Pitching the Plan: The DeckJune 18, 2013
Jeremy HalpernBiography›  Nu#er,	  McClennen	  &	  Fish,	  LLP	  -­‐	  Partner;	  Director	  of	  Biz	  Dev,	  Emerging	  ...
Christopher MirabileBiography•  Co-­‐Managing	  Director	  of	  LaunchPad	  Venture	  Group	  •  	  Named	  XConomys	  "To...
Gail HoffmanBiography•  Managing	  Director	  –	  Golden	  Seeds	  •  Previous	  •  Corporate	  Finance	  Department	  of	...
Nutter’s Emerging Companies Group5	  As	  a	  full	  service	  firm	  with	  a	  dedicated	  team	  of	  lawyers	  in	  the...
Cover Slide Introduction•  1	  Minute	  Elevator	  Pitch	  –  Get	  their	  a#enOon!	  	  •  Introduce	  company	  without...
Company Value Proposition (*Zoom out)•  Argued	  to	  be	  most	  important	  slide	  in	  presentaOon	  –	  a	  1	  slide...
The Problem a/k/a the Opportunity•  What	  is	  the	  unsolved	  problem	  or	  need?	  	  	  •  Who	  has	  this	  proble...
Product/Service Solution•  Describe	  your	  product	  or	  service?	  	  	  •  What	  does	  it	  do	  and	  how	  does	 ...
LifeSci Only:Regulatory Progress and Path•  Are	  you	  IND	  or	  510k?	  	  Any	  addiOonal	  details?	  •  Costs	  and	...
Solution Value Proposition andCompetitive Advantage (*Zoom In)•  How	  is	  your	  soluOon	  be#er,	  faster	  or	  cheape...
•  Who	  is	  compeOng	  with	  you?	  	  •  Barriers	  	  to	  entry	  for	  you?	  For	  others?	  	  Ones	  that	  you	...
Comparative Advantage &FocusCriteria	  1	   Criteria	  2	   Criteria	  3	   Criteria	  4	  You	  CompeOtor	  1	  CompeOtor...
•  How	  and	  when	  will	  you	  make	  money?	  •  Who	  is	  going	  to	  pay	  (i.e,	  what	  is	  the	  “Revenue	  M...
•  How	  you	  get	  your	  customers	  and	  costs	  	  •  How	  you	  actually	  deliver	  soluOon	  to	  customers	  (t...
LifeSci Only: Cost vs Revenue /Role of Reimbursement•  You	  cannot	  “help	  the	  system	  save	  money”	  	  –  if	  yo...
•  Industry	  size	  =	  the	  total	  revenue	  generated	  in	  a	  segment	  of	  the	  economy.	  	  •  These	  are	  ...
•  Intellectual	  Property:	  Patents,	  Trademarks,	  Copyrights,	  Trade	  Secret	  •  Difference	  between	  provisional...
Management Team andAdvisors•  Top	  execuOves,	  Board	  of	  Directors,	  Board	  of	  Advisors	  &	  SAB	  •  Startup,	 ...
Current Status: Achievements andUpcoming Milestones•  Demonstrate	  current	  progress	  and	  achievement	  of	  mileston...
•  IdenOfy	  exisOng/Oming	  of	  prior	  preferred	  stock	  deals	  •  Cash	  and	  monthly	  cash	  burn	  •  How	  muc...
•  Technology	  	  /	  Product	  –	  Will	  the	  soluOon	  work?	  	  Can	  you	  build	  it?	  	  •  Business	  Model	  ...
•  Length	  to	  liquidity	  •  IPO	  vs.	  M&A	  vs.	  Licensing	  (vs.	  other)	  •  PotenOal	  Acquirers	  •  Acquirer	...
Summary	  Slide	  /	  Investment	  RaOonale	  •  End	  with	  a	  summary	  of	  what	  you	  have	  just	  said.	  •  Lea...
•  P&L	  –	  Historical	  +	  3-­‐5yrs;	  OJen	  with	  cash,	  customers	  and	  headcount	  •  Segment	  revenue	  by	  ...
FINANCIALS ANDPROJECTIONS – DEEP DIVE26	  
Building	  ProjecOons:	  Yeah,	  but…	  •  Business	  plans	  with	  financial	  projecOons	  are	  necessary…	   	  	  – B...
More	  on	  Scenario	  Planning…	  Worst-­‐case	  scenarios	  should	  answer	  “What	  happens	  if	  there	  is	  no	  o...
ProjecOons:	  Start	  with	  Revenue	  Take	  a	  “Bo#oms	  Up”	  approach	  •  Ex:	  We	  have	  tracked	  X	  unique	  v...
Building	  ProjecOons:	  How	  it	  works	  •  Have	  an	  assump>ons	  page	  and	  reference	  cells	  for	  your	  Inco...
ProjecOons:	  Add	  in	  expenses	  This	  also	  has	  a	  “Bo#oms-­‐up”	  approach	  •  Include	  details	  of	  all	  c...
ProjecOons:	  Cash	  Flow	  •  Map	  out	  cash	  inflows	  and	  ou•lows	  to	  determine	  funding	  needs	  –	  do	  thi...
ProjecOons:	  Some	  Final	  Checks	  "The	  GOAL”	  is	  to	  make	  money	  –  Social	  jusOce,	  triple	  net	  bo#om	 ...
Pitching	  projecOons:	  	  What’s	  the	  “ask”?	  Fin	  projecOons	  need	  to	  Oe	  to	  the	  amount	  of	  the	  rai...
Pitching	  ProjecOons:	  Expert	  moves	  •  Know	  your	  audience	  –  The	  earlier	  you	  are,	  the	  more	  interes...
Pitching	  ProjecOons:	  Rookie	  moves	  –  CTRL+C+P	  enOre	  excel	  model	  into	  a	  slide	  –  Using	  anything	  l...
CLOSING THOUGHTS37	  
General Dos and Don’ts:“Presentation is a visual not a reference”Do	  •  Use	  one	  topic	  per	  slide	  •  Limit	  text...
•  Know	  your	  material	  cold!	  	  Don’t	  wing	  it.	  	  •  DON’T	  READ	  your	  presentaOon.	  	  	  •  You	  shou...
•  Modulate	  your	  pace,	  pitch,	  volume,	  tone	  and	  enthusiasm	  –	  like	  when	  you	  are	  telling	  a	  stor...
Interacting with InvestorsBasic Principles - Overview•  Research	  the	  investor	  in	  advance	  •  Pay	  a#enOon	  to	 ...
Interacting with InvestorsCautionary Overview – Dont do the following•  Bash	  the	  compeOOon	  •  Hype	  •  Condescend	 ...
Jeremy	  Halpern	  Partner	  Director	  of	  Business	  Development	  Emerging	  Companies	  Team	  Nu#er	  McClennen	  &	...
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Pitching the Plan and Financial Projections

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Pitching the Plan and Financial Projections

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Pitching the Plan and Financial Projections

  1. 1. Pitching the Plan: The DeckJune 18, 2013
  2. 2. Jeremy HalpernBiography›  Nu#er,  McClennen  &  Fish,  LLP  -­‐  Partner;  Director  of  Biz  Dev,  Emerging  Companies  Team  •  Top  10  Boston  law  firm  •  Represent  clients  in  technology,  hardware,  soJware,  mobile,  medical  devices,  health  IT,  biotechnology,  cleantech  CPG,  consumer  electronics,  sports  &  entertainment    •  Provide  support  and  outreach  to  the  entrepreneurial  community  ›  Boards  and  OrganizaOons  ›  MassVentures  –  Director  &  Investment  Commi#ee  Member  •  The  Venture  Arm  of  the  Commonwealth-­‐-­‐  catalyzing  innovaOon  in  Massachuse#s  by  providing  seed  and  early  stage  venture  funding  to  high  growth  technology  startups.  ›  The  Capital  Network  –  Director;  Past  Chairman  •  Providing  educaOon,  resources  and  community  to  high  growth  entrepreneurs  and  angel  investors  as  they  navigate  the  early  stage  capital  process  ›  Entrepreneurial  Experience  -­‐  Entertainment  and  Digital  Consumer  Products  ›  UC  Berkeley,  B.A.  (Go  Bears!);  UCLA  School  of  Law,  J.D.  2  
  3. 3. Christopher MirabileBiography•  Co-­‐Managing  Director  of  LaunchPad  Venture  Group  •   Named  XConomys  "Top  Angel  Investors  in  New  England"  for  2012  •  Adjunct  lecturer  in  the  MBA  program  at  Babson  College  •  Entrepreneur-­‐in-­‐Residence  at  Babsons  Olin  School  of  Business.  •  Previous:  •  CFO  -­‐    IONA  Technologies  PLC    •  Corporate  and  securiOes  lawyer  -­‐  Testa  Hurwitz  &  Thibeault    •  Management  consultant  with  Price  Waterhouses  Strategic  ConsulOng  Group  •  Christopher  earned  his  J.D.  from  Boston  College  Law  School  and  his  B.A.,  with  honors,  from  Colgate  University   3  
  4. 4. Gail HoffmanBiography•  Managing  Director  –  Golden  Seeds  •  Previous  •  Corporate  Finance  Department  of  Dean  Wi#er  Reynolds    •  Boston  Ventures  Management  Inc.,  a  private  equity  firm  focused  on  the  communicaOons  and  entertainment  industries.  •  Received  an  MBA  with  High  DisOncOon  from  The  University  of  Pennsylvania’s  Wharton  School    4  
  5. 5. Nutter’s Emerging Companies Group5  As  a  full  service  firm  with  a  dedicated  team  of  lawyers  in  the  Emerging  Companies  Group,  Nu=er  supports  ventures  across    the  innova>on  economy:  • Biomedical  Devices  • Biotechnology  • PharmaceuOcals  • Life  sciences    • SoJware  • Hardware  • InformaOon  Technology    • Cleantech  • Mobile  • Consumer  Products  • AnalyOcs  • New  Media    • RoboOcsa  We  provide  entrepreneurs  will  the  full  spectrum  of  support  that  they  need  to  build  their  businesses  and  realize  their  visions:  • EnOty  FormaOon  • Founders  Agreements  • Financing  Strategy  and  Key  IntroducOons  • Angel  &  Venture  Capital    • Debt  Financing  • Private  Equity  • IniOal  Public  Offerings  • Private  Placements  • Strategic  Partnering  • Mergers  &  AcquisiOons  • Employment  support  • Equity  CompensaOon  • Tax  Strategy  • LiOgaOon  • Licensing  • DistribuOon  • Manufacturing  • Supply  Agreements  • Electronic  Commerce  • Patent  and  Trademark  Strategy  &  ProsecuOon  
  6. 6. Cover Slide Introduction•  1  Minute  Elevator  Pitch  –  Get  their  a#enOon!    •  Introduce  company  without  distracOng  from  spoken  introducOon  •  Sets  the  tempo  •  Content:  –  Logo    –  Tag  Line  –  should  explain  business  and  begin  to  differenOate  –  Contact  informaOon  ‒  Name  of  the  investor/group  to  whom  presentaOon  is  delivered  ‒  Possibly  a  non-­‐distracOng  picture      •  Be  enthusiasOc  –  people  buy  from  people  not  PowerPoint  6  
  7. 7. Company Value Proposition (*Zoom out)•  Argued  to  be  most  important  slide  in  presentaOon  –  a  1  slide  summary  –  Important  enough  to  repeat  3  Omes  –  Bookend  the  deck  –  begin  and  end  presentaOon  •  Content  objecOve  –  why  should  investors  invest  –  5-­‐7  bullets  outlining  strengths  and  direcOon  of  presentaOon  •  Core  technology  •  Product  candidates  •  Market  opportunity  •  Key  partnerships  •  Management  strengths  7  
  8. 8. The Problem a/k/a the Opportunity•  What  is  the  unsolved  problem  or  need?      •  Who  has  this  problem?    Define  your  Core  Customer  and  their  a#ributes  •  How  serious  is  it?  Do  you  have  Metrics?      –  Magnitude  :  How  significant  is  it?    Can  you  quanOfy  it?  –  Frequency:    How  oJen  is  pain  experienced  (life  insurance  vs.  coffee)  –  CriOcality:    Will  the  pain  disrupt  the  business  (e.g.,  IT  outage).  •  Cancer  Drug  vs.  Aspirin  vs.  Vitamin?    •  How  have  the  alternaOve  offerings  failed  to  meet  the  need?  •  Analysis  of  why  has  the  problem  not  been  solved  unOl  now?  •  Remember!  –  Customers  buy  if  they  experience  need,  not  if  society  does.  –  Business  customer  buy  to  make  money  or  solve  problems.  8  
  9. 9. Product/Service Solution•  Describe  your  product  or  service?      •  What  does  it  do  and  how  does  it  work?  •  Do  not  get  too  detailed?    Assume  technical  ma#ers  will  be  validated  later.  •  Use  pictures  or  diagrams  where  possible.      •  Demo  /  screen  shots,  etc.  if  necessary.  •  How  does  it  fit  within  the  customer’s  environment?  •  What  proof  of  concept  have  you  achieved?  Prototype?    Beta?    •  What  proof  do  you  have  of  its  effecOveness?  •  Use  accurate  words  to  describe  phase  of  development:    •  “it  does”  vs.  “it  will”  vs.  “it  may”  9  
  10. 10. LifeSci Only:Regulatory Progress and Path•  Are  you  IND  or  510k?    Any  addiOonal  details?  •  Costs  and  Oming  and  paOent  populaOon  of  trials  needed  to  obtain  approval?  •  Phase  1,  Phase  2  (2b),  Phase  III  •  Strategy?  •   Team  or  consultants  with  experience  in  obtaining  approval?  •  Roadblocks  or  risks?  •  RelaOonship  of  path  to  exit  Oming  10  
  11. 11. Solution Value Proposition andCompetitive Advantage (*Zoom In)•  How  is  your  soluOon  be#er,  faster  or  cheaper  than  the  exisOng  soluOons  for  your  customer?    **Remember  Different  ≠  Be#er**  –  Saves  costs  -­‐  –  Drives  revenue  or  customer  acquisiOon  –  Allows  customer  to  offer  its  customers  a  superior  value  proposiOon    –  Decreases  risks  –  Leverages  customer’s  exisOng  customers  or  soluOons  –  Provides  enjoyment,  recreaOon,  educaOon,  Ome  saving…  (consumer  product)  •  How  much  be#er,  faster,  cheaper?  Can  you  quanOfy  the  value  proposiOon  to  the  customer?    –  Can  you  validate  that  your  soluOon  is  be#er?    Do  you  have  data  to  indicate  that  such  items  are  meaningful  to  the  customer?    –  Can  you  quanOfy  a  Return  on  Investment  (ROI)  for  your  customer.    11  
  12. 12. •  Who  is  compeOng  with  you?    •  Barriers    to  entry  for  you?  For  others?    Ones  that  you  are  creaOng?    Competitive Landscape12  •  Blocking  IP  •  Startup    Cost  to  compeOOon    •  Change  Cost  to  customers  •  Geography  •  Contract  exclusivity  or  change  penalOes  •  Market  dominaOng  companies  (“800lb  Gorillas”)  •  CompeOOve  Advantage  revisited  -­‐  Why  will  you  be  able  to  win    (not  “cooler”)    •  Points  soluOon  vs.  total  soluOons  •  Current  major  compeOtors  and  why  you  will  beat  them  •  Avoiding  the  “no-­‐compeOOon  trap”  •  Explaining  their  trends  of  growth  or  contracOon  •  On  a  matrix  –  show  advantages  and  areas  where  you  don’t  compete  •  Pick  metrics  your  customers  care  about  not  just  those  you  “win”  at!  •  Avoid  upper  right  quadrant  graphs  
  13. 13. Comparative Advantage &FocusCriteria  1   Criteria  2   Criteria  3   Criteria  4  You  CompeOtor  1  CompeOtor  2  CompeOtor  3  13  •  Choose  criteria  important  to  your  customers  and  to  end  users  /  paOents  •  Show  focus:  being  best  in  class  in  only  certain  things    •  Show  where  you  are  not  compeOng  
  14. 14. •  How  and  when  will  you  make  money?  •  Who  is  going  to  pay  (i.e,  what  is  the  “Revenue  Model”)?    Who  are  YOUR  customers?  •  Manufacturing  and  commercializaOon  strategies  •  Timing  and  frequency  of  buying  decision  and  payments  •  Average  $/purchase?      Likely  to  increase  or  decrease?  •  Cost  of  Customer  AcquisiOon  (CCA/CAC)  vs.  LifeOme  Value  of  Customer  (LTV/LVC)  •  Fixed  vs.  variable  costs  •  Revenue  Model  –  and  consequences  to  volume,  price,  margin  etc.  of  each:  •  Direct  /  Indirect  Sales  •  Razor  and  Blade  •  Professional  Services  •  SAAS  •  Licensing  •  Government  Contractor  Strategy:Business and Revenue Model14  
  15. 15. •  How  you  get  your  customers  and  costs    •  How  you  actually  deliver  soluOon  to  customers  (trucks,  distributors  or  click?)  •  Go-­‐to-­‐Market  and  General  MarkeOng  strategies  •  How  you  incenOvize  and  compensate  sales  (if  applicable)  •  Explain  geography  and  expansion  strategy  (scaling  or  growth  issues)  •  Discuss  criOcal  distribuOon  partners,  opOons  and  roadblocks  •  Core  business  vs.  non-­‐core  business    •  potenOal  licensing  or  spin-­‐off  opportunity  •  Conversion  metrics  (idenOficaOon  >  lead  >  sales  process  >  conversion)  Sales and Distribution Model15  
  16. 16. LifeSci Only: Cost vs Revenue /Role of Reimbursement•  You  cannot  “help  the  system  save  money”    –  if  your  soluOon  is  cheaper  than    the  compeOOon,  understanding  the  moOvaOon  of  the  payor  vs  the  provider  (to  whom  cost  may  equal  revenue)  •  Will  you  need  reimbursement?  –  Status  of  code  designaOon?  Strategy?  •  Comparables  for  reimbursement  pricing?  •  If  deployed  onto  paOents,  the  long  term  savings  to  payor?  16  
  17. 17. •  Industry  size  =  the  total  revenue  generated  in  a  segment  of  the  economy.    •  These  are  what  are  tracked  by  Forrester,  Gartner,  Thomson  etc.  •  Only  useful  for  trend  analysis,  not  for  evaluaOng  investability.    •  Example:  “The  internet  adverOsing  industry  is  an  $X  billion  industry”  •  Addressable  Market  =  the  total  amount  of  revenue  that  your  company  could  generate  if  it  acquired  every  potenOal  customer  (the  “Addressable  PopulaOon”).  •  Willing  and  able  buyers  that  you  can  reach  •  Ini>al  Target  Market:    subset  of  the  addressable  market  for  whom  the  value  proposiOon  is  truly  compelling  and  obvious  at  product  introducOon.  •  Annual  Sales:    that  subset  of  the  addressable  market  or  the  iniOal  target  market  who  buy  or  who  are  likely  to  buy  each  year.  •  Explain  how  the  market  is  changing  and  why.      •  Customers,  pricing,  compeOOon,  new  technology,  etc.    •  $500m  TAM  vs.  $50m  TAM  –  know  your  investors!  The Addressable Market17  
  18. 18. •  Intellectual  Property:  Patents,  Trademarks,  Copyrights,  Trade  Secret  •  Difference  between  provisional,  applicaOons  and  granted  patents  •  Patent  strategy  •  IP  that  covers  advantage  vs.  extraneous  claims/assets  •  How  unique  is  your  soluOon?  •  Trade  Secret  and  development  lead;  Ease  of  replicaOon  •  Cost/Ability  of  customer  to  replace  your  SoluOon  •  Key  relaOonships    •  Contractual  protecOon  •  FDA  Approvals  •  SancOoned  monopolies  (e.g.,  cable  systems)  Defensibility18  
  19. 19. Management Team andAdvisors•  Top  execuOves,  Board  of  Directors,  Board  of  Advisors  &  SAB  •  Startup,  domain,  customers  or  key  opinion  experience  •  Prior  success  •  Balance  •  Cohesiveness  •  Don’t  put  their  whole  resume  on  the  slide  •  Only  show  acOves  •  Current  staffing  gaps  and  strategy  for  filling  •  OrientaOon  towards  success  not  control  (“Rich”  not  “Monarch”)  19  
  20. 20. Current Status: Achievements andUpcoming Milestones•  Demonstrate  current  progress  and  achievement  of  milestones  •  Development  partnerships  •  DistribuOon  partnerships  •  Customer  acquisiOon  progress  (conversion  rates)  •  PublicaOons  •  Financing  •  Team  Developments  •  Upcoming  milestones  and  Challenges    •  Gant-­‐style  Charts  •  How  you  will  overcome  the  challenges/weakness    (ex.  key  hire)  •  OJen  integrated  with  use  of  proceeds  slide  20  
  21. 21. •  IdenOfy  exisOng/Oming  of  prior  preferred  stock  deals  •  Cash  and  monthly  cash  burn  •  How  much  of  burn  is  variable  vs.  fixed    •  Lowest  you  can  the  Burn  without  killing  the  company  •  Time  and  investment  dollars  to  reach  cash  flow  posiOve  •  Timing  and  quanOty  of  future  rounds  •  Current  round  size  and  Oming  •  Use  of  proceeds  -­‐  what  will  it  be  used  for?  What  will  it  buy?    •  OpOmal  deal  structure  •  Pre  Money  ValuaOon  •  Dangers  of  including  suggested  valuaOons  •  Dangers  of  not  knowing  the  appropriate  valuaOons  Funding, Cash and Use ofProceeds21  
  22. 22. •  Technology    /  Product  –  Will  the  soluOon  work?    Can  you  build  it?    •  Business  Model  –  Can  you  sell  the  soluOon  at  margin?  •  Supply  –  Can  you  acquire  and  manage  criOcal  vendors  •  Customer  AdopOon  Risk  –  Will  the  Dogs  eat  the  Dog  Food?  •  Market  Dynamics  –  Do  customers  have  cash  and  the  will  to  spend?  •  DistribuOon  Risk  -­‐  Can  you  acquire  and  run  criOcal  distribuOon  and  sales  points?  •  CompeOOon  Risk  –  Is  there  an  opportunity  in  the  marketplace?  Will  an  800lb  gorilla  eat  your  lunch?  •  Financial  risks  –Will  you  have  sufficient  or  available  capital  now  and  in  the  future?    •  Legal  risks  –Freedom  to  operate  ?  Do  you  have  the  ability  to  defend  your  IP?  •  Regulatory  risks  –  Are  there  barriers  beyond  your  ability  to  influence?    •  Team  risks  –  Is  our  product  or  customer  knowledge  distributed  and  accessible?    •  Exit  Risk  –  Are  there  willing  buyers  (or  a  public  market)  for  your  company?  Risks and Plans22  
  23. 23. •  Length  to  liquidity  •  IPO  vs.  M&A  vs.  Licensing  (vs.  other)  •  PotenOal  Acquirers  •  Acquirer  characterisOcs  and  raOonale  for  acquisiOon  •  How  frothy  is  the  current/expected  market  now  and  at  maturity  •  Recent  exits  for  similarly  situated  companies  •  ValuaOons  (if  available)  •  Counterpoint:  Building  a  company  vs.  building  an  exit  Exit Strategy and Options23  
  24. 24. Summary  Slide  /  Investment  RaOonale  •  End  with  a  summary  of  what  you  have  just  said.  •  Leave  them  with  the  key  message  points  you  are  trying  to  convey.  •  Be  prepared  for  quesOons  •   Appendices  •  All  of  the  informaOon  that  may  backstop  your  conclusions  •  Case  studies  •  Customer  tesOmonials  •  More  detailed  technical  or  product  informaOon  •  More  detailed  market  or  customer  informaOon    •  Demo  videos  24  
  25. 25. •  P&L  –  Historical  +  3-­‐5yrs;  OJen  with  cash,  customers  and  headcount  •  Segment  revenue  by  type  of  revenue  •  Fixed  vs.  Variable  cost  structure  •  Revenue  and  Margin  RaOos  •  Think  about  cash  flow  Oming  issues  –  see  revenue  model  (e.g.,  direct/reimbursement)  •  Bo#om-­‐Up  vs.  Top-­‐Down  projecOons  •  AssumpOon  tab  in  the  Excel  build  •  What  does  “conservaOve”  mean:  Use  of  High  /  Medium  /  Low  •  Perfect  vs.  FuncOonal  –  Running  your  business  vs.  Building  a  model  •  AnOcipaOng  investor  cutback  •  Risks  of  projecOons  being  Oed  to  equity  and  compensaOon  •  ValuaOon  Issues  Financials and Projections25  
  26. 26. FINANCIALS ANDPROJECTIONS – DEEP DIVE26  
  27. 27. Building  ProjecOons:  Yeah,  but…  •  Business  plans  with  financial  projecOons  are  necessary…      – Bo#oms-­‐up  vs.  Top-­‐down  – HINT:  Youre  trying  to  talk  yourself  out  of  this!  •  Financial  projecOons  are  a  key  porOon  of  the  due  diligence  most  investors  perform  •  I’ve  heard  that  I  don’t  really  have  to  build  a  business  plan  with  financial  projecOons  because  no  one  actually  reads  it…  Investors  are  more  interested  in  the  assump1ons  made  when  building  financial  projec1ons,  not  the  exact  bo;om  line  FOR  YOU  
  28. 28. More  on  Scenario  Planning…  Worst-­‐case  scenarios  should  answer  “What  happens  if  there  is  no  outside  capital?”  –  if  the  answer  isnt  grow  slower,  is  this  a  pipe  dream?  Best-­‐case  scenarios  should  answer  “What  does  this  business  look  like  if  everything  goes  right?”  –  if  the  answer  isn’t  a  huge  financial  win  for  your  investor,  is  this  a  pipe  dream?  Most-­‐likely  scenarios  should  answer  “What  does  this  business  look  like  following  comparable  companies’  growth  paths?”  –  if  the  answer  isn’t  able  to  be  funded  with  the  current  “ask”,  is  this  a  pipe  dream?  Goldilocks  got  it  right:  examine  all  op1ons!  
  29. 29. ProjecOons:  Start  with  Revenue  Take  a  “Bo#oms  Up”  approach  •  Ex:  We  have  tracked  X  unique  visitors  to  our  website  and  with  an  industry  averages  2%  conversion  rate,  sales  will  be  Y.  •  Ex:  Survey  revealed  customers  are  willing  to  pay  $X  for  an  app  with  Y  features.  •  Ex:  Q4  sales  were  $X.  With  a  customer  acquisiOon  cost  of  $Y,  we  expect  a  20%  growth  rate  as  a  result  of  markeOng  efforts  Econ  101:  revenue  =  price  *  volume.    Knowing  which  element  is  driving  your  company’s  revenue  is  a  key  metric.  
  30. 30. Building  ProjecOons:  How  it  works  •  Have  an  assump>ons  page  and  reference  cells  for  your  Income  Statement  (don’t  hard  code  anything)  •  A  separate  assumpOons  page  allows  flexibility  –  change  them  for  different  growth  scenarios  •  AssumpOons  are  the  backbone  of  your  projecOons,  so  you  should  know  them  COLD  Excel  is  your  friend,  but  be  careful  with  cell  references  –  it’s  easy  to  make  a  mistake!  
  31. 31. ProjecOons:  Add  in  expenses  This  also  has  a  “Bo#oms-­‐up”  approach  •  Include  details  of  all  categories  –  Ex.  Headcount  is  a  step-­‐funcOon  (hard  to  find  .25  person)  –  Ex.  Income  taxes,  no;  Sales  tax,  use  tax,  payroll  tax…  yes!  •  SG&A    –  MarkeOng  –  Development  –  Overhead  
  32. 32. ProjecOons:  Cash  Flow  •  Map  out  cash  inflows  and  ou•lows  to  determine  funding  needs  –  do  this  by  month!  •  Revenue  collecOon  –  Oming  impacts  cash  projecOons.  Collect  in  30  days?  60  days?    •  DepreciaOon  =  noncash  expense  (include?)  •  Don’t  forget  to  include  CapEx  in  cash  flow  (tooth  fairy  doesn’t  exist)  
  33. 33. ProjecOons:  Some  Final  Checks  "The  GOAL”  is  to  make  money  –  Social  jusOce,  triple  net  bo#om  line,  etc,  come  AFTER  profitability  •  "You  cant  give  away  what  you  dont  have"  (unless  youre  the  Feds)  –  Youll  need  space  one  day  that  isnt  free  –  It  is  illegal  to  hire  someone  and  not  pay  them  –  Equity  +  cash  =  total  compensaOon  •  As  equity  values  increase,  cash  compensaOon  should  increase  as  the  less  expensive  long-­‐run  pay  opOon  (this  means  you  are  WINNING!)  –  Research  financial  statements  to  get  an  idea  of  expenses  you  may  have  missed    –  Research  how  much  things  cost  –  don’t  guess!  
  34. 34. Pitching  projecOons:    What’s  the  “ask”?  Fin  projecOons  need  to  Oe  to  the  amount  of  the  raise  –  Fundraising  takes  Ome,  so  12-­‐18  months  of  cash  per  raise  –  IdenOfy  milestones  to  be  hit  and  cost  of  each  one  –  The  sum  of  those  milestone  costs  is  the  raise  amount  –  The  "cushion"  in  the  raise  is  not  X%,  its  the  cost  difference  in  the  most  likely  scenarios  The  secret  to  life  is  “t”  –  “t”  is  the  variable  for  “Ome”  in  mathemaOcal  equaOons…  and  Ome  in  projecOons  is  everything  
  35. 35. Pitching  ProjecOons:  Expert  moves  •  Know  your  audience  –  The  earlier  you  are,  the  more  interested  in  your  assumpOons  the  investors  are  –  so  know  you’ll  be  discussing  them  in  detail.    Painstaking  detail.    •  Be  rich,  not  king  –  Does  a  new  hire  cut  costs  or  increase  revenue?    This  will  drive  the  Oming  of  a  new  hire.  •  Don’t  forget  that  headcount  is  a  step-­‐funcOon    •  What  is  B/E  expectaOon  for  a  new  hire?  –  Good  metric  for  HC  is  sales/employee  –  these  numbers  are  benchmarked  and  available  with  some  research.  
  36. 36. Pitching  ProjecOons:  Rookie  moves  –  CTRL+C+P  enOre  excel  model  into  a  slide  –  Using  anything  less  than  18-­‐point  font    –  Li#ering  clipart  from  1995  –  StaOng  projecOons  to  the  $.01  –  Failing  to  summarize  projecOons  –  Using  ANY  of  the  following  phrases:  •  “conservaOvely  esOmated…”  •  “at  only  X%  of  the  market…”  •  “with  no  compeOOon…”  –  Forge€ng  to  explain  what  the  amount  you  raise  achieves  –  Assuming  a  short-­‐term  exit  at  a  high  mulOple  
  37. 37. CLOSING THOUGHTS37  
  38. 38. General Dos and Don’ts:“Presentation is a visual not a reference”Do  •  Use  one  topic  per  slide  •  Limit  text  on  each  slide  •  Use  pictures,  graphs,  video’s  –  Not  all  bullets  •  Choose  fonts  and  colors  that  are  easy  to  read  •  PowerPoint  is  the  accessory  to  YOUR  presentaOon  •  Spell  Check  Don’t  •  Use  sounds  with  slide  transiOons  •  Overdo  the  ALL  CAPS,  bolded,  italicized  or  underlined  text  •  Use  too  many  different    fonts  •  Overuse  special  effects  –  focus  on  the  content  •  Have  technical  difficulOes  –  test  before  the  meeOng  38  
  39. 39. •  Know  your  material  cold!    Don’t  wing  it.    •  DON’T  READ  your  presentaOon.      •  You  should  have  answers  to  likely  quesOons.  •  Be  clear  when  you  don’t  know  an  answer  –  then  follow  up.    •  When  possible,  know  the  room.  Arrive  early,  walk  around  the  speaking  area  and  pracOce  using  the  microphone  and  any  visual  aids.    •  Body  language  and  appearance  =  50%  of  the  pitch  •  PrioriOze  and  eliminate  less  criOcal  points.      •  Be  flexible  –  be  prepared  to  be  interrupted.    •  Understand  the  goal  of  your  presentaOon.      Is  it  to  inspire,  to  educate,  to  connect,  to  get  a#enOon,  to  get  a  second  more  personal  meeOng?      Presentation Skills: Part I39  
  40. 40. •  Modulate  your  pace,  pitch,  volume,  tone  and  enthusiasm  –  like  when  you  are  telling  a  story.    This  helps  keep  the  audience  focused.      •  Use  humor,  personal  stories  and  conversaOonal  language  where  possible.  Use  easy  to  understand  analogies.  •  PracOce.  PracOce.  PracOce!    GO  SEE  OTHER  PRESENTATIONS!  •  Slides  should  HELP  the  oral  presentaOon,  not  BE  the  presentaOon.    •  Bring  a  backup  copy  on  a  flash  drive  and  via  cloud    •  Slides  should  be  professional  and  consistent  with  your  image.    •  Spend  more  Ome  building  the  business  than  the  presentaOon  •  Leave  Ome  for  quesOons.  •  RELAX,  BREATHE  and  SLOW  DOWN  Presentation Skills: Part II40  
  41. 41. Interacting with InvestorsBasic Principles - Overview•  Research  the  investor  in  advance  •  Pay  a#enOon  to  what  you  say  during  the  presentaOon  banter  •  Communicate  •  Be  likeable    •  State  your  value  proposiOon  up  front  •  Come  prepared  with  sufficient  data  (including  back  up  slides)  •  Enjoy  yourself  and  let  it  show  •  Keep  the  presentaOon  within  allo#ed  Ome  •  Be  realisOc  about  valuaOons  in  the  market  •  Make  due  diligence  easy  •  Realize  investors  are  thinking  about  exit  strategy  41  
  42. 42. Interacting with InvestorsCautionary Overview – Dont do the following•  Bash  the  compeOOon  •  Hype  •  Condescend  or  talk  down  •  Be  arrogant  •  Be  vague  about  your  technology    •  UnderesOmate  the  importance  of  the  core  science/development  •  Deluge  investors  with  facts  •  Act  desperate  for  funding  (even  if  you  are)  •  Act  like  you  don’t  need  money  •  Cite  that  “the  company  is  undervalued”  as  a  reason  to  invest  •  Overprice  your  rounds  so  you  can  keep  stepping  up  valuaOon  •  Give  investors  a  reason  to  turn  you  down  42  
  43. 43. Jeremy  Halpern  Partner  Director  of  Business  Development  Emerging  Companies  Team  Nu#er  McClennen  &  Fish  LLP  Pitching the Plan: The DeckChristopher  Mirabile  Managing  Director  Launchpad  Venture  Group  Gail  Hoffman  Managing  Director  Golden  Seeds  
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