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MBA School Mannheim - How to write a Business Plan _Entrepreneurship Club
 

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How to write a business plan and raise venture capital

How to write a business plan and raise venture capital

MBA School Mannheim, March 2012, Michael Altendorf

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    MBA School Mannheim - How to write a Business Plan _Entrepreneurship Club MBA School Mannheim - How to write a Business Plan _Entrepreneurship Club Presentation Transcript

    • How To Write a Business Plan.Michael Altendorf CEO & Co-Founder of AdtelligenceDate: March 22nd 2012Time: 07:00pm-09:00pmPlace: Education Centre Dalbergplatz (2nd floor); N2, 10Please register in http://doodle.com/wm9ddci3n8ga5bkr
    • ABOUT ADTELLIGENCE
    • Social commerce hashighest growth Rates!Mobile: 27%Social Media: 34%Display Advertising: 17%
    • HIGHER REVENUESFOR YOUR ONLINE BUSINESSADTELLIGENCE EMPOWERS ADVERTISERS & ECOMMERCE SHOPS TO BOOK ONLINE ADVERTISING ON FACEBOOK & OTHER SOCIAL NETWORKS TO OPTIMIZE YOUR WEBSHOP TO ANALYZE THE AUDIENCES ON YOUR SITE TO INCREASE YOUR CONVERSION RATES & REVENUES
    • FULLY AUTOMATED ONLINE MARKETINGWITH ADTELLIGENCE SOCIAL MARKETING SUITE1 Advertise 2 Analyze Audiences 3 Personalize your Shop  Increase Revenues!  Automated conversion optimization based on user profile data  Machine Learning next generation technology  Enrich your CRM data with with new audience insights
    • Who is Adtelligence? Founded in 2008 by Michael Altendorf & Dr. Cyrille Awards 2010 & 2011 Waguet (SAP Chief Architect) Teams in Mannheim (HQ), Düsseldorf, London Team of 25+ tech- & media experts from e.g. SAP, Google, WPP Group and IBM Funded by 6 leading European Internet Investors Connected to: 1 of 10 Facebook preferred developer consultants in EU Only certified Facebook Advertising provider (API) in central Europe Performance: Manage terabytes of data Deliver billions of impressions Cloud based solution Simple & efficient scalability Highest security and redundancy Confidential Information
    • Who works with Adtelligence?
    • HOW TO START A VENTURE ?
    • THE IDEA COMES FIRST
    • How to start?Iterate, iterate, iterate…Questions to ask yourself before the start Do I have a good idea? Am I good enough to be an Entrepreneur? Where do I get the money for my Company from? Who gives me the Money? How do I get to know such people? Why do the rich people do this? What do I have to do? What kind of questions do the Investors ask? How much Money do they give to me (& how much do they want from me?) When do I get the Contract and the Money? What happens then? Source: Computer History Museum Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • From Idea to concept No… …Better… …Maybe… …Yes Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • From first idea to first version of a product – sometimes ittakes only some days – Sales Funnel Analysis Tool Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • THE TEAM
    • The TeamHow to built a great team for the start?• Motivation is key!• Experience is something but not much• You need some experience in several disciplines but no senior team• Combination of experience and fresh ideas is best• Minimum 2 people for the start, 3-4 are better Source: A-Team Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • The CV problemWhen others will think that you will become a real entrepreneur 80% of the success is determined by the Team  Your Qualification: 1,0 in Informatics + 1,0 MBA + 2 own (sold) companies + 5 years work experience would be “good”  BA in XYZ + an internship at McKinsey is not enough to get VC  Quote from former CFO SAP: “The guys who sold nothing switched to marketing”Show that you are able to build the product and the company Work on your Idea:  Identify markets  Calculate Costs and Revenues  Develop a Prototype  Talk to experts  … Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • THE (BUSINESS) PLAN
    • Some FAQ for the (Business) Plan Yes, you will write it for yourself, but the VC wants to see the potential (100 Mio in 5 Years is the key, not in one VC round, you need at least 3-5) – start small (50K rev e.g. for the first year and show how to grow to 100M) think big No, salary of more than 50.000€ per Year is not ok for the start when your just graduated No, with 3 People you wont reach 5% Market share - please calculate bottom-up No, you dont have to mention Gartner and IDC, but 1 Big Player would be good No, you cant do it without a business plan (…but with a product which has 10.000 users +) No, it should not be longer than 10-25 Pages (10/ 20/30 rule) – no McKinsey 80 page plan with 40 page competitive feature analysis – you can do the longer analysis for you but not for the VC – VC‟s do not have time to read more than 10 pages As short as possible, not longer than necessary The core problem is  to write a short plan, not long one! Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Typical Points in the Business PlanBUSINESS PLAN PRESENTATION FORMAT (Draft from Accel Partners)“Agenda”1. Overview - 1 Slide2. Market – 4-5 Slides3. Product / Service of Company - 4 slides4. Technology - 1-2 slides5. Distribution - 3-5 slides6. Competition - 2-3 slides7. Management - 1 slide8. Financials - 3-4 slides9. Capitalization - 1 slide10. Risks - 1 slide11. Summary - 1 slideTotal: 23 – 28 slideshttp://www.accel.com/pdfs/Draft_Business_Plan_Presentation_Format.pdf Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Typical Points in the Business Planor even Shorter – The 10/20/30 Rule10 slides:1. Problem2. Your solution3. Business model4. Underlying magic/technology5. Marketing and sales6. Competition7. Team8. Projections and milestones9. Status and timeline10.Summary and call to actionTypical 20 min presentation time in a 1 hour VC meeting(!)30 point font typeRead more: http://blog.guykawasaki.com/2005/12/the_102030_rule.html#ixzz1prhvT800 Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • But first start with a one pager1 page (not 5)Elevator Pitch What can the investor tell his wife in the evening afterwardsTechnology Unique Selling Propositions - We have 10 patents, and 2 competitors who can not do this in that wayMarket Info Size, growth rate, Gartner means market is 100bn in 2 years and we approach it in a fast way with abcTeam One who build, one to sell is minimumFirst Success Proof of Concept or prototype exists, first 5 clientsBusiness Model We need X to bring YOptimistic financials for 5 years (be able to get VC!) Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • THE VENTURE CAPITAL
    • Where do I get the Money for my CompanyTypical Sources for first angel money: Own Money Family, Friends & Fools Business Angel Bank Seed Venture Capital Fonds (Seedcamp, Y Combinator)Prefer Smart Money in the Beginning! Venture Capitalists most times didnt had an own company with problems you will get Prefer Business Angel with Experience and a lot of spare time Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Who gives me the Money?Prefer an experienced Business Angel with "proven track record", a goodnetwork, and Experience in the right Segment Source: John Doerr/Ted.com Source: Ron Conway/Techcrunch Source: Forbes Magazine Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • How do you meet those people? Recommendations by other CEO‟s or VC‟s Best Place to pitch VC‟s: University Coffee in Palo Alto/Sillicon ValleyOr on local Events Our own matching event:Rhein Neckar Technology Ventures (www.technologyventures.de) Heidelberger Innovationsforum or other local events Contacts (Lawyer, Tax Accountant) BAND/BA Networks  Karlsruhe  Frankfurt  Heilbronn  Stuttgart Mentor or Public Consultant Do not pay, if it is not necessary the best advice you will get for free! Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • How much should I raise?Phase Who invests? Volume Success FactorsIdea Nobody 0 Experience and BackgroundOrientation Fools 0 Meet the right PeoplePlanning Fools 25.000 € Background - Who can write a clean Plan and make a good Calculation - only Serial Entrepreneurs in Silicon Valley are getting Money for IdeasFounding / Business Plan Family & Friends, BA with 0 - 1 Mio. Own Funds, persuasive Power, can Experience in this Segment you get VC with your Plan and your Idea - Can you realize the PlanSeed / Prototyping Business Angel - prefer smart Up to 1 Mio, but 50k -500k average How good is the Team and the Money PrototypeStartup Business Angel (HTGF) Up to 1 Mio. Development, Financial PlanEarly Stage BA, VC Up to 10 Mio. International, 1-5 The right Contacts, Potential and Mio. national Fonds TeamExpansion VC 5-25 Mio. Growth in Sales, Business Model (reoccurring revenues)Late Stage IPO, VC, etc. Unlimited Growth in Sales, EBIT, Market Share Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Ideal Way of increasing value – Facebook (at least till 2011) Source: Techcrunch.com Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • THE BUSINESS MODEL
    • Define a Business Model, test it and iterate, iterate, iterate… 1 Infrastructure 2 Offering 3 3 Customer Core Partner Customer Customer Competencies Network Relationship Segments Value Proposition Value Distribution Configuration Model Costs 4 Finance Revenue Model Source: A. Osterwalder Business Model Design Template Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • THE PRODUCT
    • The unique selling proposition of your product? Some questions to answer: • Why should somebody buy your product? • What needs to you address? • What are the key USP‘s for your target customer? • Why are you better? • Is there a market? • If there is no competition there is no market! That is not an USP – nobody will buy it! Source: Forbes Magazine Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • The Whole Product (by Geoffrey Moore) Outsourcing Hardware ApplicationComplementary Engineering Software Complementary Services Core Products Installation Offering and support Peripherals Design Databases Minimum set of products and services to fulfill target customers reason to buy. Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • THE MARKET
    • 5 Forces (Porter) Potential Entrants Threat of new Entrants Bargaining Industry Competitors Suppliers Power of Rivaly among Bargaining Buyers Power of Buyers Suppliers existingfirms Threat of Substitute Products or Service Substitutes Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • The Competition Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • New Markets are different Source: Steve Blank Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • GO TO MARKET STRATEGY
    • How to find the first Customer Search Customer Discovery Customer Validation Pivot Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Crossing the Chasm in an existing market Source: Crossing the Chasm, Geoffrey Moore Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Crossing the Chasm in a New market takes much longer Source: Steve Blank Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Customer Development - How the find the Target Customer• Week 1: Define a beachhead where to enter the market• Define the pricing• Week 2: define a new target customer• Define a better package and better pricing• Week 3: …• After one year:• Market should be clear and positioning has improved (in a new market) Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Plattform vs. One Trick Pony Easier to enter the market, niche leader but can become obsolete with game Very hard to sell, indirect business models, high changing technology (Facebook vs. investment but maximum ROI Studivz Source: Facebook Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • DISTRIBUTION THE SALES MODEL
    • Distribution – Where do you fit in the value chain? Source: Slideshare Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Whats up with the Marketing - there is no Budget WEB 2.0 TOOLBOX  Todays Online Marketing Technologies for the Web 2.0 are more Creative Viral Marketing  The new Tools are used to make all kinds of Advertising: PR News, Blogs or Twitter Early Adopter Marketing  An interesting and interactive way of Advertising is the viral Buzz & Guerilla Marketing marketing (Word of Mouth Marketing) Blogging & Twittering  The Problem of these creative Advertising: Brand Page  You cant predict the effect Facebook Fan Pages Online Events / Webinar  Viral Campaigns are unique - you cant replicate them Youtube Video PR Company Radio & TV Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • FINANCE AND REVENUES
    • Raising VC & Sales – Money is OxygenRaise 50% more money than you need in the beginningExample for good first invest:HTGF gives 500K for 15% (+one time anti dillusion) as they know that you will need it Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Working Capital• There is some time between order entry and cash flow• This can become your core problem – you need a good banker!• If you have contracts, the bank can be used for this but not unlimited Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • European Startups need break even faster than US!!! …cash flow break even is important Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • HUMAN RESSOURCES
    • Building a great Team Look for talent not for CV Hungry people are the best Motivation is more important than previous internships etc. An MBA does not make you a great sales guy Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • The SMT – Building a Senior Management Team Like in a rock band: All instruments have to be played and not everybody can play everything Very important to find 5 key people in the company In the beginning you need 2: one to sell, one to build Later you need: CEO, VP Sales, COO, CFO, CTO/visionary Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • GROWTH CAPITAL
    • Finance Planning and Venture Capital Create a Financial Plan in 2 ways  Bottom Up  Top Down From where to you get the Numbers?  Gartner for top down  Excel for bottom up Calculate 3 Scenarios (+/+/=) (if you have a negative scenarios – how to innovate the business mode to still make money? Can you get VC with your calculation? Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Who are the Key Players to get VC? Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Scaling the Company & Establish an Expansion Strategy Many ways to grow: • Product differentiation • Go into verticals • Expand into other countries • Start partnerships Problem: Which way is right? Try everything but stop fast if ist not working Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • EXIT SCENARIOS
    • Exit ScenariosRevenues x Market Hype + Competition = Exit multipleDifferent Options:• Selling to Google is best, but there are many other which are ready to buy• IPO – not necessary, you can use private equity first• As an expert first before you sell (M&A advisors in London, NY , silicon valley)• Stay with your company?• Merger with competitor• … Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • LEARNINGS
    • Key Learnings Being self-employed means working the every day and own your own - 60 - 100 hrs a week is normal There is no work life balance – as there is no difference Never Stop Learning, iterate every day and improve Writing and Optimizing the Business Plan Get a "Level of Trust" - Visit Events and enlarge your network Investors are paying for the growth of the Company, not for luxury like concord flights – don‟t worry you will be invited to cool locations and events all the time all over the world! Get in the Market when everybody makes fun of you Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Thank YouInformation: www.adtelligence.deBecome a fan: www.facebook.com/adtelligenceTwitter: www.twitter.com/Michael1980Connect: www.linkedin.com/in/michaelaltendorf www.xing.com/profile/Michael_Altendorf
    • FAQS
    • Books to Read Starting a Venture - The Art of the Start – Guy Kawasaki Go to market and productization - Steve Blank – 4 steps to epiphany Got to market - Crossing the Chasm Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • What kind of Questions do the Investors ask?Product - What is the Product Roadmap? What are you developing next, how long will it take, and who are your hires todevelop it? How did you make the decisions regarding the Direction the Product is right now? We want to understand yourDecision making Process and your vision of the company. This last point is extremly important.Market - How big is the market and how will it grow? What are the trends in the market that make now the right time for yourproduct? If youre in a big enough market, you can afford to make some mistakes (which as startups you will always do!). Whoare your first customers? Are they referenceable? What does your pipeline look like?Competition - Who are the competitors? What is your competitive advantage and is it sustainable? Hint: IP patents are notenough.Team - What are your backgrounds, where did you meet, and why are you the right team to execute on this plan? Who doeswhat, and who else do you need to hire to build out the right team? Be lean with your costs. No VC likes to see a company thatis spending extraneous money.Scalability - What are the barriers to growth? There will always be some; be aware of what they are. This could be from thebusiness model side or the technical product side. Within this there is also the issue of customer acquisition strategy and cost.Finally, although we do not ask the founder this question, we ask ourselves: In what ways do WE as the VC investorprovide value to this particular entrepreneur/team/startup?Source: Janet Zhou //Silicon Valley VC May 2010 Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Week 1: When do I get the Contract and the Money? When the Investor is interested : First Round 2 -3 Month Due Diligence Phase "Finding the Rock": Investors asking question Founders are answering Months of Contract Negotiations Meeting with Notary (Founding GmbH)  Open an Account Source: Wooga  Dont wait for the certificate of registration, start immediately  Then the Money comes Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • Week 2: What happens then? Get an Office Go to IKEA or buy on eBay Get a Phone Write Job Ads Hire People - Is the Team complete? No, you cant order a Porsche, a Macbook or an iPhone Long Term Investments  You can„t go to the Customer with a ALDI Notebook? Source: Blog Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany
    • After 1 year – Breakthrough invention? Product should be ready first clients Pricing clear Gain clients Automate process Build up the team Iterate! Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany