How to Manage and Present to Your Startup Board

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Best Practices in Startup Board Presentations
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David Teten
teten.com / @dteten

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  • Njce! Thanks for sharing.
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  • Just to be clear, I am not soliciting business by my postings. You are incorrect, Dick as to the need for attorneys to make sure all material facts are disclosed. I am certainly glad I don't represent you. Ask the SEC what they think, thank you.
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  • Pauls, I couldn't disagree more. Your comment is blatantly self serving and an entirely unnecessary expenditure, with the exception of meetings where a material legal issue may be on the agenda that warrants professional advice to the entirely of the Board.
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  • David, you miss a critical point by suggesting that attorneys only get involved with board meetings if there is an expectation of contention. Attorneys should be involved with the entire presentation to the board, including preparation and determination of material facts that need to be presented. Board members often are investors or conduits to investors. Companies need to take care to present all material facts to the Board. Companies need to comply with the SEC's Rule 10b-5 and state requirements when presenting to Boards. Also, attorneys need to be paid for these services. You suggest that attorneys may attend board meetings for startups for free. The truth is no attorney worth his or her salt is going to get involved with a client for free where securities matters are implicated. Either you get paid properly so you can do the job professionally, or you have to keep arms length. It is in the best interests of the companies, the board, the shareholders and the public that attorneys are properly retained to make sure material facts are disclosed and compliance maintained.
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How to Manage and Present to Your Startup Board

  1. 1. Best Practices in Meeting With and Managing Your Startup Board David Teten Partner, ff Venture Capital More resources at ffvc.com http://farm5.staticflickr.com/4152/4962969492_bde3b662bf_b.jpg ffvc.com // @ffvc teten.com // @dteten
  2. 2. Best Practices in Meeting With and Managing Your Startup Board Based in large part on research executed by NYU EEX Research Team, Spring 2012 term; and ff Venture Capital interns Yong Kwon, Columbia MBA ’13, and Matt Joyce, Dartmouth BS ’14. NYU student team lead and ff VC intern: Emil Lee NYU Stern MBA ’12. NYU Stern team: Alois Monger, Andreea Odangiu, Anthony Musso, Arjun Kathuria, Harsh Jiandani More resources at ffvc.com http://farm5.staticflickr.com/4152/4962969492_bde3b662bf_b.jpg
  3. 3. Don’t Take Notes! Download these slides and get more free resources at: teten.com/board
  4. 4. David Teten (teten.com) More resources at ffvc.com • Partner, ff Venture Capital, early-stage technology venture capital fund • Lead author of first-ever research study on best practices in private equity/venture capital deal origination • Lead author of first-ever research study on best practices of venture capitalists in increasing portfolio company value through operational support • Harvard MBA 1998, Yale BA, both with honors. • @dteten
  5. 5. • Research Findings • Discussing Your Hypotheses and Experiments • Sample Agenda and Notes • Recommended Reading • Appendix: Sample Slides Outline More resources at ffvc.com
  6. 6. Caveats • Focus your time on building your company, not building a pretty deck for your board. • This presentation is designed to cover exhaustively all of the major issues that are typically addressed in board meetings. It is descriptive, not prescriptive. You should not think you are obliged to cover all these points. • Optimally, spend your time building a proper management dashboard, and then you and your board can just look at that dashboard together. 6 More resources at ffvc.com
  7. 7. Key Findings • Keep it simple. Less is more. • More graphs, less text. • Demonstrate thoughtful analysis: Show unit economics. Illustrate decision-making process. Show that you’ve obtained background data from experts/industry contacts. • Discuss failures and challenges explicitly. If you don’t discuss them while you’re in the room, the Board will discuss them when you’re not in the room. • Always show accountability: Show prior commitments / budget, and your “SMART” plans (which are Specific, Measureable, Attainable, show who’s Responsible, and Time-bound”). • No chartjunk/fancy formatting. Just dump Excel graphs into your slide. Read all of the books by Edward Tufte . • Don’t use acronyms/jargon unless you’re 100% sure everyone will understand. Your board and other readers of your deck do not know your company as well as you do. Include a ‘Corporate jargon” page to explain all of the terms unique to your company; this is also good to share with new employees. • Emphasize how the board can help: what do you need? 7 More resources at ffvc.com
  8. 8. Before the Meeting • Set an appropriate frequency and length for meetings. We recommend 2-3 meetings per quarter at 2 to 3 hours each at most for early stage companies, with lower frequency (down to quarterly) as the company matures. Meetings should be scheduled immediately after quarterly financials become available. • Talk with each board member to ensure you cover all topics that are relevant to each individual. • Send out deck 2-3 days prior to allow for more discussion rather than simply an update meeting; information must flow both ways. • Gain buy-in on anything controversial individually with each board member before the meeting. If you can’t get buy-in, at least prepare for a healthy discussion. • Consider asking attorneys to be present, particularly in contentious meetings. Sometimes they won’t charge, as they view their presence as educational and relationship-building. • Prepare a deck with a maximum of ten pages. You can include all other information in appendices/background reading. 8 More resources at ffvc.com
  9. 9. During the Meeting • Organize an in-person meeting or at least a videoconference. Conference calls make it far too easy for people to get distracted by their email. • Prohibit smartphones /computers (tough to do!) and instead allow for email breaks every hour, to relieve peoples’ email itch. • Get administrative items out of the way first. Typical items include: minutes approval from the last meeting, review/approval of option grants, committee matters (such as audit, compensation, nomination, M&A), and anything else requiring a vote. Name a secretary for the meeting. • Maintain clear goals for both the company and for the people in the room, and remind everyone throughout the meeting. Identify and start with the top strategic issues that really matter and give you insomnia. • Remind people. Don’t assume that your board members remember the detailed facts you presented at the last meeting. Make sure relevant metrics are easy to find and compare against past performance and forecasts. • Look forward. Most board meetings end up looking at the past because it’s easier. Embrace ambiguity and look forward. 9 More resources at ffvc.com
  10. 10. After the Meeting • Get closure on each topic and allow for no ambiguity on who owns it. • Assign responsibility and expect results. Board members are there to help to you; you need to ask for it. • Allow an executive session without the CEO, if appropriate. Step out of the room and allow the board to discuss internally right after the meeting. Step back in and ask for feedback – good and bad. • Keep it social with a dinner before or after the meeting. 10 More resources at ffvc.com
  11. 11. Discussing Experiments • A “Startup” is an organization formed to search for a repeatable and scalable business model1,2 • Systematically list and test your startup’s assumptions in order of successively decreasing risk • Be explicit about your assumptions, how you will test them (the experiments), in what order, and what evidence will validate them • Ask the board to challenge you on every point • Set specific goals that the board can hold you to 11 More resources at ffvc.com 1. Steve Blank. Why Board Meetings Suck – Part 1 of 2. 2011, June 1. http://steveblank.com/2011/06/01/why-board-meetings-suck-%E2%80%93-part-1-of-2/ 2. Steve Blank. What’s A Startup? First Principles. 2010, January 25. http://steveblank.com/2010/01/25/whats-a-startup-first-principles/
  12. 12. Structure of Each Experiment • Hypothesis- "We believed [customer type] wants to [perform action/solve problem/etc]." • Test- "We tested this hypothesis by running a [split test/customer interviews/landing page/concierge]. Our goal was to [insert target to hit for experiment to be validated]." • Result- "The result was that [number success] out of [number tested] confirmed this hypothesis." • Learning- "The key insight we gained from this experiment was [insert key insight].” 12 More resources at ffvc.com Source: Trevor Owens, Founder and CEO, Lean Startup Machine and Validation Board. For a one-page poster version of this, see ValidationBoard.com
  13. 13. Sample Hypotheses and Experiments Assumptions for Jersey Square [startup that allows people to rent sports jerseys]: • Customer Hypothesis: Jersey value attached to standing of player in community • Test: track jersey sales in wake of trades and scandals • Result: validated • Learning: sales tank when players are traded away or embarrass team—fans regret purchasing jersey • Problem hypothesis: Jerseys derive primary value from use on game day • Test: survey sports fans about when they wear jerseys • Result: validated • Learning: jerseys get 80% of their use on game day • Solution Hypothesis: Sports fans recognize situational value of jersey and therefore would rather rent than buy • Test: offer jersey rental as alternative to purchase • Result: invalidated; only 2% opted to rent • Learning: fans have emotional attachment to player and jersey 13 More resources at ffvc.com
  14. 14. • Next Solution Hypothesis: Sports fans would like to donate invalid jerseys to charity in exchange for discounts on sports tickets. • Riskiest assumption: Sports fans will work with our proposed solution instead of taking the default option of dumping jersey in garbage / nearest charity bin. • Method: Create simple landing page offering sports fans chance to donate jerseys to charity. • Minimum success criterion: At least 2% conversion rate of signups for more information on the landing page. • Results: In next board meeting. 14 More resources at ffvc.com Sample of Future Hypothesis to Test
  15. 15. AGENDA: Recommendations • Include date • Decide who is Secretary taking notes. List attendees in person vs. remote in the notes. • 5-7 Primary Sections for the meeting – Order by priority and logic – Include appendix (full financial statements, org chart, etc.) • Maintain consistency in the structure every meeting • Highlight urgent / time-sensitive items (and needs), so that board members have some advance notification to prepare thoughts • Early in deck insert mission statement and objectives, to remind everyone and keep them aligned 15 More resources at ffvc.com
  16. 16. 16 More resources at ffvc.com - It’s good to allocate time – and person responsible - for each section. Not necessary to be explicit, but speakers should have a general idea of how much time to allot to each section and avoid overruns. January 12, 2013: Board Update since [Prior board meeting date] Agenda Item Presenter Time (minutes) Official board business Entire board 5 CEO Update Moe 15 Product: Experiments, Strategy, Technical Initiatives Curley 50 Metrics Dashboard Larry 10 Pipeline / Business Development Larry 15 Recruiting Curley 5 Financials: Overview, Forecast Moe 10 Discussion Closed Board Session 30 Appendix NA TBD AGENDA: Sample
  17. 17. AGENDA: Sample for 1st Board Meeting after Closing a Venture Round • Decide who is Secretary (typically same person at every meeting). • Determine how to handle governance education for all members. • Verify appropriate accounting processes in place • Establish thresholds for board approval of actions (e.g., conflicts of interest, contracts other than day-to-day operations) • Designate Audit Committee and Compensation Committee (or just individuals with those roles) • Discuss profile of additional board members (if any) • Determine frequency and schedule future board meetings (including annual CEO performance review and mutual board member assessment one year from now). Recommend monthly at first. • Discuss how information for board will be shared and discussed, and which technology platform if any to use. (See links at end of deck for some ideas and recommendations.) • Review management’s recommendation for KPIs and formal milestones • Review draft budget (by 2nd meeting at latest date) 17 More resources at ffvc.com
  18. 18. Recommended Reading Board Governance White Papers (source: http://www.levp.com/news/whitepapers.shtml ) • Working Group On Directory Accountability And Board Effectiveness , “A Simple Guide to The Basic Responsibilities of VC-Backed Company Directors” (MUST READ) • Pascal Levensohn et al., "After the Term Sheet: How Venture Boards Influence the Success or Failure of Technology Companies” Books • Brad Feld, Startup Boards: Reinventing the Board of Directors to Better Support the Entrepreneur • Edward Tufte, all of his books • Garry Reynolds, Presentation Zen • Nancy Duarte, Slide:ology 18 More resources at ffvc.com
  19. 19. Recommended Reading • Another Sample Board Deck and Investor Updates http://resources.iaventures.com/ • Steve Blank, “When the Boardroom is Bits” http://www.slideshare.net/sblank/when-the-boardroom-is-bits-052111 • Fred Wilson, “The Board Of Directors: Board Meetings” http://www.avc.com/a_vc/2012/04/the-board-of- directors-board-meetings.html • Brad Feld, “The Best Board Meetings” http://www.feld.com/wp/archives/2009/08/the-best-board- meetings.html • Brad Feld, “The Best Approach to a Board Package” http://www.feld.com/wp/archives/2013/01/the-best-approach-to-a-board-package.html • Mark Suster, “Running More Effective Board Meetings at Startups” http://www.bothsidesofthetable.com/2010/02/12/running-more-effective-board-meetings-at-startups/ • Charlie O’Donnell, “A practical guide to a first board meeting: Advice from the pros http://www.thisisgoingtobebig.com/blog/2010/3/3/a-practical-guide-to-a-first-board-meeting-advice-from- the-p.html • Will Herman, “Board Meetings – A CEO’s Point of View” http://www.2-speed.com/2006/11/board- meetings-a-ceos-point-of-view/ • “Board Meeting Dos and Don’ts" http://pandodaily.com/2013/02/27/you-shouldnt-be-bored-at-a-board- meeting-pt-1-board-meeting-dos-and-donts/ 19 More resources at ffvc.com
  20. 20. Recommended Reading • Let’s Fix Startup Board Meetings http://techcrunch.com/2016/02/01/1270130/#.5dy1wbl:S8KU • How to Stay in Control of Your Meetings • https://bothsidesofthetable.com/how-to-stay-in-control-of-your-meetings-2fc40bde82ce 20 More resources at ffvc.com
  21. 21. APPENDIX: Sample Slides for Each Section of a Board Deck 21 http://farm1.staticflickr.com/164/413030324_3c0186f7cd_z.jpg
  22. 22. CEO Update: Sample 22 More resources at ffvc.com Good structure here: - Highlights - Challenges - Customer Feedback - Goals - Recruiting • Highlights • Lessons from working with prospects • Product message and positioning launch – Feb 21 • Challenges • 3-12 month planning with capital concerns • Safeguarding product roadmap • Sales cycle time • Customer highlights • … feedback • Key goals • $300K in bookings by March 31 • $ … down, $ … in pipeline for Q1 • 2 enterprise customers • Nearly a dozen open conversations • Employee updates • Hired … co-founder of … on PT contract for sales strategy help • Hired … experienced VP Marketing … on PT contract as fractional CMO
  23. 23. CEO Update: Sample 23 More resources at ffvc.com Capitalization Summary and Effect of Option Grants 23 OPTION LOG DETAILS Vesting Employee Name Award Date Employee Award Adviser Award Total Option Shares Awarded Option Shares Exercised Option Shares Cancelled/Retu rned Balance FD% without Unallocated Options FD% with Unallocated Options Initial Tranche BOY (1)/ EOY (2) Term for Remaining Vesting Exercise Price Issued Options Employee A 3/15/2010 100,000 - 100,000 25,000 - 75,000 4.4% 3.0% 25.0% 2 48 months $0.0100 Employee B 6/1/2011 10,000 10,000 - 10,000 - 0.0% 0.0% 25.0% 1 8 quarters $0.1000 Employee C 9/1/2012 10,000 10,000 - - 10,000 0.6% 0.4% 25.0% 1 8 quarters $0.2000 Employee D 12/31/2012 100,000 - 100,000 - - 100,000 5.8% 4.0% 25.0% 2 48 months $0.2500 Employee E - - - - - - 0.0% 0.0% 12.5% 1 - quarters Employee F - - - - - - 0.0% 0.0% 12.5% 1 - quarters Total Issued Options 200,000 20,000 220,000 25,000 10,000 185,000 10.7% 7.4% Cumulative Vested Option Shares Cumulative Vested % (excluding unissued options) Proposed Option Awards Employee G 3/15/2013 10,000 - 10,000 - - 10,000 0.6% 0.4% 12.5% 2 48 months $0.5000 Employee H 3/15/2013 - 2,000 2,000 - - 2,000 0.1% 0.1% 12.5% 1 8 quarters $0.5000 Total Proposed Option Awards 10,000 2,000 12,000 - - 12,000 0.7% 0.5%
  24. 24. 24 More resources at ffvc.com 24 Proposed Option Grants 24 Award Summary Employee Name Total Option Shares Awarded Award Date FD% without Unallocated Options Issued Options Employee A 75,000 3/15/10 4.4% Employee B - 6/1/11 0.0% Employee C 10,000 9/1/12 0.6% Employee D 100,000 12/31/12 5.8% Employee E - 1/0/00 0.0% Employee F - 1/0/00 0.0% Total Issued Options 185,000 10.7% Proposed Option Awards Employee G 10,000 3/15/13 0.6% Employee H 2,000 3/15/13 0.1% Total Proposed Option Awards 12,000 0.7% Total Issued Options 197,000 11.4% Cumulative Fully-diluted % to date Remaining Unissued Options Available 768,000 Total Option Pool 965,000 - CEO Update: Sample
  25. 25. • Structure product strategy summary: highlights, challenges • Include product roadmap and timeline • Highlight key product initiatives – Show analysis: unit economics, comps • What metrics are you using to craft your strategy? • Highlight mobile & social strategy (if relevant) • Include customer feedback analysis and case studies (where relevant) • Articulate your hypotheses 25 More resources at ffvc.com PRODUCT STRATEGY: Recommendations
  26. 26. PRODUCT STRATEGY: Sample 26 More resources at ffvc.com Good structure: - Accomplishments - Objectives - Challenges • Accomplishments • Customer feedback process with 15 users • Shortened proposal cycle to 1-day turnaround • Created product collateral for major website update • Objectives • Work closely with Sales to align Product Roadmap with customer “asks” • Ramp up to X salespeople • Challenges • Roadmap definition – “Where do we say no?” • Supporting legacy product (decommissioning a dozen more APIs in February)
  27. 27. TECHNICAL INITIATIVES: Sample 27 More resources at ffvc.com Discuss Objectives, Accomplishments, and Challenges. Clear labeling of what’s been done / what is to be done; Entrepreneurs tend to elide the difference. Key Technical Priorities for Q1 Progress Update Since Last Board Meeting • Expand Hadoop Clusters for Pipeline & Serving • Refactor & Enhance Data APIs • Deliver Generic Topic system • Supplement Twitter Collectors with Tokens • Scale registered user data store beyond 1M users • Launch Improved Scoring System Project (Maxwell) • Deliver SLA Management System (w/ data quality)
  28. 28. • Use visuals to highlight areas of strength and weaknesses • Call out who the person responsible for each metric is • Show historicals: what were prior objectives? Did you meet them (why or why not?) • Clarify when goals were set. • Sample metrics: – Site traffic – User engagement – User growth (by source) – LTV – CPA – Viral Coefficient – Cohort / Retention analysis – Attrition / Churn – Social media metrics 28 More resources at ffvc.com METRICS DASHBOARD: Recommendations
  29. 29. METRICS DASHBOARD: Sample 29 More resources at ffvc.com Very helpful to call out pivotal dates.
  30. 30. • Achieved 5% conversion in most recent release of iOS app • $200 / day revenue achieved: trailing 7-day average: X • Paid CPA reduction 16% (… to …) • Improved 6-week retention by 265% (from … to …) METRICS DASHBOARD: Sample Lifetime Value 30 More resources at ffvc.com Key Drivers of Lifetime Value (LTV) 1) Acquisition User Growth Cost / Acquisition Acquisition by Source 2) Retention & Engagement Cohort Analysis Mobile Usage Social Media 1) Monetization Premium User Growth Conversion Product Mix Return on Marketing High-level Insights
  31. 31. METRICS DASHBOARD: Sample Cost per acquisition 31 More resources at ffvc.com Very good chart: Shows historical trend Explanations of major shifts Provides absolute #s at the bottom for reference Blended Mobile CPA … … … … …
  32. 32. METRICS DASHBOARD: Sample 32 More resources at ffvc.com Cohort/retention User Engagement DEFINITELY track user engagement
  33. 33. METRICS DASHBOARD: Sample Social media 33 More resources at ffvc.com
  34. 34. • Display the following fields (if relevant): – Prospect – Stage – Probability of closing – Age – Forecasted revenue opportunity – Timeline • Include prior forecast vs. actuals for all relevant fields 34 More resources at ffvc.com PIPELINE: Recommendations
  35. 35. PIPELINE: Sample 35 More resources at ffvc.com Customer Deal Size Pipeline Status % Close Expected Owner Age (in weeks) Total … … … A … Negotiation 90 Q1 … 10 B … Negotiation 90 Q1 … 7 C … Proposal 75 Q2 … 7 D … Value Prop 50 Q1 … 3 E … Needs Analysis 20 Q1 … 4 F … Needs Analysis 20 Q2 … 10 G … Needs Analysis 20 Q2 … 7 H … Qualification 10 Q2 … 18 I … Qualification 10 Q2 … 2 J … Qualification 10 Q2 … 1
  36. 36. • Highlight key hires • Show relevant expenses • Calculate cost-per-hire (usually much higher than you think, taking into account your time) • Provide forecast for future recruiting plans • Link to social media presence (e.g., LinkedIn) 36 More resources at ffvc.com RECRUITING: Recommendations
  37. 37. RECRUITING: Sample 37 More resources at ffvc.com Name Position Date Direct Cost (advertising, recruiter, relo) Social Media Bashful Jr. Engineer 4/18/2012 $2350 Linkedin.com/in/bashful Doc Backend 4/22/2012 $1350 Linkedin.com/in/doc Dopey Jr. Engineer 5/9/2012 $850 Linkedin.com/in/dopey Grumpy UI 7/14/2012 $850 Linkedin.com/in/grumpy Happy Sales Projected $2850 Linkedin.com/in/happy Sleepy Sales Projected $2350 Linkedin.com/in/sleepy Sneezy QA Projected $2850 Linkedin.com/in/sneezy
  38. 38. • Provide one page summary (“Financial Snapshot”); most important is cash burn + runway • Detailed Budget vs. Actual and Trailing Revenue Budget vs. Actual (YTD), with explanations of unexpected variances, • Future forecasts for cash balance; and forecasted revenue and operating expense summary (with key drivers and assumptions) • Most companies are required to have board-approved budget by November 30, so present budget for formal approval. • Appendix with Full Historical Financials: P&L, Balance Sheet, and Cash Flow for Trailing 12 Mos. at least 38 More resources at ffvc.com FINANCIAL OVERVIEW: Recommendations
  39. 39. FINANCIAL OVERVIEW: Sample • Spending [under/over] Plan by [$XX] in Q3 with savings/increase from [ ] due in large part to [ ] • Cash balance [behind/ahead of] Plan by $[ ] at $[ ] and projected to be $[ ] at end of Q4 compared to Plan of $[ ] • Ended Q3 with total workforce of [ ] ([ ] employees, [ ] contractors) • Current monthly cash burn at $[ ] which, at this level and no revenue offset, would deplete cash balance by [ ] • Cash burn projected to [decrease/increase] to $[ ] by end of Q4 after (explanation], which would deplete cash balance by [ ] 39 More resources at ffvc.com Source: Philip Dunkelberger
  40. 40. FINANCIAL OVERVIEW: Sample Snapshot 40 More resources at ffvc.com Show key metrics that drive financial performance Item Q1 2012 Q2 2012 Q3 2012 Q4 2012 YE 2012 Sales - TCV … … … … … Recognized Revenue … … … … … CMRR … … … … … # New Customers … … … … … Cash on Hand … … … … … Salaries & Commissions … … … … … Operating Expenses … … … … … Total Headcount … … … … …
  41. 41. FINANCIAL OVERVIEW: Financial Snapshot Projected Runway: 12 Months (July 2017) Actual Actual Actual Actual Projected Projected Projected Projected Projected Projected Projected Projected Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Condensed P&L Revenue (Net) 45,283$ 50,448$ 55,988$ 61,876$ 68,120$ 74,710$ 81,626$ 88,880$ 96,463$ 104,354$ 112,566$ 121,089$ COGS 11,557$ 12,590$ 13,698$ 14,875$ 16,124$ 17,442$ 18,825$ 20,276$ 21,793$ 23,371$ 25,013$ 26,718$ GP 33,726$ 37,859$ 42,290$ 47,001$ 51,996$ 57,268$ 62,800$ 68,604$ 74,670$ 80,983$ 87,553$ 94,371$ 74% 75% 76% 76% 76% 77% 77% 77% 77% 78% 78% 78% Expenses Sales & Marketing 78,375$ 80,875$ 93,250$ 95,750$ 108,125$ 110,625$ 113,125$ 115,625$ 118,125$ 120,625$ 123,125$ 125,625$ Tech 59,250$ 59,250$ 59,250$ 59,250$ 59,250$ 59,250$ 69,125$ 69,125$ 79,000$ 79,000$ 88,875$ 88,875$ Office 8,979$ 9,428$ 9,900$ 10,395$ 10,914$ 11,460$ 12,033$ 12,635$ 13,266$ 13,930$ 14,626$ 15,358$ General & Administrative 26,317$ 26,317$ 26,317$ 26,317$ 26,317$ 26,317$ 26,317$ 26,317$ 26,317$ 26,317$ 26,317$ 26,317$ Professional Services 8,786$ 9,225$ 9,686$ 10,171$ 10,679$ 11,213$ 11,774$ 12,363$ 12,981$ 13,630$ 14,311$ 15,027$ Total 181,707$ 185,095$ 198,403$ 201,882$ 215,286$ 218,865$ 232,374$ 236,064$ 249,689$ 253,501$ 267,254$ 271,201$ EBITDA (147,981)$ (147,237)$ (156,113)$ (154,882)$ (163,290)$ (161,597)$ (169,574)$ (167,460)$ (175,019)$ (172,519)$ (179,702)$ (176,831)$ - - - - - - - - - - - - Cash Flow Beginning Cash 469,276 2,821,295 2,826,337 2,695,697 2,561,154 2,416,404 2,276,369 2,126,338 1,981,068 1,825,710 1,675,282 1,514,766 Cash Flow from Operating (147,981) 5,042 (128,140) (134,543) (142,250) (140,035) (147,531) (145,270) (152,858) (150,428) (158,016) (155,725) Cash Flow from Investing - - (2,500) - (2,500) - (2,500) - (2,500) - (2,500) - Cash Flow from Financing 2,500,000 - - - - - - - - - - - Ending Cash 2,821,295$ 2,826,337$ 2,695,697$ 2,561,154$ 2,416,404$ 2,276,369$ 2,126,338$ 1,981,068$ 1,825,710$ 1,675,282$ 1,514,766$ 1,359,042$ Other Metrics Headcount 14 14 15 15 16 16 17 17 18 18 19 19 More resources at ffvc.com
  42. 42. Condensed P&L Budget Actual Δ $ Δ % Notes Revenue (Net) 100,000$ 74,710$ (25,290)$ -25% Anacott Steel deal ($25k MRR) taking longer to close than projected COGS 15,000$ 17,442$ 2,442$ 16% Server costs higher than projected GP 85,000$ 57,268$ (27,732)$ -33% % 85% 77% -8% Expect gross margins to normalize to 85% in Q4 OPEX Sales & Marketing 125,000$ 110,625$ (14,375)$ -12% Tech 60,000$ 59,250$ (750)$ -1% Office 9,000$ 11,460$ 2,460$ 27% General & Administrative 25,000$ 26,317$ 1,317$ 5% Professional Services 5,000$ 11,213$ 6,213$ 124% Added consultant ($6k/month) in May Total 224,000$ 218,865$ (5,135)$ -2% EBITDA (139,000)$ (161,597)$ (22,597)$ 16% Cash Flow Budget Actual Δ $ Δ % Notes Beginning Cash 2,400,000$ 2,416,404$ 16,404$ 1% Cash Flow from Operating (175,000)$ (140,035)$ 34,965$ -20% Cash collections slower than anticipated; adjusted DSO's in model going forward Cash Flow from Investing -$ -$ -$ 0% Cash Flow from Financing -$ -$ -$ 0% Ending Cash 2,225,000$ 2,276,369$ 51,369$ 2% Other Metrics Budget Actual Δ Δ % Notes Headcount 15 16 1 7% Hired 1 engineer ahead of plan Jun-16 FINANCIAL OVERVIEW: Detailed Budget vs Actual This slide should compare board-approved budget vs. actuals for any months not covered since last board meeting More resources at ffvc.com
  43. 43. This slide should present your revenue projections through the year vs. your actuals YTD. If a re-forecast has been made during the year, that should be included here as well – but NOT in place of the original plan. In this example, a Company set a 2016 plan in late 2015, reforecast in April and has actuals presented through June. Option 1 More resources at ffvc.com
  44. 44. This slide should present your revenue projections through the year vs your actuals YTD. If a re-forecast has been made during the year, that should be included here as well – but NOT in place of the original plan. In this example, a Company set a 2016 plan in late 2015, reforecast in April and has actuals presented through June. Option 2 More resources at ffvc.com
  45. 45. FINANCIAL OVERVIEW: Charts More resources at ffvc.com
  46. 46. • Include pricing strategy slide during major decision points • Articulate hypotheses (conversion rate, sales capacity, etc.) • Keep a brainstorming list of additional revenue streams, but don’t act on more than 1-2 of them. 46 More resources at ffvc.com REVENUE INITIATIVES: Recommendations
  47. 47. REVENUE INITIATIVES: Sample 47 More resources at ffvc.com 14-Day Free Trial with … launch Release of … UI tweaks 12X increase
  48. 48. REVENUE INITIATIVES: Sample 48 More resources at ffvc.com -Good use of graph, but chart legend difficult to read. -Violates rule of one point per slide … … … … … … …
  49. 49. 49 More resources at ffvc.com Discuss: Lower entry price to expand base of paying users or increase perceived value? • Price elasticity testing has been inconclusive • Lowering price by 38% increased revenue by 57% • Similar price changes in Germany had 0 impact on revenue • Launch of 1-year plan had immediate and strong uptake • Product X currently being positioned as higher- price product Pricing and offer strategy … REVENUE INITIATIVES: Sample
  50. 50. REVENUE INITIATIVES: Sample Revenue bridge 50 More resources at ffvc.com
  51. 51. Key Assumptions • Conservative sales projections: – Slow sales ramp – Lowest price point – Very little in-account growth in 2012 • Hires: 2 Sales, 1 Tech by end of Q1; all other hiring is trigger-based • Motorola stays in all year, as is – same staffing and cash 51 More resources at ffvc.com FORECAST: Sample - Show key assumptions - This slide lacks numbers: what is a “slow” sales ramp? - What analysis proves the assumption is “slow” or the price point is “low”?
  52. 52. • Highlight areas that the board needs to discuss, including: – Future fundraising activity – Key recruiting needs – INCLUDE items company needs help from board with. Assign tasks to your board members and build accountability and engagement. – Examples: top customer prospects, business development leads and other companies you would like to meet • Sample questions – “What is the ideal business model for our company?” – “Can we be in two businesses at the same time?” – “Do we need to build, own, and operate our payments system to be successful long term?” – “Can we build a sustainable business long term operating solely on Facebook?” 52 More resources at ffvc.com BOARD DISCUSSION: Recommendations
  53. 53. Good slide: Discusses important / opportunistic upcoming events Provides board opportunity to be helpful: “You should meet Reid in San Francisco.” BOARD DISCUSSION: Sample 53 More resources at ffvc.com • CEO & Fundraising Discussion • Ideal path: Bridge -> CEO Search -> Series B • Would look for executive with enterprise sales experience (e.g. selling to Sears) • Enterprise Roadmap and Vision • Q3 & Q4 Planning • Bay Area Trip • Investor meetings scheduled: … • Targeting: … • Customer meetings scheduled: … • Targeting: …
  54. 54. ITEMS TO INCLUDE IN APPENDIX: Recommendations • Suggested items to include: • Full financial statements • Org chart • Cap table • Case studies • Customer feedback • Additional detail (#s, assumptions) supporting 1-page summaries in the main body of the board book 54 More resources at ffvc.com
  55. 55. Any questions ? Slides at teten.com/board/ ffvc.com teten.com @ffvc @dteten
  56. 56. A representative of ff Asset Management, LLC d/b/a ff Venture Capital (“ffVC”) is providing this presentation for informational purposes to the intended audience. Nothing in this presentation shall constitute an offer or solicitation with respect to the purchase or sale of any security in any jurisdiction nor should anything in this presentation form the basis of, or be relied upon for, making any investment decision. Nothing in this presentation constitutes professional and/or financial advice of any kind (including business, employment, investment advisory, accounting, tax, and/or legal advice), nor does any information in this presentation constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. This presentation and the information contained herein are provided “AS IS”. ffVC makes no representation or warranty (express or implied) with respect to the information contained herein (including, without limitation, information obtained from third parties) and expressly disclaims any liability based on or relating to the information contained in, or errors or omissions from, these materials; or based on or relating to the recipient’s use (or the use by any of its affiliates or representatives or any other person) of these materials; or based on any other written or oral communications transmitted to the recipient or any of its affiliates or representatives. ffVC undertakes no duty or obligation to update or revise the information contained in this presentation. Disclaimer

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