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Art of getting funded & business plan zafar

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  • All Rights Reserved (c) Naeem Zafar BizEducationWorkshops.com & ConcordiaVentures.com
  • All Rights Reserved (c) Naeem Zafar BizEducationWorkshops.com & ConcordiaVentures.com
  • All Rights Reserved (c) Naeem Zafar BizEducationWorkshops.com & ConcordiaVentures.com
  • All Rights Reserved (c) Naeem Zafar BizEducationWorkshops.com & ConcordiaVentures.com
  • Transcript

    • 1. The Business Plan & the art of Getting Funded Naeem Zafar CEO Bitzer Mobile Haas Business School, University of California Berkeley www.NaeemZafar.comwww.startup-advisor.com All rights reserved © Naeem Zafar 1
    • 2. Purpose of Business Plan • “In battle, the plans are useless …. But the planning was indispensible” » General Dwight D. Eisenhowerwww.startup-advisor.com All rights reserved © Naeem Zafar 2
    • 3. Personal Background • Faculty at Univ of Calif Berkeley Haas business school • Founder www.Startup-Advisor.com advisory to entrepreneurs • CEO of four companies: now Bitzer Mobile • Worked in engineering, research, marketing & sales • Experience at one large multinational & 6 startups • One IPO (Initial Public Offering) • Four acquisitions, One merger, two “wind-down”, One “restart” • Raised over $70M in multiple ways (VC, asset sale, debt, angel) • Advised over 1,000 entrepreneurs, boards of 10+ companies • Traveled to 76 countries, lived in 3 (including South Africa, Kenya, Tanzania, Zimbabwe, Botswana, Morocco, Algeria …) • Brown University engineering 1981, Univ of Minnesota MSEEwww.startup-advisor.com All rights reserved © Naeem Zafar 3
    • 4. Agenda • What do I need to get funded? • What is a business plan • Why do I need one • When is it needed • How long should it be • What topics must it coverwww.startup-advisor.com All rights reserved © Naeem Zafar 4
    • 5. What is a Business Plan • Summation of your research & discovery process • You don’t start with a business plan …. You get to it!www.startup-advisor.com All rights reserved © Naeem Zafar 5
    • 6. How Long Does it Take? 2-6 months 2 – 8 months 1-12 months • Homework • Bootstrap • Prod dev • Market research • Fund raise • Go-2-market • Customer discovery • Team build issues Business planwww.startup-advisor.com All rights reserved © Naeem Zafar 6
    • 7. Steps for Starting Up Market research CreateFind unmet need Investor Materials Validate need Find team Write Biz Planwww.startup-advisor.com All rights reserved © Naeem Zafar 7
    • 8. Why Write a Business Plan • To organize, debate & validate reasons to start a business • To convince yourself, and others, why this business will make money – (hence worth an investment)www.startup-advisor.com All rights reserved © Naeem Zafar 8
    • 9. What Will Investors Require? • Not a business plan – Perhaps later in the process a junior associate will ask for it! • Executive Summary • 10-15 slide presentationwww.startup-advisor.com All rights reserved © Naeem Zafar 9
    • 10. Newsflash! • You cannot write an executive summary until you have thought through the business plan – You might as well write it!www.startup-advisor.com All rights reserved © Naeem Zafar 10
    • 11. Anatomy of Business Plan (I) Section # of pages Executive summary 2-3 The unmet need 2-3 Market size 1-2 Competitive landscape 1-2 Your idea (with magic sauce!) 2-5 Positioning 1-4 Business model 1-3www.startup-advisor.com All rights reserved © Naeem Zafar 11
    • 12. Anatomy of Business Plan (II) Section # of pages Your Team 2-4 Go-2-Market Strategy 3-6 Key financial assumptions & KPI 1-2 Financial projections 2-3 Use of funds 1-2 Status timeline and traction 1-4 Supporting data, research, resume, proxies 5-15 Total number of pages  23 to 58www.startup-advisor.com All rights reserved © Naeem Zafar 12
    • 13. How Long Does it Take • Outline the plan • Divide tasks to individuals • Meet regularly to discuss & debate • People may write sections • One person (CEO) re-writes & integrates • Have somebody check for accuracy & readability • Write exec summarywww.startup-advisor.com All rights reserved © Naeem Zafar 13
    • 14. 2: Unmet Need • Forget about your idea (for a week) & ask what is real unmet need that your users have! • Are you a solution looking for a problem?www.startup-advisor.com All rights reserved © Naeem Zafar 14
    • 15. Validating Unmet Need • Six key questions: 1. What issues & problem customers face? 2. Why have they not filled that need? 3. How have they tried to look for a solution? 4. What should an ideal solution look like? 5. How will they buy it? 6. Why wont they buy it?www.startup-advisor.com All rights reserved © Naeem Zafar 15
    • 16. Where to Validate • Personal interviews (at least 10 conversation per fonder – preferably 20+) • Online surveys • Google Adwordswww.startup-advisor.com All rights reserved © Naeem Zafar 16
    • 17. How to Validate • Agree among founders on key data needed • Agree on a list of questions • Go talk to real people • You are NOT allowed to start a company until you have spoken to 10 userswww.startup-advisor.com All rights reserved © Naeem Zafar 17
    • 18. 4: Who Needs Me More? Market Segmentation • Start by intense domain & customer knowledge • Articulate pain users have • Who has more pain now!Startup Workshop All rights reserved © Naeem Zafar 18
    • 19. Linked In SearchStartup Workshop All rights reserved © Naeem Zafar 19
    • 20. ResultsStartup Workshop All rights reserved © Naeem Zafar 20
    • 21. Write & AskStartup Workshop All rights reserved © Naeem Zafar 21
    • 22. Questions • Is there a real unmet need in this area (where your products address the problem)? • How does he/she want to see this problem solved? • Why have they not solved this until now – what issues are preventing the problem from being solved? • If a solution (or a product) existed, what would it look like? • Who will use this product (or service) – what are these users looking for? How badly do they want it? • What is the buying process (in other words, who needs to approve this purchase)? • What are usually the selection criteria? • What price point will make this decision a no-brainer? At what price point are we likely to find resistance? • What are the reasons somebody would decide not to buy? • Why hasn’t the customer bought this solution from someone else until now? • Who else may be interested in solving this problem? • Who in the organization is the most likely to champion solving this problem – can I get an introduction to them?Startup Workshop All rights reserved © Naeem Zafar 22
    • 23. Startup Workshop All rights reserved © Naeem Zafar 23
    • 24. Google AdwordsStartup Workshop All rights reserved © Naeem Zafar 24
    • 25. Doing Online Research www.Zoomerang.com www.SurveyMonkey.com Sites.Google.com Survey Online Drive traffic to Landing landing page Page• Google Adwords• Facebook Ads Collect Tell them Value Prop &• Emails to targets contact Link to take survey www.constantContact.com www.aweber.com Startup Workshop All rights reserved © Naeem Zafar 25
    • 26. 3: Market Size • Look for publically available data • Estimate total number of users and your revenue per user – Then estimate how many can you get to realistically each year – Proxies • VCs don’t typically invest in small marketswww.startup-advisor.com All rights reserved © Naeem Zafar 26
    • 27. Free Sizing Data: www.census.govStartup Workshop All rights reserved © Naeem Zafar 27
    • 28. Startup Workshop All rights reserved © Naeem Zafar 28
    • 29. 4: Competitive Landscape • Pretend to be a “user” of YOUR product • See what you find? • Order products, sign up for information • Put yourself in your customer’s shoeswww.startup-advisor.com All rights reserved © Naeem Zafar 29
    • 30. Who Should You Be Looking For • Differentiate between customer and user! – Pre-teen products – Medical & hospital productswww.startup-advisor.com All rights reserved © Naeem Zafar 30
    • 31. 5: Your Idea & Magic Sauce • Now you can tell what you do • How is this different – Based on what you heard from customers during interviews • Use pictures, diagrams and photos, • Videos, website mockups, whatever it takes to ignite imaginationwww.startup-advisor.com All rights reserved © Naeem Zafar 31
    • 32. 6: Business Model • How do you make money? – who pays you – what channels – what gross marginsStartup Workshop All rights reserved © Naeem Zafar 32
    • 33. Good Business Model $0.50 $4.00Startup Workshop All rights reserved © Naeem Zafar 33
    • 34. Business Model Drives Clarity $3 User Google Ad $2 Your $9 CompanyLicensing Customer fee 34
    • 35. 7: Positioning • We are like_____, and unlike _____ • We are like ___ except this _____ • Positioning is “what you do” etched in do customer’s mind (& investors & employees)www.startup-advisor.com All rights reserved © Naeem Zafar 35
    • 36. How Will You Appear Different to Your CustomersStartup Workshop All rights reserved © Naeem Zafar 36
    • 37. 8: Team & Timing • Why us? • Why now? • What is so special about uswww.startup-advisor.com All rights reserved © Naeem Zafar 37
    • 38. 9: Go-to-Market Strategy• To launch your product you need to make many decisions – Pricing – Channel selection – Alliances – How to lock in your first “n” customers – Support strategy – Customer acquisition cost All rights reserved © Naeem Zafar 38
    • 39. Target Market • Identify your • Find a sliver who target market needs you more!5/15/2009 all rights reserved Concordia Ventures LLC 39
    • 40. 10: Assumptions & KPIs • What key assumptions drive your company • What will you measure – # of visitors – # of conversions – Minutes spent per page • For a restaurant – % of tables occupied per week? – Total spend per table? – # of times table rotates per nightwww.startup-advisor.com All rights reserved © Naeem Zafar 40
    • 41. 11: Use of Funds • What will this money allow you to accomplish? – Launch mobile client! – Add sales team in USA – Work on telecom customers • You only raise enough money to get to the next proof point (+ cushion to raise next round)www.startup-advisor.com All rights reserved © Naeem Zafar 41
    • 42. De-Risk The Deal! • You only raise enough money to A get to the next proof point • At “A” there is Risk B team execution risk, market acceptance risk, C technology risk timewww.startup-advisor.com All rights reserved © Naeem Zafar 42
    • 43. 12: Financial Projections • 5 year projections of – Revenue – Gross profit – Expenses by department – Special expenses – Net profit • Conservative initially, bold later!www.startup-advisor.com All rights reserved © Naeem Zafar 43
    • 44. 13: Time line & Progress • Show last six months (or longer if applicable) & 18 months forward – (unless your business requires longer) • What progress is made and what mile stones are expected – Product launch – Employees – Beta starts – First customerswww.startup-advisor.com All rights reserved © Naeem Zafar 44
    • 45. 13: Time line & Progress Seed $100K Series A $4M Series B $7M Q4-’07 Q1-’08 Q2-’08 Q3-’08 Q4-’08 1H-’09 2H-’09 1H’10 2H’10 Start Milestone e.g. 1stcompany #4 Prototype Milestone e.g. 1st e.g. 10 #2 alliance referenceable signed Milestone accounts #3 Milestone #5 Or Reach profitability etc. betas Alpha customer Product acquisition Prod Launch developmentEmployee count 4 6 11 18 22 29 39 54
    • 46. 1: Executive Summary • Now write this summary • Same topics but one or two sentences • Show some diagram or photo to make it look interesting • Same 7-10 topics as paragraphs! • Most people will just read this Exec Summwww.startup-advisor.com All rights reserved © Naeem Zafar 46
    • 47. Tips & Suggestions • Don’t be disappointed as no one will want to read it (not even your spouse!) • It was for you! (remember) • Lots of white space & pictures plz • Make it visually appealingwww.startup-advisor.com All rights reserved © Naeem Zafar 47
    • 48. Develop Your Personal Filter to Screen Ideas Many ideas Unmet need Market size Differentiated Positioning Scalable Biz Model Why us & why now Good ideaswww.startup-advisor.com All rights reserved © Naeem Zafar 48
    • 49. www.FiveMountainPress.comwww.startup-advisor.com All rights reserved © Naeem Zafar 49
    • 50. Essential Steps to Successful Startup • www.NaeemZafar.com/free • Sign up and get a free eBook All rights reserved © Naeem Zafar 50