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How to write your business plan - Rob Moffat, Balderton Capital

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As presented at campus EDU, London, 31 May

As presented at campus EDU, London, 31 May

Published in: Business

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  • 2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5
  • 2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5
  • 2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5
  • 2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5
  • Transcript

    • 1. How to write a business planCampus EDU31 May 2013
    • 2. • Invest $0.1 - 10M in tech companies with $B potential• Invest across Europe, help businesses go international• Have invested in >100 companies over last 10 years2Balderton Capital – what we do
    • 3. We back great entrepreneurs & disruptive companies3Europe’s leadingvacation rentalmarketplaceTop 2 global musicpublisher from zero:Prince, McCartney1 Million loanapplications permonth1M products soldper month
    • 4. Me419962000200420072009
    • 5. You5Written a business plan?Have an idea?Working on a business right now?Looked at their business plan this week?
    • 6. • Pitch deck• Excel• Business plan• For you• For your co-founders / employees6Scope for today
    • 7. 7We’re not writing a dissertation…
    • 8. 9Contents of a (software/internet) business plan• The problem• Your solution• Competition, and why you win• Size of the opportunity• Unit economics• The necessaries: Product, Team, Capital• Milestones
    • 9. 10Contents of a (software/internet) business plan• The problem• Your solution• Competition, and why you win• Size of the opportunity• Unit economics• The necessaries: Product, Team, Capital• Milestones
    • 10. 11What is a problem?• Unmet need• Unmet want• Too expensive• Too time-consumingHow many other people really care about this problem?
    • 11. 12What was the problem?
    • 12. 13Solution without a problem…
    • 13. 14Contents of a (software/internet) business plan• The problem• Your solution• Competition, and why you win• Size of the opportunity• Unit economics• The necessaries: Product, Team, Capital• Milestones
    • 14. 15Your solutionFor… (target customer)who… (statement of the need or opportunity),we are a… (product type)that… (key benefit).Unlike… (main competitor),our product… (how we are different).
    • 15. 16Which company?For young travellersWho need somewhere cheap to stay,We are a marketplace for accommodationThat gives you a better room for half the price.Unlike hotels or hostelsOur product gives you the personality of the city
    • 16. 17Two acronymsBHAGMVPBig Hairy Audacious GoalMinimum Viable Product
    • 17. 18Which company?BHAGMVPThe social networkOnline student directory
    • 18. 19Why now?
    • 19. 20Contents of a (software/internet) business plan• The problem• Your solution• Competition, and why you win• Size of the opportunity• Unit economics• The necessaries: Product, Team, Capital• Milestones
    • 20. 21“We have no competitors”#1 reason for a VC to ditch your business plan?
    • 21. 22Know your competitionWhere are the weaknesses?What are they good at?Common mistake: Compare where you will be in twoyears with where they are today
    • 22. 23Disruptive innovationFilm cameras -> Digital -> SmartphonesTV -> YoutubeServers -> CloudMSFT Office -> Google Docs
    • 23. 24Good & bad competitive advantages• Disruptive innovation• Speed• Unique technology / IP / data• Exclusive partnerships• Substantially lower cost• Quality of your teamGood Bad• Features• Better service• Lower margins• Better for client but not for users
    • 24. 25How will you sustain your advantage?
    • 25. 26How will you sustain your advantage?• Network effects• Virtuous circles• More/better data• Brand• Depth of tech expertise
    • 26. 27Contents of a (software/internet) business plan• The problem• Your solution• Competition, and why you win• Size of the opportunity• Unit economics• The necessaries: Product, Team, Capital• Milestones
    • 27. 28#2 reason for a VC to ditch your business plan?“Our market opportunity is $100B”
    • 28. 29Bottom up market sizingNumber of potential users of your product% who are willing/able to payYour annual revenue per userxx
    • 29. 30Example: LovefilmNumber of potential users of your product% who are willing/able to payYour annual revenue per userxx24 MUK households40% ?Sky TV penetration(as a proxy)£120£1.1BAddressable market=
    • 30. 31Contents of a (software/internet) business plan• The problem• Your solution• Competition, and why you win• Size of the opportunity• Unit economics• The necessaries: Product, Team, Capital• Milestones
    • 31. 32Unit economics = can you make money?Contributionper orderRevenue perorderVariable Cost perorder= -Cost PerAcquisition(CPA)Cost per lead% of leads thatconvert= ÷CustomerLifetime value(CLV)Contributionper orderAverage # orders percustomer before theyleave= xLifetime value(LTV)MakingmoneyCost PerAcquisition(CPA)>=
    • 32. 33Unit economics = can you make money?Contributionper orderRevenue perorder= -Cost PerAcquisition(CPA)Cost per lead% of leads thatconvert= ÷CustomerLifetime value(CLV)Contributionper order= xLifetime value(LTV)MakingmoneyCost PerAcquisition(CPA)>=Variable Cost perorderAverage # orders percustomer before theyleave
    • 33. 34Contents of a (software/internet) business plan• The problem• Your solution• Competition, and why you win• Size of the opportunity• Unit economics• The necessaries: Product, Team, Capital• Milestones
    • 34. 35The necessaries: Product, Team, CapitalProduct• Minimum Viable Product• Make use of third party tech• ‘Mechanical turk’?Team• Skills that you need• Raw talent vs. experience?• Want VC investment? You need a CTOCapital• Running costs for 18 months, plus 25%• Sufficient runway to prove the product?• Use client work to help build product?
    • 35. 36Contents of a (software/internet) business plan• The problem• Your solution• Competition, and why you win• Size of the opportunity• Unit economics• The necessaries: Product, Team, Capital• Milestones
    • 36. 37Milestones
    • 37. 38MilestonesProve the hard stuff firstPostpone big costsPrioritize constantly
    • 38. 39First milestoneTest the plan!
    • 39. 40Some ways to test a business plan• Talk to …• Potential clients / partners / similar companies• Smart 3rd parties (including investors)• Dummy ad campaigns to test messaging & CPC• Landing page & waiting list• Kickstarter• Minimum viable product• Work at your competitors
    • 40. 41Read this book
    • 41. 42Your turn1. Write a simple business plan for yourbusiness/idea• If you don’t have an idea, pick your favourite startup2. Get your neighbour to critique it15 mins10 mins
    • 42. 43Reminder: Contents of a business plan• The problem• Your solution• Competition, and why you win• Size of the opportunity• Unit economics• The necessaries: Product, Team, Capital• Milestones
    • 43. 44DiscussionWhich was the weakest part of your plan?What is the area that most needs more testing?
    • 44. 45Advice• Re:work: Guess not a plan – keep short & revisit often• Be clear on what problem you are solving. It’s best todo one thing really, really well• Cost is a disease• People don’t like giving ‘negative feedback’. Pushthem to find the weak points, and listen• Be optimistic (but not blindly so)
    • 45. Questions?rmoffat@balderton.com@robmoff
    • 46. Further readinghttp://blog.guykawasaki.com/2012/01/how-to-create-an-enchanting-business-plan-officeandguyk.htmlhttp://37signals.com/reworkhttp://theleanstartup.com/http://www.avc.com/a_vc/mba-mondays/http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-versionhttp://www.seedcamp.com/resources/the-product-market-fit-cyclehttp://ycombinator.com/lib.htmlhttp://www.forbes.com/sites/bruceupbin/2012/08/30/the-dangerous-seduction-of-the-lifetime-value-ltv-formula/
    • 47. Your business planThe problem Competition / why you win Size of the opportunityYour solutionUnit economics Necessaries: Product, Team, Capital Milestones