The four S of Innovation Individuals that inspire through Seeders their wishes innovation Inventors or innovators that seek to Sellers to sell, license, or fund their inventions. Professionals that utilize their skills Solvers and knowledge to propose innovative solutions for a prize. Entrepreneurs, organizations, and investors that are looking for new Seekers ideas, solutions, or inventions.InnovaHub
1. Elevator Pitch 6. Proprietary Tech2. The Problem 7. Competition3. Your Solution 8. Marketing Plan4. Market Size 9. Team / Hires5. Business Model 10. Money / Milestones
picture your idea an effective elevatorpitch is illustrative and tangible.
YOUR ATTITUDEbe confidenthave funshow passionshow integrity
keep your eyes shut whilesomeone reads your text out loud
Business Model (How Do You Plan to Make Money?)• Describe Top 1-3 Revenue Sources – Prioritize by Size, Growth, and/or Potential – Cite current market activity / customer behavior as proof• Show How You Get to Break-even (or Profitable) – Ideally, on the current round of funding you’re raising• Common Revenue Models – Direct: ecommerce, subscription, digital goods, brands – Indirect: advertising, lead gen, affiliate / CPA
What do VC’s wantTeam • Domain expertise with core technical strength and knowledge of given market opportunity • History of collaboration and success • A willingness to allow VC’s to help build the teamMarket • Emerging and fast growing market • Bad markets make for bad companiesBusiness model • How will you make money, how will you sellTechnology • Defensible technology/IP that can be protected to form competitive barriers over time
The Executive Summary • Stimulate and motivate the investor to learn more. • Hook them on the first page. Most investors are inundated with business plans. Your first page must make them want to keep reading. • Keep it simple. After reading the first page, investors often do not understand the business. If your business is truly complex, you can dive into the details later on. • Be brief. The executive summary should be 2 to 4 pages in length.
Why VC Is Helpful?Low High Friends & Angels/De Venture Family mons Capitalists Capital Advice Connections 25
Are You Ready For VC? Great Huge Product in Team Market Market Seed ($50K - $1M) X Series A (>$1M – 5M) 26
Economics of VC Firm• Management Fees (typically 2-2.5% of AUM) – Charge a management fee to cover the costs of managing the committed capital.• Carried Interest (typically 20-25%) – "Carried interest" is the term used to denote the profit split of proceeds to the general partner.• Example $100m fund – 4x return and 2 and 20% – $2m per year in management fee – (($100m x 4) - $100m) * 20% = $60m in carried interest
What to Expect• 12-16 week process • Investors will seek: – First meeting to close – 20-50% of the company – 1st mtg diligence partner – Valuation function of targeted raise, meeting TS negotiation close ownership, and stage,• Prepare Investor Package – Preferred Equity securities, with key – Presentation terms: • BoD seat – Financial Plan • Liquidation Preference – Personal references • Anti-dilution Protection – Customer references • Participation – Market references • Pro Rata rights – Cap Table • Protective Provisions – Market research • Vesting terms for founders and employees – Product documentation – Competitive Analysis
What to Consider• Is the idea sufficiently baked? – Optimal time is 6 months of iteration• Pick your co-founders very carefully• Test fit with VC – Personality, values, knowledge of market• Optimize for best deal not best price• Consider the downstream effects of the financing – High-post moneys can by Pyrrhic victories if company misfires – Angel financing can be a mixed blessing – be careful
Approaching VC’s• Investing is a people business, and getting a meeting is all about “who you know”• Best way to approach a VC is some form of introduction – If you don’t know a VC, find someone who knows you and get them to introduce you – Entrepreneur, professor, attorney… (Linkedin…) – Sending a plan to firstname.lastname@example.org is a waste of time