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How to pitch wow to investors list, 28 may 2013

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How to pitch wow to investors list, 28 may 2013

  1. 1. Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 1 How to Pitch the Wow! to Investors By Steve Austin saustin7777@gmail.com Presented by http://www.meetup.com/Silicon-Valley-Startup- Idea-to-IPO/ at Workspring Palo Alto CA 28 May 2013
  2. 2. Startup Heroes “Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it!” Johann Wolfgang von Goethe ©Copyright 2013 Steve Austin, All Rights Reserved 2
  3. 3. Startup Heroes WE ARE NOT ATTORNEYS GET LEGAL ADVICE! Follow SEC RULES – Stay out of Trouble! ©Copyright 2013 Steve Austin, All Rights Reserved 3
  4. 4. Startup Heroes Agenda 1st hr Pitch What about Angels? What Investors Need 2nd hr Make it Simple Pitch to Group ©Copyright 2013 Steve Austin, All Rights Reserved 4
  5. 5. Startup Heroes 4 Steps 1. “Why” I believe… 2. “Wow” Factor ©Copyright 2013 Steve Austin, All Rights Reserved 5 3. Business Model 4. Simple Message Persona of Leadership
  6. 6. Startup Heroes Act Like a Leader! People follow Inspirational Extra effort Credibility Humor Fair Listens Responsible Not defensive Learns & adjusts ©Copyright 2013 Steve Austin, All Rights Reserved 6 Steve Jobs Richard Branson Howard Schultz Martin Luther King Anne Mulcahy, Xerox Indra Noori, Pepsi
  7. 7. Startup Heroes Pitch Basics 1. Be Confident 2. Don’t apologize 3. No “superlatives” – Huge market, – Fastest widget, etc 4. Use facts & numbers 5. Ask ©Copyright 2013 Steve Austin, All Rights Reserved 7
  8. 8. Startup Heroes Most Important to Investors – Especially Angels 1.YOU & Team 2.Your ability to make it happen ©Copyright 2013 Steve Austin, All Rights Reserved 8
  9. 9. Startup Heroes Pitching 60 Second Pitch • 20 Sec Pitch – 1 Sentence each point • 60 Sec Pitch – 2 – 3 sentences/point – Prioritize • 5 – 6 Minute Pitch – 10-15 Slides MAX – No slides ©Copyright 2013 Steve Austin, All Rights Reserved 9
  10. 10. Startup Heroes 20 Second Elevator Pitch • Name • Title @ Company Name • “I believe __ (what is really important to you) • Problem • Big Market (optional) • Our Solution • Benefit is • Ask ©Copyright 2013 Steve Austin, All Rights Reserved 10 Say “Awesome” or“Facebook” an’ You Walk-the-Plank!
  11. 11. Startup Heroes Angel Investors ©Copyright 2013 Steve Austin, All Rights Reserved 11
  12. 12. Startup Heroes Think Like an Angel Entrepreneur ©Copyright 2013 Steve Austin, All Rights Reserved 12
  13. 13. Startup Heroes 1. Net Worth $1Million + 2. Not including primary residence, or 3. Income $200,000/yr last 2 yrs 4. $300,000 if married 5. Expect same $ this year From Securities Act of 1933 What is an Accredited Investor? ©Copyright 2013 Steve Austin, All Rights Reserved 13
  14. 14. Startup Heroes What’s the 1 Thing Angels Want Most? ©Copyright 2013 Steve Austin, All Rights Reserved 14 They don’t want to loose their money. Photo used without permission. http://www.zerohedge.com/article/value -losing-money
  15. 15. Startup Heroes Angel Investors 1. Invest their own money 2. Not someone elses $ (like VC) 3. Write you a personal check $ 4. Don’t want to loose $! ©Copyright 2013 Steve Austin, All Rights Reserved 15
  16. 16. Startup Heroes What is Usual Start-up’s ROI? Its terrible! About 90/100 fail Almost anything else is better! ©Copyright 2013 Steve Austin, All Rights Reserved 16
  17. 17. Startup Heroes How Much $ Invest of Total Wealth? Prudent: Max 5% wealth Wealth Invest $/Y $5M $250K $50-100K $10 M $500K $50-100K+ $25 M $1.25M $100-500K Wealth Invest $/Y ©Copyright 2013 Steve Austin, All Rights Reserved 17
  18. 18. Startup Heroes Investment Stages ©Copyright 2013 Steve Austin, All Rights Reserved 18
  19. 19. Startup Heroes www.privco.com/knowledge-bank/private-equity-and-venture-capital Investment Stages ©Copyright 2013 Steve Austin, All Rights Reserved 19
  20. 20. Startup Heroes www.privco.com/knowledge-bank/private-equity-and-venture-capital Investment Stages ©Copyright 2013 Steve Austin, All Rights Reserved 20
  21. 21. Startup Heroes Valuation CEOs Job Increase Value $ SeedSeed Pre-Money Value + $ Investment = Post $ ExampleExample $1.2M + 400K Invest $1.6 M ExampleExample $1.2M = 75% + 400K = 25% $1.6 M =100% Series ASeries A Pre-Money Value + $ Investment = Post $ Series B (Mid)Series B (Mid) Pre-Money Value + $ Investment = Post $ ©Copyright 2013 Steve Austin, All Rights Reserved 21 Seed $1.00 / Share Series A $2.50 / Share Series B $4.75 / Share
  22. 22. Startup Heroes What if Value Goes Down? CEOs Job Increase Value Series ASeries A $10 M = 55% + 8 M = 45% $18 M =100% Series BSeries B $12 M Pre $ + 4 M Invest $ $16 M Post $ ©Copyright 2013 Steve Austin, All Rights Reserved 22 Series ASeries A $2.50 /Share Series B $1.60 /Share 1. Share price goes down 2. Investor’s “Anti-dilution clause” protection 3. Make “whole” from Founder’s Share 4. CEO / Founder can be washed out
  23. 23. Startup Heroes Effect of Anti-Dilution on Founders ©Copyright 2013 Steve Austin, All Rights Reserved 23
  24. 24. Startup Heroes What Do Angels Look For? ©Copyright 2013 Steve Austin, All Rights Reserved 24
  25. 25. Startup Heroes Mike Levinson, DreamIt Ventures An angel investor… looks at http://www.inc.com/guides/2010/10/how-to-pitch-to-angel-investors.html 1 1. Simple to understand 2. Problem / need? 3. Big enough market & customer base? 4. Right people ©Copyright 2013 Steve Austin, All Rights Reserved 25
  26. 26. Startup Heroes http://www.youtube.com/watch? v=mBS0OWGUidc Jerry McGuire – Movie “Show Me the Money!” 2 ©Copyright 2013 Steve Austin, All Rights Reserved 26
  27. 27. Startup Heroes Angels Need to Know the $ Story2 ©Copyright 2013 Steve Austin, All Rights Reserved 27 1. How much $ do you need? 2. What will you do with it? Use of funds - milestone 3. When will I get my money back? 4. What Co. will buy yours? Exit
  28. 28. Startup Heroes INVESTOR CONCERNS ©Copyright 2013 Steve Austin, All Rights Reserved 28
  29. 29. Startup Heroes What Entrereneur Sees ©Copyright 2013 Steve Austin, All Rights Reserved 29 Photos used withut permission with URLS on each Our Solution for Problem
  30. 30. Startup Heroes What Investor Sees: Alternatives ©Copyright 2013 Steve Austin, All Rights Reserved 30 Our Solution for ProblemOur Solution To Problem Alternative AlternativeAlternati ve alt Alterna tive alt alt alt alt alt alt Alterna tive alt alt alt Alterna tive
  31. 31. Startup Heroes Why So Much Return? 5 investments 2 Fail 1 Walking dead 1 Maybe 1 Great return! 20 XNeeds 5-20 X to cover High RISK of Failures ©Copyright 2013 Steve Austin, All Rights Reserved 31
  32. 32. Startup Heroes Slide Deck Template From angelsforum.com ©Copyright 2013 Steve Austin, All Rights Reserved 32
  33. 33. Startup Heroes Company Name “One Line Mission Statement” Before you start presentation, introduce yourself and the general concept From angelsforum.com
  34. 34. Startup Heroes 1. The Problem • Clearly define the problem – Who is this a problem for? – The problem(s) should be unserved by competition From angelsforum.com
  35. 35. Startup Heroes 2. Solution • How do you solve the problem ? • Tie solution to specific pain point • Create continuity in the story Product = 15% of time From angelsforum.com
  36. 36. Startup Heroes 3. The Product • 1 or 2 product slides • Screen shots or pre-recorded video • Show product meets the specifications • Add detailed product features in appendix From angelsforum.com
  37. 37. Startup Heroes 4. Leadership Team • CEO – Include company name & job title • CFO • CTO • Relevant experience From angelsforum.com
  38. 38. Startup Heroes 5. Advisory board • Who is on the advisory board –What do you rely on them for ? –(i.e. advisor for CEO coaching) • CFO • Relevant experience
  39. 39. Startup Heroes 6. Market • How “big” is market – investors want to see in $ – Convince me this is a big opportunity for my investment. – What market dynamics • What are key market segments (if appropriate)? • What is TAM and SAM? For SAM make bottoms up analysis • Have detail on TAM & SAM analysis - appendix
  40. 40. Startup Heroes 6a. TAM > SAM > SOM TAMTAM Total Available Market – Ex: Total LED Market SOM: ServiceableSOM: Serviceable Obtainable Market – Realistic market share SAMSAM Served/Serviceable Available Market – Ex: Living colors LED segment TAM SAM SOM
  41. 41. Startup Heroes 7. Competition • Direct and indirect • Highlight how your solution fills gaps • Recommend use a graphic on this slide – Put competition on X axis title and key features on Y axis – Highlight how your solution provides the right key features – Alt: 2 prime points on X & Y; develop scatter plot of competitive landscape • Have back-up slide – competition details
  42. 42. Startup Heroes 8. Business Model How do you make money? From angelsforum.com
  43. 43. Startup Heroes 9. Go-To Market Strategy How will you launch this?• How will you launch this? – Target customer now, - 12 months, 36 months? – Direct vs. Indirect sales – Leverage existing channels • Having an advisor a plus • How acquire customers in cost-effective manner? • “SEO” is not a strategy From angelsforum.com
  44. 44. Startup Heroes 10. Financial Projections • Five year pro-forma • Revenue • COGS • Gross Margin • Key Opex (3-4 line items) • EBITDA • Cash • In Appendix - detailed five year if needed From angelsforum.com
  45. 45. Startup Heroes 11. Capital Raise • How much $ so far? – What form, if priced round what was post-$ • How much $ Raising? – Convertible note or equity? – Valuation – How much soft-circled? – Specific milestones (i.e. use of funds) – Milestones should be tied to value creation for company. From angelsforum.com
  46. 46. Startup Heroes 12. Future raises • Sample chart below – show what $ you will need in the future. Highlight CFP point (not on graph). • Be ready to talk to exit points and drivers for exit From angelsforum.com
  47. 47. Startup Heroes 13. Exit • Who are potential acquirers? • What are comparable transactions? – Seller – Buyer – Valuation – Multiples, (revenue and EBITDA) – Key driver • Most likely exit? From angelsforum.com
  48. 48. Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 48 The Wheel This is where you pivot!
  49. 49. Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 49 Steve Austin saustin7777@gmail.com Call for Start Up Support! Thank You!Thank You!
  50. 50. Startup Heroes Difference Between Loan & Equity Banker • Loans $500K • Wants LOW risk • Does NOT want huge returns • Wants avg interest ~ 10% • Pay back from SALES Margin DEMANDS PRINCIPAL BACK InvestorInvestor • Invests $500K • Accepts risk • Wants BIG returns • Will risk $ - more fear = • 5 – 40 X Return EXPECT BIG FAT RETURN FOR EARLY $ IN ©Copyright 2013 Steve Austin, All Rights Reserved 50
  51. 51. Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 51 Thank You!Thank You! Steve Austin saustin7777@gmail.com www.linkedin.com/pub/steve-austin/1/ba2/35b/ email for Start Up Support! Follow our meetups at http://www.meetup.com/Startup-Heroes-Silicon-Valley/

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