Business Models&Pitching Investors Mark Neely firstname.lastname@example.org
Agenda Part I- Business Models Business Models 101 Explaining your Business Model Groundtruthing your Business Model Part II – Pitching To Investors It’s a Numbers Game Pitching 101 Proposed Presentation Format Risk v. Reward
Business Models 101 Market Segment Identify the specific group of customers (aka ‘market segment’) you will target. Demonstrate an understanding that different market segments have different needs, preferences and purchasing criteria. Explain why you have chosen the specific market segment. Quantify, Quantify, Quantify. Important to be able to point to a present demand from an identifiable and targetable market segment.
Business Models 101 Value Chain Where does your business sit in the value chain? Do you need telco support/partnership? Can you go direct-to-customer? Do you require the availability of other technologies (e.g. Bluetooth)? If you are reliant on others, how will you capture your part of the value created? If you require other technologies, how do you overcome consumer inertia?
Explaining Your Business Model Business Model = Your Business In a Nutshell If you cannot explain it in 50 words or less, you don’t yet fully understand your business. Summarise, summarise, and summarise again. Throw away verbiage, get to the essence (e.g. “We cure cancer”). Concise, powerful summary needed: Elevator pitch Investor pitch Customer pitch Friends & Family (“What is it that you do?”)
Business Models 101 Part II:Pitching to Investors
It’s a Numbers Game Law of Supply v. Demand works against entrepreneurs/innovators: 1000s of ideas (Supply) v. Dozens of investors (Demand) Investors are very choosy: Specific niches / areas of interest (e.g. Health) Specific investment criteria + thresholds Specific stages of investment Specific regions for investment Do your research + target compatible sources of investment.
Pitching 101 Rule 7 – Remember the ‘end game’ and only tell enough of the full story. You cannot assume they have read your business plan (99% won’t have). But you don’t have time to tell them everything. No one is going to write you a cheque after a single pitch. So you need to tell them enough to get them interested and secure a follow-up meeting. Objective of a pitch is to stimulate interest, not close the deal. It is the start of a l-o-n-g process.
Risk v. Reward Remember your audience – THE INVESTOR. Investors always want to see: What they get for their $. A billion dollar market. 10X return within 3-5 years. Investors have a portfolio approach: Of 10 investments, 7 will fail (money lost), 2 will break even (nil return), 1 will be breakaway hit (10X return). They pick every investment for its potential to be breakaway hit.