This document provides guidance on strategic financing plans and pitching plans to investors. It discusses determining how much capital to raise initially and in the future to fund business needs. It also covers dilution impacts, credibility with investors, the fundraising sales process, marketing materials, pitch deck organization and content, and presenting to investors. Key recommendations include raising the least capital needed, being forthright about risks and unknowns, and tailoring materials for specific investors while maintaining consistency.

1. THE CAPITAL NETWORK Roundtable Breakfast - Pitching the Plan January 12, 2010

3. Generally - the least capital you need to get to next major valuation milestone (with 90-120 day / 10-20% cushion). You need enough cash to:

4. Hire critical team members

5. Attract Customers / Convert beta customers to paying customers

6. Acquire critical technologies, systems and resources

7. Cover 4-6 months of cash burn (not accounting expense)

8. Deal with unanticipated opportunities or setbacks

9. Counterpoint: Consider the time cost & disruption of raising capital incrementally

10. Optimizing capital raised for:

11. Business Outcomes (Business Growth / Market leadership / Flexibility

13. Continued R&D

14. Sales and R&D Development Teams

15. Sales and Marketing Efforts

16. Growth and Expansion

17. Impact on valuation and dilution

18. Debt vs. Equity

19. Strategy > Optimum investor base

20. Funds

21. Groups

22. Individuals

24. Authenticity – Be genuine: Tailor your messaging not your company, your ethics, your vision or your passion.

25. Forthrightness – Be upfront with the problems, risks and unknowns – “I don’t know” is a better answer than B.S.

26. Confidence – Have confidence in the vision and in your ability to assess and overcome the problems, risks and unknowns.

27. Humility– Accept that you don’t know everything – learn from everyone (including investors) and from every meeting.

29. Identify optimal (and backup) potential investors

30. Gather direct and indirect contact information

31. Prioritize Prospects

32. Systems – Prospect Tracking

33. Contact / Get Introduced – Networking and Social Networking

34. Optimizing first impressions

35. Don’t Pitch! Get a Meeting!

36. Create an internal champion

37. Sell the opportunity to participate in value creation

38. Close, or move on

39. Deal syndication

41. The full Business Plan - When and Why?

42. The 5 Page Executive Summary

43. The 1 Page Summary (the “Teaser”)

44. The 15-20 Slide Deck

45. The 10 second oral presentation pitch (the “Elevator Pitch)

46. The 30 sec -2 min oral presentation (the “Quick Conversation”)

47. Tailoring the emphasis of materials for the specific investor (similar to tailoring a resume) vs. Consistency across all iterations

48. Tracking distribution of materials

50. Selling the Investment Opportunity

51. Solutions are more important than technology or “coolness”

52. Value creation is more important than revenue model

53. What do investors want to know

54. How to anticipate and address investor concerns: Risk Analysis

55. Optimize pitch and presentation; Use of Appendices

56. Problem: The Perfect Deck vs. Running Your Business

57. 10/20/30

60. Use of tagline may be useful to assist recall and give an overview

61. Include contact information

63. What is the magnitude and frequency of the problem per customer?

64. Cancer Drug vs. Aspirin vs. Vitamin?

65. Does the pain create pain for 3rd parties?

66. Can you quantify the pain per customer or industry wide?

67. Can you explain WHY the pain exists?

68. For consumer products – can you explain desire?

70. What does it do:

71. Provides customer with cost savings or time/cost efficiencies

72. Drives revenue to customer

73. Drives customer’s acquisition of customers

74. Provides customer a same priced product that provides additional critical benefits

75. Allows customer to offer its customers a superior value proposition

76. Decreases risks to customer

77. Leverages customer’s existing customers or solutions

78. Don’t get too detailed

79. Unless you are a deep engineering company – don’t get too detailed

80. Assume technical matters will be validated later

82. How much better, faster, cheaper?

83. When is 2% savings in time or cost huge?

84. Can you itemize the specific ways in which your solution is “better”? Do you have data to indicate that such items are meaningful to the customer?

85. Can you quantify value proposition to the customer?

86. Can you quantify a Return on Investment (ROI) for customer based on comparison of solution cost to quantifiable solution benefits?

87. ROI to customer should be a portion of the incremental value created by solution; the remainder

88. Example:

89. SellCo spends $25 to create a solution that it sells to BuyCo for $50. BuyCo obtains $100 in gross benefit from solution (a 2:1 ratio).

91. If your customers are resellers, explain who THEIR customers are as well.

92. How do you get paid?

93. When and how much do you get paid? Average $/customer?

94. What is your cost structure – fixed vs. variable portions?

95. Is the business model well understood or newer? Ex. Digital consumer goods

96. Streamlining and prioritizing multiple revenue lines

97. Examples:

98. Direct Sales

99. Indirect Sales

100. Razor and blades business model

101. Auction / Arbitrage

102. Digital Marketplace

103. Publishing / Digital Publishing

104. Subscription

105. Advertising

106. Professional Services

107. SAAS

108. Licensing

109. Maintenance Contracts

110. Insurance

111. Loyalty business models

112. Freemium business model

113. Premium business model

114. Professional open-source model

115. VAR

116. Multi-level marketing business model

117. Cost Savings Share

118. MLM

119. Franchise

120. Data Broker

121. Sponsorship

123. Marketing and distribution strategy

124. How you create customer relationships

125. How you incentivize and compensate sales

126. Explain geography and expansion strategy

128. Patents, Trademarks, Copyrights

129. How unique is your solution?

130. Ease of replication?

131. Know how and Trade Secrets

132. R&D development lead

133. No-“out” Contracts

134. Relationships and Team

135. “First Mover”

137. Experience with startups, with industry and with customers

138. Soft commitments from prospects

139. Board Members

140. Board of (technical) Advisors

142. How much can you and your direct competitors sell in the coming years

143. Target market and addressable markets

144. Avoiding silly statistics

145. Hard data about your marketplace

146. Business model or technological shift in that marketplace

147. Monopoly problems

148. Distribution bottlenecks

149. Other concerns that would compress margins or eliminate expansion opportunity

150. Current major competitors and why you will beat them

151. Avoiding the “no-competition trap”

153. Context of development timeline

154. Critical development partnerships

155. Team

156. Critical distribution partnerships

157. Customer Acquisition

159. Business Model risks – Can you sell the solution at margin?

160. Supply risks – Can you acquire and manage critical vendors

161. Market Dynamics risk – Do customers and distributors have cash and will to spend?

162. Distribution Risk - Can you acquire and manage critical distribution and sales points?

163. Customer Adoption Risk – Will the Dogs eat the Dog Food?

164. Financial risks – Will you have positive cash flow? Will you have sufficient capital?

165. Legal / Regulatory risks – Are there barriers beyond your ability to influence?

166. Team risks – Is our product or customer knowledge distributed and accessible?

168. Cash burn

169. Time to cash flow positive

171. What will it be used for?

172. How far will it take you?

173. Preferred deal structure?

175. Again add contact info

177. Case studies

178. Customer testimonials

179. More detailed technical or product information

181. Segment by revenue type

182. Bottom-Up vs. Top-Down projections

183. % of China Problem

184. Assumptions Pages

185. Perfect vs. Functional

186. What does “conservative” mean

187. Use of High / Medium / Low

188. Market Metrics and Information

189. Addressable vs. Total Markets

190. Use of selective statistics

191. Anticipating investor cutback

193. Use note cards & appendix slides for easy access to specific information.

194. DON’T READ your presentation.

195. You should have answers to likely questions, even if you don’t intend to cover such material in your core presentation.

196. It’s okay to not know everything – no one does. Unless someone asks you something that you clearly should know, it is okay to directly state that you don’t have an answer and that you will get back to someone. This builds credibility with your audience.

197. When possible, know the room. Arrive early, walk around the speaking area and practice using the microphone and any visual aids.

198. Wear clothes that represent you and which reinforce your authority and confidence.

199. Work to control filler words such as “Um” “Ah” Eh” or “Like”. Try to limit distracting repetitive hand or body gestures.

201. Be flexible – be prepared to be interrupted.

202. Understand the goal of your presentation. Is it to inspire, to educate, to connect, to get attention, to get a second more personal meeting? Your focus should help you prioritize.

203. Modulate your pace, pitch, volume, tone and enthusiasm – like when you are telling a story. This helps keep the audience focused.

204. Use humor, personal stories and conversational language where possible. Your use of easy to understand analogies can help you draw in the audience and create traction.

205. Practice. Practice. Practice! Rehearse out loud with all equipment and with a timer. Allow time for the unexpected.

206. Every slide should be consistent with your corporate image – each should bear the company name and should have a background or theme consistent with the company type or culture.

208. The professionalism of the powerpoint may convey information to the audience about your credibility. If it looks like a last-minute effort, it probably was.

209. The deck is just a tool. If the computer or projector cease working – you should be able to carry on with your presentation without getting flustered. Remember, this is just a tool, it is not the presentation.

211. Web / MHT / Business Plan Competitions / Trade Org Meetings

212. The improper use of Social Networking

214. an employee benefit plan under certain conditions

215. a charitable organization, corporation, or partnership with assets exceeding $5 million;

216. a director, executive officer, or general partner of the company selling the securities;

217. a business in which all the equity owners are accredited investors;

218. a natural person who has net worth that exceeds $1 million at the time of the purchase;

219. a natural person with income exceeding $200,000 ($300,000) in each of the two most recent years; or