Investor repellers - Junior Jedi Workshop


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Investor repellers, i 10 errori da non fare – 21 giugno 2012– Andrea Baldini, Tomaso Rodriguez, Umberto De Feo

Vi riveleremo dalle nostre esperienze personali e con un po' di humor cosa (non) fare nel preparare e presentare pitch e business plan ad investitori!

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Investor repellers - Junior Jedi Workshop

  1. 1. Workshops Investor Repellers “10” mistakes to avoid when you present to investorsAndrea Baldini – Tomaso Rodriguez
  2. 2. WHAT’S THIS? THIS?WHAT’S GONNA HAPPEN? HAPPEN?Short workshop on some things you should (NOT)do when presenting to investors……with a bit of humor and theatrics……for all the startuppers out there!FORMAT: MISTAKE RULE Presented to you by Junior Jedi 2
  3. 3. It’s a story I want to believe inRULE # 0GOOD COMMUNICATIONS 4
  4. 4. 5
  5. 5. What are you going to tell me?RULE # 1EXECUTIVE SUMMARY 7
  6. 6. FIRST THINGS FIRST Golden rule:Tell me what you are going to tell me, then tell me, then summarize (= tell me again) 8
  7. 7. What is it? What is it for?RULE # 2IT’S THE PRODUCT, STUPID! PRODUCT, STUPID! 10
  8. 8. Source: 11
  9. 9. Financials will comeRULE # 3BUSINESS MODEL FIRST 13
  10. 10. BUSINESS MODEL Razor BladeReverse Razor Blade 14
  11. 11. SOME EXAMPLES• Advertising• Add On• Razor Blade• Freemium• Low Cost• Pay as you Go• Subscription model• Brick & mortar vs Digital Distribution• Virtual goods• … 15
  12. 12. BUSINESS CASE• New product/service addressed needs• Breakthrough innovation nearest comparable• Business case: the reasoning for switching from the existing to the new• Always consider: Pros Cons – Laziness of people • ... • ... – Fear of the unknown • … • … BE • … • … CONVINCING! 16
  13. 13. investors MANAGE riskRULE # 4SUPPORT WITH METRICS 18
  14. 14. METRICS• Follow business model and strategy• Financials should reflect them• VCs love measurable things – Make their job easier – Help in proving the value of a concept – Can validate an idea that «sounds good» 19
  15. 15. METRICS FOR A WEBCO (OLD SCHOOL)• SEM • MWA• SEO CAC • Lead Lifetime• Retargeting LTV Customer • Churn Rate Lifetime Acquisition• Affiliation Value Cost • Recurring Sales• Mob Ads • …• … LTV > CAC ??? 20
  16. 16. YOUR OWN STRATEGY, YOUR OWN METRICS• «old school» vs. start up VCs don’t like buying user bases• Key: acquire quality users at the lowest cost possible 21
  17. 17. So you got an idea? That don’t impress me muchRULE # 5EXECUTION 22
  18. 18. EXECUTION• Idea is NOTHING without execution• No plan = No money from an investor• Go-to-market plan coherent with strategy• Measurable performance 23
  19. 19. How to segment and identify my segmentsRULE # 6FIND THE MARKET BEFORE IT FINDS YOU 24
  20. 20. THE OLD WAYS• segment = people with the same buying motive• Judging what people will buy based on: – Job – Salary – Level of employment• Largely irrelevant as: – people do not conform to stereotypes – people from all classes and occupations share similar aspirations. © Prof. Paul Fifield 25
  21. 21. THE NEW SCHOOL The best (real) segments comprise people with the same needs & motivations – these change depending on the time, place and eventPeople share the sameneeds and motivations, notbecause of who they are, butwhat brings them together © Prof. Paul Fifield 26
  22. 22. HD AND THEIR BUSINESS DEFINITION © Prof. Paul Fifield 27
  23. 23. IN WHICH BUSINESS ARE YOU IN? “Product led” Company “Market led”Motor Cycles Harley Davidson Big Boys’ ToysWatches Swatch Fashion AccessoriesElectric Motors B&D DIY = Do It YourselfElectronics Sony EntertainmentWatches Rolex JewelryCosmetics Revlon “Hope”Coffee Shops Starbucks The Third PlaceLeather/Luggage Louis Vuitton The Art of TravelingEncyclopedias Britannica Parental guilt Our Product? Our Company Our Business © Prof. Paul Fifield 28
  24. 24. MARKET ≠ ADDRESSABLE MARKET• Sector / niche• Segmentation• Geography• Distribution• Legal constraints• Competition• Barriers to entry• … 29
  25. 25. Where does taht number come from…RULE # 7VALUATION 30
  26. 26. SHOW ME THE MONEY• For VCs and investors valuation comes out of many elements (strategy, focus, market, metrics, biz model, etc., etc., etc.)• Investors are (usually) in for the long term• Market (usually) wins• VCs reason BACKWARDS (exit and dilution)• Incentives needs to be aligned• CAVEAT: be certain to know what you are buying with a certain valuation 31
  27. 27. We are gonna find it out anyway…RULE # 8BE TRANSPARENT 33
  28. 28. SECURITY BY OBSCURITY IS NO GOOD• Be transparent on TEAM, don’t hide missing pieces, be practical• Be transparent on COMPETITORS, which one keeps you awake at night?• Be transparent on LOCK-IN, how you avoid losing ground and user base or customers?• Be transparent on anything, there is going to be a Due Diligence if everything goes well… 34
  29. 29. Feedback is good, secrets are notRULE # 9GET CHALLENGED BEFORE PRESENTING 35
  30. 30. IRIDIUM CASE • 66 low earth orbiting satellites • Allowing subscribers to make phone calls all over the world • Cost of the project over $6 bln • IPOed in June 1997 for $20 / share, in less than one year price increased to $ 72.19 / share • In November 1998 the service was launched 36
  31. 31. IRIDIUM CASE (cont.) (cont.)• In May 1999 share price was just $ 3.06• Bankruptcy in August 1999“We’re a classic MBA case study in how not tointroduce a product. First we created a marveloustechnological achievement. Then we asked howto make money on it.” Iridium Interim CEO John A. Hey! Did Richardson, August 1999 somebody tell these guys that the product is too bulky??? Source 37 mighty-fall
  33. 33. One size doesn’t fit allRULE # 10GET INFO ON VC BEFORE PRESENTING 40
  34. 34. GET INFO ON VCs BEFORE PRESENTING• VCs will provide «smart» money for your business• But every VC has its own expertise in terms of: – Geographies – Sectors – Network – Markets – Stages of growth – …• Getting financed by a VC is like getting married, you have to choose accurately! 41
  35. 35. One size doesn’t fit allRULE # 10+DON’T BE (TOO) BULLISH 42
  36. 36. THERE ARE NOT MANY GOOGLES AND FACEBOOKS OUT THERE Need of cash € 500 k Planning to sell the company at 15 x EBITDA in 4 years at € 1,2 B 43
  37. 37. MyProduct Feature 1 Feature 2 Feature 3 Feature 4 Feature 5 Feature 6 Feature 7 Feature 8 COMPARISONS SHOULD BE FAIR ENOUGH44
  38. 38. Thank You! You! Investor Repellers “10” mistakes to avoid when you present to investorsAndrea Baldini – Tomaso Rodriguez
  39. 39. Francesco Matteo Tomaso Andrea EmilInguscio Scarabelli Rodriguez Baldini AbirascidMatteo Matteo Giusy Anna AlessandraPanfilo Faggin Cannone Sargian GiuffrantiFederica Francesca Pierantonio MarinaPasini Brescia Luceri CalcagnoUmberto Eugenia RaffaeleDe Feo Di Somma Mauro 46
  40. 40. Next workshop:Finanziamento VC: capire un term sheet Pierantonio Luceri , Matteo Panfilo 28 giugno 2012 @ StartMiUp Register on EventBrite!
  41. 41. Q&A
  42. 42. 49
  43. 43. GUERRILLA MARKETING DrasticGoodwill Humorous Guerrilla Marketing Cheap One shot Completely Unexpected 50
  44. 44. EXAMPLE OF BAD EXECUTION • Ben-Gay is a cream to relieve pains very successful in US • When the company decided to launch the Aspirin it was a flop • It was just a naming problem… would you swallow a Ben-Gay? 51