NES Enterprise Series 2010 - Pitching for capital
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NES Enterprise Series 2010 - Pitching for capital Presentation Transcript

  • 1. Kristav Childress
    NUS Enterprise Series
    15 December 2010
    Pitching forCapital
  • 2. Pitching Vs. Presenting
    “We PITCH to PERSUADE”
  • 3. Principle 1 of THE PITCH
    Know
    Your
    Customer
    (the investor)
  • 4. Two (Conflicting) Investor Fears
    Investors are afraid to invest in something that will LOSE their investment money
    Savvy investors are also afraid that they will MISS an outstanding investment - a Google, Microsoft, HotMail or Yahoo for example - and PASS UP HUGE RETURNS
  • 5. Preparing to Pitch to Investors
    Remember:
    Ultimately, its mostly about the money (occasional exceptions – like “green”)
    Investors want to understand and trustYOU AND YOUR IDEA before give you their (clients’) money
    The investor may not understand your technology, certainly not in detail
    You often have only 1-2 minutes to “hook” them
  • 6. Principle 2 of THE PITCH
    Have
    the
    Confidence
    to
    Keep
    It
    SIMPLE!
  • 7. Simple Is Often Not Easy
    “I didn't have time to write a short letter . . . so I wrote a long one instead. “
    -- Mark Twain
    American Author
    Message – creating a clear, simple description of your business/product/service that sells can take a lot of work.
  • 8. K.I.S.S . . . Keep It . . .
    COMPLEX (Original)
    “XipLink is the technology leader in wireless optimization using IETF and Space Communications Protocol Specifications (“SCPC”) standards. Wireless optimization includes protocol acceleration, data compression and HTTP optimization.”
    SIMPLE PAIN (My Version)
    “ We all spend time waiting for programs to run or files to download over wireless connections. XipLink is the best way to move critical data – e-mails, files and web pages – 2 to 3 times faster over a wireless connection. It cuts waiting time so that users can work faster and finish sooner.”
  • 9. Guy Kawasaki’s “10/20/30 Rule”
    For presentations to potential investors:
    “. . . a PowerPoint presentation [to investors] should have ten slides, last no more than twenty minutes, and contain no font smaller than thirty points.”
  • 10. The “Elevator Pitch”
    Use it in your initial discussions with the investor (intro) and adapt to the presentation
    Ideally two levels:
    An ultra short pitch, one or two sentences that capture the pain and the unique profitable solution
    A more detailed (<2 minute) version
  • 11. The “Ultra Short” Pitch Sample
    “Today, the average worker wastes 30 minutes a day just filing and searching for e-mails . . . costing businesses an estimated $60billion per year. Our patented “neural net” e-mail organizer reduces that wasted time by 80% and pays for itself in as little as one week.”
    NOTE: Almost NO JARGON, concrete, value is easily understood
  • 12. Elevator Pitch (<2Min)
    Possible format: “Hi, I am ****, [title] of [company]. I (we) have personally seen that [BRIEF description of pain/problem/need] which causes many people (businesses) a lot of [trouble/costs/etc.] They are willing to spend money to solve [problem]. We can solve it by [description of solution] which is unique and addresses the need better than [summary of existing solutions]. Other companies cannot easily duplicate this solution because of [patent, trade secret, etc.] This is a greatopportunity, with an estimated market of $X each year. May I tell you more about the opportunity and our team’s unique ability to quickly build a very large and profitable company from it?”
  • 13. Sample Elevator Pitch
    Example: “Hi, I ‘m Kris Childress, CEO of eMail Nirvana. I have personally seen that [many companies waste thousands of man-hours filing and searching for important e-mails] which costs businesses a lot of [lost time and money, plus sometimes not responding in a timely fashion to important e-mails]. They are willing to spend money to solve [this problem of misplaced e-mails]. We can solve it by [providing an inexpensive, automated, intuitive e-mail box] which is unique and addresses the need better than [existing spam filters and e-mail folders]. Other companies cannot easily duplicate this solution because of [our unique software and trade secret technology].This is a great opportunity, with an estimated market of $350M each year. May I tell you more about the opportunity and our team’s unique ability to quickly build a very large and profitable company from it?”
  • 14. Principle #3: “Magic Words”
    Practice
    Practice
    Practice
    You should practice your pitch until it is comfortable and natural.
  • 15. What Should Be in Your Presentation?
    Suggested Content
  • 16. Guy Kawasaki’s 10 Points/Slides
    Problem (“Pain”)
    Your solution
    Business model
    Underlying magic/technology
    Marketing and sales
    Competition
    Team
    Projections and milestones
    Status and timeline
    Summary and call to action
  • 17. Rose’s Elements of Investment Pitch
    • Strategic Relationships
    • 18. Competition
    • 19. Barriers to Entry
    • 20. Financial Overview
    • 21. Use of Proceeds
    • 22. Capital Valuation
    • 23. Company Logo
    • 24. Business Overview
    • 25. Team
    • 26. Market
    • 27. Product
    • 28. Business Model
    Adapted From David S. Rose's TED Presentation
  • 29. The Elements of the Pitch
  • 30. Team
    KRIS CHILDRESS, Director of Marketing & Strategy.  Has held series of increasingly complex and responsible marketing and sales roles with four young technology companies (3 global ) over a 25 year careerr. Currently a mentor in go-to-market strategies for young technology firms in Singapore and the US. CEO of small clean-tech firm in Singapore. 
    Note: Emphasize experience and success, esp. in startup companies. Meaningful experience is valuable. But don’t “puff it up”.
  • 31. Market
    Who and How big is the market?
    What is your realistic target market?
    How fast can you exploit this target market?
    Example:
    Total market is US$1B for computer UPSs
    Realistic market segment is companies that need UPSs in remote locations: $200M
    We can have 10% of this market ($20M) in 3 years
  • 32. Product
    What is your product or service?
    Why does anyone care?
    What are people/companies using now in the absence of your product?
  • 33. Business Model
    Very simply, how do you plan to make money?Alternatives can include:
    • Sales
    • 34. Subscription
    • 35. SaaS
    • 36. Gain-Sharing
    • 37. Rentals
    • 38. Royalties
    • 39. OEM
    • 40. Ad Revenues
    • 41. License Fees
    • 42. Leases
    • 43. Others
    • 44. Combinations
    • 45. What is your “unit” of revenue: units, hours, cpm?
  • Strategic Relationships
    Which companies, agencies, etc., want to partner with you, in some way, that will grow your business? (Proof, like a signed MOU, is important). Examples:
    Retailer has committed to sell your product
    Manufacturer will build your product into theirs
    A government agency has promised to use your product exclusively
  • 46. Competition
    If you say you “have NO competition” you are going to lose savvy investors. Either:
    There is no market for the product/service
    You are being naïve and haven’t looked at the market
    Keep in mind that competition is not just similar technologies, but also other products that meet the need. An example is different kinds of music players (cd, mp3, etc.)
  • 47. Barriers to Entry
    What are the barriers to entry for others?
    Are you:
    First to Market? (How Much Lead Time?)
    Strong Brand? (Nikes Not “Knock Offs”)
    Trade-Secret – Know How?
    Patents?
    Copyrights?
    Standards /“natural” monopoly (like Microsoft)?
    Strong network, partners and/or complementary technologies? – the Phokki model.
  • 48. Financial Overview
    Build as complete a picture of the costs of doing business and your best estimates of sales, profits, returns, etc. (There are spreadsheet templates that you can customize.)
    Have several knowledgeable people review these estimates to confirm that they are reasonable
    There may be “optimistic”, “realistic”, “pessimistic” versions – but probably not in pitch
    For an initial pitch, a simple projection (3-5 years) of revenues versus costs is often sufficient. KEEP . . . IT . . . SIMPLE!
  • 49. Simple Example Projected Results
  • 50. Use of Proceeds
    What will you spend capital on?:
    Be as simple and clear as you can about where you will spend most of the money
    Salaries, web pages, market research, consulting, legal, travel, etc.
    Don’t waste money but don’t “under budget”
    Consider funding in tranches with specific milestones
  • 51. Capital Valuation
    What is your company worth and why?
    Not an “exact science”: the valuation of a company is almost always a negotiation
    Some pitches do not include this, may be part of follow-up
  • 52. Some Final Thoughts
  • 53. The VC PITCH Checklist
    Your Pitch slides with presenter notes
    A “leave behind” version of your pitch with more details
    A business plan
    A 1-2 page summary of the pitched idea with very brief details
    Product and company literature, a web page, name cards, etc.
  • 54. Some Final Points on the PitchEND
    Be able to describe the business in 15-20 seconds if necessary
    The Pitch – Like BP – Should be your best thinking to date
    Focus, Focus, Focus and
    Practice, Practice, Practice
    Anticipate questions and answer them as much as practical in the presentation
    Make it “natural” – passionate but not “scripted”
  • 55. A Few Final Pointers
    • The language on the slides (and from the presenter) should be PURFECT!
    • 56. Best pitches are usually ONE person with others there to help with questions, demo product, etc.
    • 57. SAY it and SHOW it: demonstrations can be great, but the product must work flawlessly.
    • 58. Have a backup if you can’t get internet
    • 59. Even mockups or models can make it “real”
  • Addendum Slides
  • 60. Some Useful Blogs
    All about being a startup
    http://blog.startupprofessionals.com/
    Blog of an investor
    http://www.bwm748.com/
    Blog on Presentations
    http://www.presentationzen.com/
    Blog Resource for Entrepreneur
    http://venturehype.com/
    NOTE: I follow all of these and others on Twitter