Pitch+ The Definitive Entrepreneurs’ Guide to Financing Presentations By W. Daniel Mothersill President National Angel Capital Organization TM

President, Director, and Founding Member, National Angel Capital Organization Distinguished Visiting Professor, Entrepreneurship: Ryerson University Entrepreneurial Bootcamps: 100/3000/$2.4 billion Board Member, CEO Fusion Centre Director, Angel Network Program Ontario Serial Angel Entrepreneur Advisor to several tech and green companies Credentials (been there, done that)

President, Director, and Founding Member, National Angel Capital Organization

Distinguished Visiting Professor, Entrepreneurship: Ryerson University

Entrepreneurial Bootcamps: 100/3000/$2.4 billion

Board Member, CEO Fusion Centre

Director, Angel Network Program Ontario

Serial Angel Entrepreneur

Advisor to several tech and green companies

Major Myth: It’s an information dump To inform potential investors how the product, technology, science, or service works The Purpose of the Pitch

Major Myth: It’s an information dump

To inform potential investors how the product, technology, science, or service works

To sell investors on the fact that you have a unique business proposition that is being translated into a profitable business with significant upside potential It’s a mile-high view of the company The close of this sales presentation is to engage the interest of the Angel and to get that critical first meeting The Reality

To sell investors on the fact that you have a unique business proposition that is being translated into a profitable business with significant upside potential

It’s a mile-high view of the company

The close of this sales presentation is to engage the interest of the Angel and to get that critical first meeting

“ The net sum value of a killer technology, disruptive science, breakthrough product, or compelling service idea is zero -- unless you can demonstrate how you will turn it into a significantly profitable business within the next three-to-five years.” W. Daniel Mothersill Investors’ Credo

“ The net sum value of a killer technology, disruptive science, breakthrough product, or compelling service idea is zero -- unless you can demonstrate how you will turn it into a significantly profitable business within the next three-to-five years.”

W. Daniel Mothersill

The Down-and-Dirty Dozen (or so) The Cover The Dead Lobster: Pain/Solution (elevator pitch) The Market (overall size, your niche, your share) Product, Technology, Science, Service Description Before/ After Diagram (the world with your solution) Go-To-Market Strategy (direct/channel) The Team (business acumen, domain knowledge, operational expertise) Milestones Met (what have you done with the money?) Target Milestones (where are you going with funding sought?) Competition (why are you better and who can kill your business?) Financials (three-to-five year projections) Investment Highlights (key points to remember)

The Cover

The Dead Lobster: Pain/Solution (elevator pitch)

The Market (overall size, your niche, your share)

Product, Technology, Science, Service Description

Before/ After Diagram (the world with your solution)

Go-To-Market Strategy (direct/channel)

The Team (business acumen, domain knowledge, operational expertise)

Milestones Met (what have you done with the money?)

Target Milestones (where are you going with funding sought?)

Competition (why are you better and who can kill your business?)

Financials (three-to-five year projections)

Investment Highlights (key points to remember)

The Cover (or title slide) Company name (graphics if appropriate) Company logo Tagline (use as the title of the presentation) Name of group/company to whom you are presenting Your title: President or CEO Date of the presentation

Company name (graphics if appropriate)

Company logo

Tagline (use as the title of the presentation)

Name of group/company to whom you are presenting

Your title: President or CEO

Date of the presentation

Tell investors the pain, unsatisfied trend, or unfulfilled demand in the market you are targeting. Define the specific problem and need that customers/industry segments have. Then tell them your solution. What is it that you do better then anyone else? … and say it all in four or five sentences. The Dead Lobster (not your average elevator pitch)

Tell investors the pain, unsatisfied trend, or unfulfilled demand in the market you are targeting.

Define the specific problem and need that customers/industry segments have.

Then tell them your solution. What is it that you do better then anyone else?

… and say it all in four or five sentences.

What is the overall size of the market? (at least one authoritative reference) What is your market niche? This carves out the key segments from the broad market and clearly defines what you are going after. (BUT --don’t give the impression that you are trying to boil an ocean) Explain the trends in the market, why it is growing, and at what rate – in percentage terms per annum The Market (the components)

What is the overall size of the market? (at least one authoritative reference)

What is your market niche? This carves out the key segments from the broad market and clearly defines what you are going after. (BUT --don’t give the impression that you are trying to boil an ocean)

Explain the trends in the market, why it is growing, and at what rate – in percentage terms per annum

Positions the market sector(s) you are targeting. Always expressed in dollar terms. Helps position you geographically. (Are you a Canadian only play? Are you addressing world domination?) The Mega Market $1 billion

Positions the market sector(s) you are targeting.

Always expressed in dollar terms.

Helps position you geographically. (Are you a Canadian only play? Are you addressing world domination?)

Obviously, defines the niche you are targeting Tells investors that it’s a big enough market space for them to be interested in Begins to build confidence that you understand the market you are entering The Market Niche $300 million

Obviously, defines the niche you are targeting

Tells investors that it’s a big enough market space for them to be interested in

Begins to build confidence that you understand the market you are entering

States in $$$ terms what revenues you are targeting to capture in the next three-to-five years. (It’s OK that five years out is a wild-ass guess) It’s a top down view that will be supported in your financial slide States that you will be large enough for the VCs, Angels to get an adequate ROI Your Market Share $50 million

States in $$$ terms what revenues you are targeting to capture in the next three-to-five years. (It’s OK that five years out is a wild-ass guess)

It’s a top down view that will be supported in your financial slide

States that you will be large enough for the VCs, Angels to get an adequate ROI

What specifically is the technology and what product(s)? Is it a platform technology or are you a one-trick pony? Is it scalable? Clearly define who the customers are. Why will they be buying your offering? What is unique about your offering? Why will your technology solve a customer’s major pain? What are the principal benefits? How will it save money, make money, or do things better and faster? Why is it better than current solutions? What is proprietary? Product/Technology/Science/ Service

What specifically is the technology and what product(s)?

Is it a platform technology or are you a one-trick pony?

Is it scalable?

Clearly define who the customers are. Why will they be buying your offering?

What is unique about your offering?

Why will your technology solve a customer’s major pain?

What are the principal benefits? How will it save money, make money, or do things better and faster?

Why is it better than current solutions?

What is proprietary?

Your World

Lack of an executable sales and marketing strategy is the principal weakness for startups The technology and products are well thought out, but targeting the right customers and capturing revenues often falls short of expectations Go-To-Market Strategy

Lack of an executable sales and marketing strategy is the principal weakness for startups

The technology and products are well thought out, but targeting the right customers and capturing revenues often falls short of expectations

The Go-To-Market slide must include: The operational expertise on the team responsible for execution A review of the sales cycle Outline of targeted customers Sales approach: Direct/channel Sales tools: Marketing: The vehicles employed to raise awareness and stimulate buying.Sales: Breakout of the sales staff/channel partners Customer Support: Resources and tactics to keep customers onside Budget: What percentage of revenues/funding are you allocating to sales/marketing? Go-To-Market Strategy

The Go-To-Market slide must include:

The operational expertise on the team

responsible for execution

A review of the sales cycle

Outline of targeted customers

Sales approach: Direct/channel

Sales tools:

Marketing: The vehicles employed to raise awareness and stimulate buying.Sales: Breakout of the sales staff/channel partners

Customer Support: Resources and tactics to keep customers onside

Budget: What percentage of revenues/funding are you allocating to sales/marketing?

Management Team Business acumen Domain knowledge Operational expertise Financial depth Board of Advisors/Directors Names that contribute to the success of the organization Recognized industry leaders wherever possible 60% of the financing decision The Team

Management Team

Business acumen

Domain knowledge

Operational expertise

Financial depth

Board of Advisors/Directors

Names that contribute to the success of the organization

Recognized industry leaders wherever possible

60% of the financing decision

The Team John Doe, President & CEO Serial entrepreneur 10 years executive experience Two successful businesses built and sold John Smith, VP Sales, or VP Business Development 12 years senior industry positions Built 3 sales teams and increased annual revenues by 50 percent on average Jack Brown, COO or CTO Developed delivery chains for 3 Fortune 1000 companies Expert in inventory management Joan Gray CA, CFO 6 years in major accounting firm 2 years CFO at major competitor Established budget and cost-control program Domain knowledge Operational expertise Business acumen

John Doe, President & CEO

Serial entrepreneur

10 years executive experience

Two successful businesses built and sold

John Smith, VP Sales, or VP Business Development

12 years senior industry positions

Built 3 sales teams and increased annual revenues by 50 percent on average

Jack Brown, COO or CTO

Developed delivery chains for 3 Fortune 1000 companies

Expert in inventory management

Joan Gray CA, CFO

6 years in major accounting firm

2 years CFO at major competitor

Established budget and cost-control program

With xxx dollars raised, we have: List major accomplishments Successful track record Examples: Development complete Patents filed Team in place Customers/alliances secured Milestones Met

With xxx dollars raised, we have:

List major accomplishments

Successful track record

Examples:

Development complete

Patents filed

Team in place

Customers/alliances secured

Strategic Alliances/Key Customers 

With xxx dollars in funding we will: List major accomplishments that include such items as: Revenue growth Positive cash flow (and how long that will take) Full functionality of development efforts IP ownership process complete (if it isn’t) Total deployment of sales and marketing plan Market penetration targets Target Milestones

With xxx dollars in funding we will:

List major accomplishments that include such items as:

Revenue growth

Positive cash flow (and how long that will take)

Full functionality of development efforts

IP ownership process complete (if it isn’t)

Total deployment of sales and marketing plan

Market penetration targets

Direct: Those who are already in your space, offering solutions to the market pain. For the most part, they already have long-standing customer base, revenues, brand, and profile. 800-pound gorillas: the companies that have the deep pockets to create a competing product. Who are they? What is the risk they will enter your space and develop a similar/superior technology/product solution? Will their existing clients buy from you? What is their likely response to your solution? Competition (the major barriers to customer adoption)

Direct: Those who are already in your space, offering solutions to the market pain.

For the most part, they already have long-standing customer base, revenues, brand, and profile.

800-pound gorillas: the companies that have the deep pockets to create a competing product.

Who are they?

What is the risk they will enter your space and

develop a similar/superior technology/product

solution?

Will their existing clients buy from you?

What is their likely response to your solution?

Indirect: those companies that sort of, kind of have a similar solution Don’t have your solution set, but are selling technology / products that are at least meeting some of the customers' requirements What is your approach to dislodging them? Status Quo: the world is still doing business without you What will it take for customers to try something different and adopt your solution? Why would they change from doing nothing to spending money on your solution? Competition (the major barriers to customer adoption)

Indirect: those companies that sort of, kind of have a similar solution

Don’t have your solution set, but are selling technology / products that are at least meeting some of the customers' requirements

What is your approach to dislodging them?

Status Quo: the world is still doing business without you

What will it take for customers to try something different and adopt your solution?

Why would they change from doing nothing to

spending money on your solution?

Competition Proves you have a more fully featured product or technology Shows you have lead-time over the competition Eliminates guessing about the competition Feature 1 Feature 2 Feature 3 Feature 4 Feature 5 YOU √ √ √ √ √ 1 √ √ √ 2 √ √ √ 3 √ √ √ 4 √ √ √ 5 √ √

Proves you have a more fully featured product or technology

Shows you have lead-time over the competition

Eliminates guessing about the competition

Financials Seeking $xxx thousands Use of proceeds: Sales and marketing 20% Capex 50% Development 30% 2008 2009 2010 2011 2012 Revenue Expense Net Income (Loss)

Seeking $xxx thousands

Use of proceeds:

Sales and marketing 20%

Capex 50%

Development 30%

You need the hockey stick growth to attract investors Be able to explain in some detail why you how you will achieve these revenue targets and what the tipping point will be Concentrate on where you will be in the next 12-to-18 months Underscore when and why you will be revenue generating Never say these are conservative numbers – everybody does Note any additional financing that will be required to achieve these financial projections Underscore the key assumptions made in compiling these forecasts Notes to Financials

You need the hockey stick growth to attract investors

Be able to explain in some detail why you how you will achieve these revenue targets and what the tipping point will be

Concentrate on where you will be in the next 12-to-18 months

Underscore when and why you will be revenue generating

Never say these are conservative numbers – everybody does

Note any additional financing that will be required to achieve these financial projections

Underscore the key assumptions made in compiling these forecasts

Repeat the market pain and your solution Highlight management strength List key milestones achieved State that you are ahead of the competition Underscore strategic alliances, customers Brand yourself as a success Investment Highlights

Repeat the market pain and your solution

Highlight management strength

List key milestones achieved

State that you are ahead of the competition

Underscore strategic alliances, customers

Brand yourself as a success

The dead lobster = brand profiling Capturing the brand’s essence in three or four sentences Dramatic – Compels your audience to take notice Irrefutable – It can be proven Easily understood – Expressed in layman’s terms (apply the grandmother test) Greed-inducing – The brand profile to start the decision- making process Provides a real-time solution to a BIG problem The Dead Lobster

The dead lobster = brand profiling

Capturing the brand’s essence in three or four sentences

Dramatic – Compels your audience to take notice

Irrefutable – It can be proven

Easily understood – Expressed in layman’s terms (apply the grandmother test)

Greed-inducing – The brand profile to start the decision- making process

Provides a real-time solution to a BIG problem

Start with the pain. What’s the crisis or challenge that your business solves? 80% of transplants are rejected within three years. There are currently no effective treatments to halt these rejections. In the US alone, some $1 billion is spent on transplantation surgeries each year. Then provide your company’s solution. Newco develops and commercializes a family of drugs to successfully treat organ rejections. Building a Dead Lobster

Start with the pain. What’s the crisis or challenge that your business solves?

80% of transplants are rejected within three years. There are currently no effective treatments to halt these rejections. In the US alone, some $1 billion is spent on transplantation surgeries each year.

Then provide your company’s solution.

Newco develops and commercializes a family of drugs to successfully treat organ rejections.

Focus on the message… Don’t try to prove the points you are making in this slide. The proof will be provided in the rest of the presentation. However, don’t make a claim that can’t be backed up from a reliable quotable source. Write the dead lobster as a complete paragraph to ensure the logic flow. Then break into bullet points for presentation purposes. State the size of the market in dollar terms whenever possible. Keep the sentences short and punchy. Building a Dead Lobster

Focus on the message…

Don’t try to prove the points you are making in this slide. The proof will be provided in the rest of the presentation.

However, don’t make a claim that can’t be backed up from a reliable quotable source.

Write the dead lobster as a complete paragraph to ensure the logic flow. Then break into bullet points for presentation purposes.

State the size of the market in dollar terms whenever possible.

Keep the sentences short and punchy.

Thank You W. Daniel Mothersill 416-368-8770 ex. 222 [email_address]