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The Investor Pitch - Entrepreneurship 101 (2012/2013)


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This lecture discusses how to build and deliver an effective pitch to help you find financing for your entrepreneurial venture or to sell your product to customers.

Published in: Business, Economy & Finance

The Investor Pitch - Entrepreneurship 101 (2012/2013)

  1. 1. Presented By:Peter Evans !Entrepreneur-In-Residence, MaRS!Founder & CEO, Speakerfile!@techmarketerMaRS Entrepreneurship 101 - May 8, 2013@speakerfileThe Investor Pitch!
  2. 2. CMA  Summer  School  2009   [Course  Title]   2  
  3. 3. OtherPeople’sMoneyFundamentally Changes Everything
  4. 4. The Investment ParadoxGetting to!NO!Investor!Entrepreneurs!Getting to!YES!
  5. 5. Venus & Mars?Successful!Track RecordCompatible!Match of Size/Stage/GeographyStrategic!RelevantPortfolioFriendly!No directlycompetitiveinvestmentsCapacity!Has funds to investThe Right!Investor!Entrepreneurs want… Investors want...Platform!Significant "Technological"AdvantageMarket!Sizable and "AddressableIP &!Bus. Model !Entry BarriersTraction!Early "Customers"Team!Skills & "Track RecordThe Right!Investment!
  6. 6. Getting to Yes: 3 Levels of EngagementEmotional! Rational! Financial!
  7. 7. 7Signs theinvestor isjust not thatinto you :-(
  8. 8. 1“I still don’t knowwhat you do”
  9. 9. 2“Isn’t your product anice to have vs. a realmarket need?”
  10. 10. 3Is your market reallybig enough?
  11. 11. 4“I still don’t understandhow you make money”
  12. 12. 5“Are you underestimatingyour go-to-market costs?”
  13. 13. 6Couldn’t yourcompetitors copy you?
  14. 14. 7“Do you have the rightplayers on your team?”
  15. 15. Pitch Principles§  StorifyCreate a well paced, logical narrative….think storyboard§  DisnifyUse visuals - frameworks, graphics and images…But only where theymake sense…you are not keynoting a TED talk§  PersonifyRelate to the team’s personal experiences…investors are in the peoplebusiness.§  SimplifyAvoid too much detail, overused buzzwords and jargon…getting aterm sheet after first meeting is not the goal §  QuantifyShow how you make money for the investor. Show key metrics §  VerifyCan you finish this sentence? “As evidenced by…” Back up yourclaims wherever you can with visible proofConnecting on an emotional, rational financial level
  16. 16. Components of the Investor PitchRealProblem#1AttractiveMarket#2UniqueAdvantage#3CompellingInvestment#4
  17. 17. StartPacing Your Investor PitchSample timeline: 12 minutes EndRealProblem(3 min)#1AttractiveMarket(4 min)#2UniqueAdvantage(3 min)#3CompellingInvestment(2 min)#4RealProblem(3 min)#1AttractiveMarket(3-4 min)#2UniqueAdvantage(3-4 min)#3* Note: Elapsed times are guidelines only
  18. 18. Answering the “So What?”Real!Problem!1Focusing a Problem that Matters
  19. 19. Creating Impact•  Core Value Proposition: Use a single sentence•  Unique Benefit: Focus on one single aspect ofwhat you do (aka…”the big idea”)•  Metaphors: Try to create a cognitive connection tosomething people understand i.e. metaphor -”Cover = Uber for restaurants or Rent FrockRepeat = Zipcar for Designer Fashion” •  Emotion: Create a visceral response (why arethings still done this way?) Be provocative….Niceto have’s aren’t investableThe Company & It’s Solution – Elevator StyleReal ProblemIntroductionKey Message: We’re fixing the insanity of the status quoStart Min 3
  20. 20. Start•  Current State: Show the insanity of howcustomers address the issue today•  Historical Evolution: What’s changed in thecustomer’s mindset •  Personas: Describe the main players in yourmarket you address•  Pictures: Every picture tells a storyReal ProblemIntroductionProblemDefining the ProblemPaint a picture of who has this painKey Message: We’re solving real pain…not “nice to haves”Min 3
  21. 21. •  Product: What is it? "(screen shots, product photos)•  Functionality: The Who + Do•  Benefits: High level value•  Category: Where do you play?•  Stage: What is the readiness of the solution? Real ProblemIntroductionProblemSolutionYour Solution to the RescueDescribe WHAT you do and HOW you do itKey Message: Our solution is novel and easy to understandStart Min 3
  22. 22. •  Founded (Year)•  Employees (FT/PT) Offices•  Advisors•  Product Release(s)•  Beta Users/Unique Views/ Registrations•  Paying Customers•  Partners (Technology/Channel)•  Certifications/Industry Awards•  Media Coverage•  PatentsReal ProblemIntroductionProblemSolutionTractionWhat’s Been Achieved to Date?Show your ability to succeed: On lots of sweat…little $Key Message: Our team is committed and can executeStart Min 3
  23. 23. Gold standard detection methods (visual & x-ray)fundamentally unchanged for decades.Existing Tooth Decay DiagnosticsTooth Decay Detected
  24. 24. by  Quantum  Dental  Technologies  Canary interactive software andprinted patient reportsThe Canary Console
  25. 25. Company OverviewWhat we do•  Quantum Dental Technologies has developed a new platform which uses a low-powered laser to detect tooth decay earlier and more accurately than conventionaltechnologies, allowing dentists to treat & heal the teeth instead of “drill, fill & bill”.Milestones•  Product - Dental Clinic model designed, first commercial units manufactured•  Customers - Over 50 pre-orders secured•  IP - Strong patent portfolio•  Clinical - First Health-Canada approved clinical trial completed, second trial inprogress, providing independent validation of safety & efficacy•  Partnerships - Strong relationships with key global distributors and major multinationalstrategic partnersFinancing•  $3.3M raised to date, seeking an additional $1.6M to reach breakeven
  26. 26. HealthyToothEarlyEnamel DecayAdvancedEnamel DecayDemineralizationThe Life Cycle of Tooth DecayRemineralizationRemineralization Therapies The Canary System Scan X-Ray, Drill Fill & BIll
  27. 27. Start EndRealProblem(3 min)#1AttractiveMarket(3-4 min)#2UniqueAdvantage(3 min)#3CompellingInvestment(2 min)#4UniqueAdvantage(3 min)#3
  28. 28. AttractiveMarket!2Opportunity AwaitsLots of Room in the Market to Scale a Business
  29. 29. •  Size: What’s being spent today on problem? Buildfrom ground up. Can the market support multipleplayers?•  Addressability: What’s the reasonable market you canserve? •  Segments: Going Niche or broad?•  Global: Identify other markets•  Proof: Use 3rd party analyst reports•  Thought Leadership: Are you using primary researchto gain insight?•  Charts: Keep it visual and engagingMarket SizeAttractive MarketSizeable Market OpportunityIt’s Very Big …And you Can Get To ItKey Message: We have unique insight into the marketMin3-4Min 7-8
  30. 30. •  Status: Closed vs. Prospects and "Paid vs. Free Trial •  Categorize: Key segments etc.•  Contextualize: Why they bought•  Personas: Describe customer characteristics•  Logos: Categorize …Avoid “logo soup”•  Evangelists: Customer quotes to validate marketpain and size CustomersAttractive MarketMarket SizeEarly Customers/ProspectsNothing really matters till somebody buys somethingKey Message: We have buyers who must have our solution Min3-4Min 7-8
  31. 31. •  Key Metrics: Pricing, Avg. Deal Size,Registrations/Subs., Churn, LTV etc. Note:Cost to Acquire is perhaps the mostoverlooked and important metric•  Channels: What are the downstream costs tosell and service the customer (is this built in?)•  Competitive Scenarios: Is your modelsustainable if competitors start stealing share?Have you factored in potential of downwardprice pressure over time? Revenue ModelAttractive MarketCustomersMarket SizeMaking MoneyWhere does the growth and profit come from?Min3-4Min 7-8Key Message: We’ve validated our revenue model and 
can demonstrate how it will allow us to scale the business
  32. 32. •  Visibility: Critical to success..what’s your unique story?•  Lead Generation Programs: What marketing approacheswill you use (stay high level – categorize)•  Sales Model: Direct vs. Channel (Do you have partners?Have you built a wave for channels to ride?) •  Systems: Do you have an infrastructure to scale (CRM/Inbound Mktg. Platforms etc.)•  Testing: Do you have capability to test value prop./offers?•  Stages: Do you have the ability to pivot from launch togrowth to maturity?Marketing & SalesAttractive MarketRevenue ModelCustomersMarket SizeAcquiring CustomersWhat’s your go-to-market strategy?Key Message: We have programs, systems and talent to drive visibility, lead gen. and close dealsMin3-4Min 7-8
  33. 33. Opportunity Example: B2B Healthcare$1.1 Billion is spentglobally every year byHealthcare sectors oninhalation anestheticDemand is growingannually by 15%!"54,000 operatingrooms in NA""3 dominant playersown a monopolyposition in the market,with no forthcomingalternatives"Greening  Anesthesia  in  the  Opera/ng  Room  
  34. 34. 1.  The explosion in SaaS•  primary driver is accessibility anywhere•  auto-backup2.  Paper to digital•  lose the shoebox by bringing in digitalcopies of the transaction3.  Wireless•  turn downtime into productive time•  increase automation4.  Collaborative Consumption•  show me what my peers are spending so Ican make better decisionsStrong desire to be organized,lack competency in this areabut looking for control.Free AgentNation28.5 millionin North AmericaWave is at the forefront of some powerful trends:Opportunity Example: Consumer/SMB
  35. 35. LegalMedia/PublishingFinancial Services HealthcareTechnologyConsultingAssociationsASSOCIATION OF AMERICAN PULISHERS INC.Customer Example: B2B Accounts by Sector
  36. 36. Go to Market Strategy§  Integration StickinessAuto-syncing banking dataevery night§  Communication:Informative, insightfulweekly emails§  Offers: Value-added,contextual, time sensitiveoffers§  Collaboration tools withinternal and externaladvisors (i.e., accountant)§  Focus on customer service§  PR – already featured in theFinancial Post and ProfitMagazine. U.S. PR throughHoffman.§  Social media and blog todrive SEO§  Partnerships, i.e. banks,accounting firms§  Vertical Communities:Custom chart of accountsfor 40+ industries§  Advertising: GoogleAdwords, Facebook Ads,LinkedIn DirectAdsRetainingCapturing
  37. 37. Start EndRealProblem(3 min)#1AttractiveMarket(3-4 min)#2UniqueAdvantage(3-4 min)#3CompellingInvestment(2 min)#4
  38. 38. You are in the Best Position to WinUnique!Advantage!#3Many of the essential pieces are in place
  39. 39. •  Role: What value will they add to your solutionResearch/Development/Sales/Support etc.•  Reputation: Do you you have the right players in themarket you are serving? •  Category Fit: Do they have sufficient market power?•  Executive Sponsorship: Do you have buy in fromkey people inside the channel? •  Incentives: Is the partner aligned financially tosupport you?•  Longer Term: Is there competitive threat or potentialM&A?PartnersPartnersShow how you can punch above your weight Key Message: Important market players buy intoour vision and want to work with usMin 6 Min 10Unique Advantage
  40. 40. •  Technology: Validate how you are different?How much market lead do you have? Whatdegree of leverage and scale do they create?•  Process: Are there unique process elements ofhow your technology works?•  Licenses: Are there 3rd party components ofyour solution that are licensed? Do you have anexclusive right to the technology? •  Patents: What is the focus of the patent andwhat stage are you at? (provisional filing, patentgranted) – Not a bad idea to mention any namebrand attorneys you work with.PartnersCompetitionTechnology/IPCompetition: Technology/IP LeadershipCreating barriers to entryMin 6 Min 10Unique AdvantageKey Message: We’ve nailed a problem that is hard to solve. It will be hard for competitors to catch up
  41. 41. •  Company Background: List experience in termsof key companies each team member worked for.List “pedigrees” (notable exits).•  Planned Hires: Speak briefly to what primary rolethey will play in the venture•  Achievement: Focus on a key aspect of theirexperience that uniquely qualifies them for theventure•  New Hires: Where applicable, speak to any keypeople you may be hiring to build out the teamPartnersTechnology/IPTeam & AdvisorsUnique AdvantageTeam & AdvisorsThe capabilities to execute on the planMin 6 Min 10Key Message: We have assembled the right mix of people who understand 
our target customers and the dynamics of the marketplace. 
We have “know how” and “know who.”
  42. 42. Competition ExampleWave is everything that the market leaders are not:Simple, Fast, Easy, Secure, Addictive, FREE.                                              Comp.  1                Comp.  2                    Comp.  3                Comp.  4  
  43. 43. A team of experts• Chris Bryson, CEOAeroplan, Warrillow & Co.• Marc Faucher, COOBlackberry Partners Fund• Amr Hiram, VP ITSAP, Red Iron• Diego Maniloff, Lead Data ScientistMITTeam Example
  44. 44. With expert advisors• Brian SinclairAIMIA, Aeroplan, Nectar• Bill BishopBrick Meets Click, Willard Bishop• Drew GreenSHOP.CA, Doubleclick,• Robin Axon & Duncan HillMantella Venture Partners, ChangoTeam Example
  45. 45. Start EndRealProblem(3 min)#1AttractiveMarket(3-4 min)#2UniqueAdvantage(3-4 min)#3CompellingInvestment(2 min)#4
  46. 46. There is Upside for InvestorsCompelling!Investment!#4Presenting the Offer for Investment
  47. 47. Key Message: Our venture clearly offers a 
superior return for our investors.•  Key Numbers: Revenues, Expenses, EBITDA,Customers, Headcount •  Burn Rate: What is the net cash out month•  Assumptions: Be prepared to defend them •  Scenarios: Be able to speak to impact ofvarious scenarios (i.e. Cost of Acquisition is x% higher than forecast or lack of conversionfrom free to premium)FinancialsCompelling InvestmentHow You Will Make MoneyKey Metrics that Explain the Bottom Line for InvestorsMin 10 End
  48. 48. •  Investment Structure/Terms: Type of Instrument(Convertible Debt, Equity) and what are the termsof the deal •  Amount: What’s been raised and what is left in theround? Use of Proceeds: What milestones willyou achieve (with the investors money)•  Runway: What amount of time does the currentmoney buy (can you hit breakeven or is a newround required?) •  Pipeline: Be prepared to speak to who iscommitted so far and who are you approaching.You must show momentum – “herd dynamics.”•  Valuation: Be careful about “premature”discussions regarding pre-money value – don’tprice from the podium! Compelling InvestmentFinancialsOffer DetailsThe AskValue & Deal Structure/Terms & Use of FundsMin 10 EndKey Message: Our structure and terms should 
meet your investment criteria
  49. 49. Financial Projections2011 2012 2013 2014 2015Number of Licenses # # # # #Revenue $______ $______ $_______ $_______ $_______Expenses $______ $______ $_______ $_______ $_______Gross Margin % % % % %EBITDA $_______ $_______ $_______ $_______ $_______Total Head Count # # # # #
  50. 50. •  Investment to Date: $_______"–  $______ support from government programs/grants (if applicable) "–  $______ cash investment from founders and angels
"•  Current Raise: $________
"•  Use of Funds See Examples of Activities Below!–  Build Marketing programs"–  Hire US sales team"–  Commercial launch of V1.0 product "–  Secure final regulatory approvals"–  Finalize Patents"–  Initiate large scale manufacturing
"•  Further Fundraising? !–  Planned ___ Round Financing in ____ of _____ "–  Expect to achieve __________with the proceeds of this raise ""Financing & Use of Funds
  51. 51. A Recap: The 4 Components of the PitchRealProblem#1AttractiveMarket#2UniqueAdvantage#3CompellingInvestment#4
  52. 52. In the End…The Investment is in YouA dozen attributes smart investors look for in startup teams1. Honesty…….........................Gives straight answers to investor questions2. Vision….................................Demonstrates customer insight/thought leadership3. Resourcefulness……………Can make an investor’s dollar go far4. Logic …………….……………Makes wise, pragmatic decisions quickly5. Drive…………………………..Genuine passion for early stage & ability to excite6. Humility……………………….Coachable and seeks help to address weak spots7. Leadership……………………Has the ability to attract and lead a winning team8. Critical Thinking……………..Challenges assumptions and spots the false +’s12. Agility……………...................Decisive…Cuts losses & pivots at the right time 9. Commitment……………........Not just involved - sweat &/or capital invested10. Patience……………...............Tolerance to the ambiguity of innovation 11. Credibility…………….............Well researched. Uses data to back assumptions
  53. 53. Peter Evans, Entrepreneur-In-Residence, MaRS!@techmarketer