Silicon Valley NewTech Meetup – April 7, 2009 Bill Hunt - bill@whuntpartners.com Funding your Start-Up

What If I Don't Need Investment? You’re NOT doing it without investment. Instead, you are choosing to be your own investor. Investment principles exist, just as architecture/coding/etc principles exist. Be a good investor and evaluate your business like an investor would. Make changes based on this, or even scrap the idea and pick a better one if it doesn’t make sense from an investment perspective.

You’re NOT doing it without investment. Instead, you are choosing to be your own investor.

Investment principles exist, just as architecture/coding/etc principles exist.

Be a good investor and evaluate your business like an investor would.

Make changes based on this, or even scrap the idea and pick a better one if it doesn’t make sense from an investment perspective.

Get an Intro Find someone who can introduce you to the Angel or VC Have an elevator pitch prepared; you never know when you’ll have a 2 minute opportunity to pitch a potential investor. Go to events you know VCs will be at. Give them the elevator pitch.

Find someone who can introduce you to the Angel or VC

Have an elevator pitch prepared; you never know when you’ll have a 2 minute opportunity to pitch a potential investor.

Go to events you know VCs will be at. Give them the elevator pitch.

Know What The Investor Wants What deal sizes do they do? What markets do they focus on? Do they have a competitive portfolio company? Do they have complimentary portfolio companies? Do they lead rounds? Do they have money? Look like the sort of company they invest in

What deal sizes do they do?

What markets do they focus on?

Do they have a competitive portfolio company?

Do they have complimentary portfolio companies?

Do they lead rounds?

Do they have money?

Look like the sort of company they invest in

The Problem You're Solving What is the problem that exists? How bad is the pain? Focus on an individual. Is this a problem for CEOs? For CIOs? For Product Managers? etc. Whose problem is this? I.e. who will buy your product? Sell Aspirin, not Vitamins.

What is the problem that exists?

How bad is the pain?

Focus on an individual.

Is this a problem for CEOs?

For CIOs?

For Product Managers? etc.

Whose problem is this? I.e. who will buy your product?

Sell Aspirin, not Vitamins.

Your Unique Solution What is your solution to this problem? Focus on the problem that you solve.

What is your solution to this problem?

Focus on the problem that you solve.

Do a demo If possible, demo your product, or do a walkthrough in mock-ups.

If possible, demo your product, or do a walkthrough in mock-ups.

Market Size How many customers will pay for a solution like this? Ideal answer will come from a third-party, such as an analyst. If necessary, do the math yourself, based on the number of potential customers x how many would actually buy. Make sure your financials (later) align with this. Don’t assume you can sell >50% of this market.

How many customers will pay for a solution like this?

Ideal answer will come from a third-party, such as an analyst.

If necessary, do the math yourself, based on the number of potential customers x how many would actually buy.

Make sure your financials (later) align with this. Don’t assume you can sell >50% of this market.

Market Validation Quote from potential customer(s) Ideal quote sounds like this: “ If only I had the XYZ widget, I would buy 50 today. I need a solution to W, and XYZ has the best/only way to solve it.”

Quote from potential customer(s)

Ideal quote sounds like this:

“ If only I had the XYZ widget, I would buy 50 today. I need a solution to W, and XYZ has the best/only way to solve it.”

Monetization It has to make money. Advertising is not looked at favorably.

It has to make money.

Advertising is not looked at favorably.

Team Describe each of the team members Why is each member fantastic for building this company? Have you worked together before? A team of one is bad. Support and Peer-pressure among founders keeps things strong.

Describe each of the team members

Why is each member fantastic for building this company?

Have you worked together before?

A team of one is bad. Support and Peer-pressure among founders keeps things strong.

Competition What other solutions exist? No competition is bad. This implies that the problem you’re solving isn’t real. Too much competition is bad. Means the space is too crowded. (although if you have serious differentiation, you can cut through competition). Common slide shows matrix with competitors along left and features along top. Checks for each feature, with your company having all checks.

What other solutions exist?

No competition is bad. This implies that the problem you’re solving isn’t real.

Too much competition is bad. Means the space is too crowded. (although if you have serious differentiation, you can cut through competition).

Common slide shows matrix with competitors along left and features along top. Checks for each feature, with your company having all checks.

Differentiation Why are you better? Be tough for others to duplicate: patents that you have filed existing market penetration man-years of effort required Focus patent efforts on paths that your competition will have to cross.

Why are you better?

Be tough for others to duplicate:

patents that you have filed

existing market penetration

man-years of effort required

Focus patent efforts on paths that your competition will have to cross.

Go To Market Plan How will you get your offering to your customers? What channels will you use? How much will you charge? Where/how will you market to customers?

How will you get your offering to your customers?

What channels will you use?

How much will you charge?

Where/how will you market to customers?

Financials Chart of projected Revenue/Costs/Profit Quarterly for first year. Yearly for next 2 years Don’t be too aggressive: Your company won’t smell right; will make VC believe you are naive. VCs have a fantastic memory for these sorts of things, and later if you don’t meet up to your projections, you’ll be in trouble.

Chart of projected Revenue/Costs/Profit

Quarterly for first year. Yearly for next 2 years

Don’t be too aggressive:

Your company won’t smell right; will make VC believe you are naive.

VCs have a fantastic memory for these sorts of things, and later if you don’t meet up to your projections, you’ll be in trouble.

Listen during the presentation Watch body language. Note concerns, and do your best to address in the presentation. If you can’t, get back to them later with better answers. Adjust pitch on the fly if necessary.

Watch body language.

Note concerns, and do your best to address in the presentation. If you can’t, get back to them later with better answers.

Adjust pitch on the fly if necessary.

Be confident Investor wants to see you as someone that can be counted on to manage a lot of their money. Be strong. Run the meeting. If they ask about something that’s in your presentation later, give them a brief answer and say “I’ll cover that in a couple of slides.”

Investor wants to see you as someone that can be counted on to manage a lot of their money. Be strong.

Run the meeting. If they ask about something that’s in your presentation later, give them a brief answer and say “I’ll cover that in a couple of slides.”

Keep it Simple 10 – 15 slides maximum Don’t pour every detail into the presentation. Focus on what’s important. If there is interest, there will be follow-up meetings to address details. Presentation should be for 30 mins max, so you have another 30 mins for Q&A The goal of the first meeting is to get a second meeting.

10 – 15 slides maximum

Don’t pour every detail into the presentation.

Focus on what’s important. If there is interest, there will be follow-up meetings to address details.

Presentation should be for 30 mins max, so you have another 30 mins for Q&A

The goal of the first meeting is to get a second meeting.

Have backup slides Keep other slides in case you need them. Being able to answer questions with backup slides makes you look prepared.

Keep other slides in case you need them.

Being able to answer questions with backup slides makes you look prepared.

Get Feedback Find out what their process is and what the next steps are. Find out what they liked and didn’t like. Internalize feedback to strengthen your company. Adjust your presentation to the next Investor accordingly.

Find out what their process is and what the next steps are.

Find out what they liked and didn’t like.

Internalize feedback to strengthen your company.

Adjust your presentation to the next Investor accordingly.

Interview the Investor Make sure the investor adds value to your company. Talk to CEOs of other companies that they have invested in. Be sure they don’t show up at board meetings to watch their money. They should provide business advice, customers, partners, and acquisition partners

Make sure the investor adds value to your company.

Talk to CEOs of other companies that they have invested in.

Be sure they don’t show up at board meetings to watch their money. They should provide business advice, customers, partners, and acquisition partners

Silicon Valley NewTech Meetup – April 7, 2009 Bill Hunt - bill@whuntpartners.com Funding your Start-Up