquire and manage critical vendors
  161. 161. Market Dynamics risk – Do customers and distributors have cash and will to spend?
  162. 162. Distribution Risk - Can you acquire and manage critical distribution and sales points?
  163. 163. Customer Adoption Risk – Will the Dogs eat the Dog Food?
  164. 164. Financial risks – Will you have positive cash flow? Will you have sufficient capital?
  165. 165. Legal / Regulatory risks – Are there barriers beyond your ability to influence?
  166. 166. Team risks – Is our product or customer knowledge distributed and accessible?
  167. 167. For each identified risk – plans to assess, address and overcome. </li></li></ul><li>The Pitch Deck – <br />Page 12 – Financial Overview / Cash Burn<br /><ul><li>Cash in the bank
  168. 168. Cash burn
  169. 169. Time to cash flow positive
  170. 170. Additional investment required before cash flow positive</li></li></ul><li>The Pitch Deck – <br />Page 13 – Funding Requirements<br /><ul><li>How much do you want and need?
  171. 171. What will it be used for?
  172. 172. How far will it take you?
  173. 173. Preferred deal structure?
  174. 174. Dangers of including suggested valuations</li></li></ul><li>The Pitch Deck – <br />Page 14 - Vision, Contact Info and Tagline<br /><ul><li>Restate the company name, vision and tagline
  175. 175. Again add contact info
  176. 176. Finish as strong as you start</li></li></ul><li>The Pitch Deck – <br />Page 15+ - Appendices<br /><ul><li>All of the information that may backstop your conclusions
  177. 177. Case studies
  178. 178. Customer testimonials
  179. 179. More detailed technical or product information
  180. 180. More detailed market or customer information</li></li></ul><li>Financials and Projections<br /><ul><li>P&L / Cash Flow / Balance Sheet – Historical + 3yrs
  181. 181. Segment by revenue type
  182. 182. Bottom-Up vs. Top-Down projections
  183. 183. % of China Problem
  184. 184. Assumptions Pages
  185. 185. Perfect vs. Functional
  186. 186. What does “conservative” mean
  187. 187. Use of High / Medium / Low
  188. 188. Market Metrics and Information
  189. 189. Addressable vs. Total Markets
  190. 190. Use of selective statistics
  191. 191. Anticipating investor cutback
  192. 192. Matching of pre-money valuation to end market valuations assuming dilution</li></li></ul><li>The Presentation – Part 1<br /><ul><li>Know your material cold! Don’t wing it.
  193. 193. Use note cards & appendix slides for easy access to specific information.
  194. 194. DON’T READ your presentation.
  195. 195. You should have answers to likely questions, even if you don’t intend to cover such material in your core presentation.
  196. 196. 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.
  197. 197. When possible, know the room. Arrive early, walk around the speaking area and practice using the microphone and any visual aids.
  198. 198. Wear clothes that represent you and which reinforce your authority and confidence.
  199. 199. Work to control filler words such as “Um” “Ah” Eh” or “Like”. Try to limit distracting repetitive hand or body gestures.
  200. 200. Realize that audiences want you to be interesting, stimulating, informative and entertaining. They’re rooting for you. </li></li></ul><li>The Presentation – Part 2<br /><ul><li>Prioritize and eliminate less critical points.
  201. 201. Be flexible – be prepared to be interrupted.
  202. 202. Understand the goal of your presentation. Is it to inspire, to educate, to connect, to get attention, to get a second more personal meeting? Your focus should help you prioritize.
  203. 203. Modulate your pace, pitch, volume, tone and enthusiasm – like when you are telling a story. This helps keep the audience focused.
  204. 204. Use humor, personal stories and conversational language where possible. Your use of easy to understand analogies can help you draw in the audience and create traction.
  205. 205. Practice. Practice. Practice! Rehearse out loud with all equipment and with a timer. Allow time for the unexpected.
  206. 206. 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.
  207. 207. Slides should HELP the oral presentation, not BE the presentation. Avoid writing down your presentation on the slides. </li></li></ul><li>The Presentation – Part 3<br /><ul><li>Always bring a backup copy of the presentation with you in paper and on a flash drive (it is also useful to have it available by web email).
  208. 208. The professionalism of the powerpoint may convey information to the audience about your credibility. If it looks like a last-minute effort, it probably was.
  209. 209. The deck is just a tool. If the computer or projector cease working – you should be able to carry on with your presentation without getting flustered. Remember, this is just a tool, it is not the presentation.
  210. 210. RELAX, BREATHE and SLOW DOWN</li></li></ul><li>Securities Laws Concerns<br /><ul><li>Public Offering Concerns
  211. 211. Web / MHT / Business Plan Competitions / Trade Org Meetings
  212. 212. The improper use of Social Networking
  213. 213. Accredited vs. Non-Accredited Investors</li></li></ul><li>Accredited Investor  <br />(Rule 501 of Regulation D):<br /><ul><li>a bank, insurance company, registered investment company, business development company, or SBIC;
  214. 214. an employee benefit plan under certain conditions
  215. 215. a charitable organization, corporation, or partnership with assets exceeding $5 million;
  216. 216. a director, executive officer, or general partner of the company selling the securities;
  217. 217. a business in which all the equity owners are accredited investors;
  218. 218. a natural person who has net worth that exceeds $1 million at the time of the purchase;
  219. 219. a natural person with income exceeding $200,000 ($300,000) in each of the two most recent years; or
  220. 220. a trust with assets in excess of $5 million under certain conditions.</li></li></ul><li>Contact Info and Questions<br />Jeremy Halpern<br />Managing Director<br />www.evolutionadvisors.com<br />jhalpern@evolutionadvisors.com<br />(617) 905-1893<br />Chairman<br />The Capital Network<br />www.thecapitalnetwork.org<br />EvolutionAdvisors, LLC - **Helping Companies Evolve**<br />

×