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Sw seres

  1. 1. Business  model.  Product  posi2oning.  Compe22ve  review.  Silvija  Seres  
  2. 2. A  few  words  about  me  IT  studies:  BSc  and  MSc  in  Informa8cs,  University  of  Oslo  Academic  research:  PhD  in  Maths,  Oxford  University,  Fellow  Magdalen  College  Teaching:  Prof  in  Saudi  Arabia,  Advisor  in  China  SoFware  Development:  DEC  SRC  in  Silicon  Valley,  Alta  Vista  Business  studies:  MBA  at  INSEAD  Management:  Fast  Search  6  Transfer,  MicrosoF  Business  Development:  Boards  and  investments  GeoKnowledge,  Camo,  Sonitor  Board  Work:  StatkraF,  Norsk  Tipping,  Aschehoug,  Making  Waves,  Norman       silvija.seres@gmail.com   www.silvija.net  
  3. 3. Business  plan  Is  just  an  aRrac8ve  presenta8on  of  a  business  idea.     General  advice:   Be  clear   Be  focused   Be  short   Be  convincing    Make  the  few  points  that  count     RESONATE!  
  4. 4. Don’t  read  the  slides,  verba.m…  Business  plan   instead,  speak  to  the  key  facts and  conclusions  you  want    them     to  take  from  each  slide.  Eleven  should-­‐have    slides:  1.  Cover  –  Business  posi8oning  statement  2.  Market  –  The  need  and  what  customers  have  it  3.  Solu8on  –  Product,  core  benefit,  protectable  technology(ies)  4.  Compe88ve  Posi8on  –  Who  they  are  and  your  defenses  5.  Marke8ng  /  Sales  /  Support  –  Channels  and  skills  needed  6.  Business  Strategy  –  How  you  plan  to  grow  beyond  launch  7.  Financial  Projec8ons    The  usual  spreadsheets  8.  Funding  Sought  –  Amount  ,  comparables,  use  of  funds  9.  Management  –  relevant  experience  10.  Milestones  –  e.g.:  product  launch,  next  funding,  breakeven  11.  Exit  Strategy  –  IPO  /  acquisi8on  (who?)   Tech  Coast  Angel’s  Guidelines    
  5. 5. 1  –  Business  posi8oning  statement  The  first  slide  should  posi2on  the  company  so  Jury  members  have  a  framework  for  listening…    1.  Company  name  (and  graphics,  if  appropriate)  2.  One-­‐sentence  “what  we  do”  statement  (posi.oning  or  elevator  pitch)  3.  Presenter’s  names  
  6. 6. 2  –  Market…  The  Need  And  The  Customers  Describe  the  need  and  the  size  of  the  market   Common  Ques2ons…   •  What  specific  problem  or  need  do  •  List  the  drivers  for  the  demand  for  your   customers  have?     solu2on  (the  benefit  customers  pay  for)   •  Why  is  the  problem  important?    For  •  Define  the  characteris2cs  of  the  companies   whom?    That  is,  who,  specifically  is   or  consumers  that  need  a  solu2on   the  customer?    •  Quan2fy  the  opportunity…  number  of   •  How  do  we  know  the  market  exists?       prospects  that  have  the  need   •  What  independent  evidence  can  you  •  Explain  how  the  market  is  growing  and  why   cite,  such  as  independent  market   research?      Iden2fy  the  most  important  2  –  3  segments  of   •  How  large  is  the  specific  (narrowly   defined)  market  for  your  product?      the  market,  and  for  each…   •  What  growth  is  expected  in  this  •  Es2mated  market  size  (customers  &   market?   poten2al  sales)   •  Are  the  market  size  es2mates  •  What  dis2nguishes  the  key  segments  from   realis2c?   the  broad  market  and  each  other  •  How  urgently  customers  need  or  want  the   solu2on  –  the  value-­‐proposi2on  
  7. 7. 3  –  Solu8on…Your  Product  or  Service  1.  Clearly  explain  your  product(s)…  what  it   Common  Ques2ons…   is  that  customers  will  be  buying.   •  How  else  can  the  customer  solve  the   problem  your  products  solve?    2.  Explain  where  your  product  fits  within   •  What  are  the  alterna2ves?       the  whole  solu2on  to  the  customer’s   •  How  does  your  product  compare  to  each?       need,  as  customers  see  it.  For  example:   •  Why  is  it  beder?       Services,  technologies  or  pla^orms   •  In  what  ways  is  it  worse?       (“enablers”)  required  to  make  your   •  Who  are  the  vendors  of  these  other   product  effec2ve.  System,  behavior  or   solu2ons?       procedure  conversions  required  to   •  How  do  they  compete  with  each  other?       realize  the  key  benefits   •  Where  will  you  fit  into  the  industry?      3.  Iden2fy  your  product’s  value-­‐added   •  Why  will  you  be  able  to  compete   effec2vely  against  them  for  the  next  ten   (what  por2on  of  the  whole  solu2on  you   years?       provide)…  and  whether  customers  will   •  Why  are  you  confident  that  no  new   see  your  product  as  being  the  main   entrant  will  come  along  with  a  beder   component  of  the  solu2on   solu2on  and  blow  you  away?       •  Why  do  you  think  you  can  dominate  your  4.  Describe  the  benefits  delivered,  jus2fying   market  niche?     the  cost  of  the  whole  solu2on  vs.  the   expected  benefits.    
  8. 8. 4  –  Comp  Posi8on…  Compe8tors  &  Barriers   Common  Ques2ons…  Address  three  barriers  to  adop2on:  1.  Big  Dogs  –  What  are  huge,  well-­‐known   •  How  else  can  the  customer  solve  the   problem  your  products  solve?     companies  that  have  exis2ng  products   and  well-­‐established  rela2onships  with   •   What  are  the  alterna2ves?       your  target  customers  doing?  How  will   •  How  does  your  product  compare  to  each?       they  react  to  your  ini2a2ves?   •  Why  is  it  beder?      2.  Iner2a  –  What  will  it  take  to  get   customers  to  change  what  they  are   •  In  what  ways  is  it  worse?       using  /  doing  today?   •  Who  are  the  vendors  of  these  other  3.  Innovators  –  What  companies  might   solu2ons?       leapfrog  your  solu2on  with  equal  or   •  How  do  they  compete  with  each  other?       beder  solu2ons?   •  Where  will  you  fit  into  the  industry?        Explain  how  you  propose  to  win  against  the   •  Why  will  you  be  able  to  compete  effec2vely   against  them  for  the  next  ten  years?      best  of  these.  In  par2cular,  describe  your  strongest  barriers  to  compe22on…  i.e.:  if  you   •  Why  are  you  confident  that  no  new  entrant   will  come  along  with  a  beder  solu2on  and  are  successful,  how  you  plan  to  block  beder-­‐ blow  you  away?      known  or  beder-­‐funded  compe2tors  from   •  Why  do  you  think  you  can  dominate  your  moving  in  and  taking  over   market  niche?    
  9. 9. 5  –  Marke8ng  /  Sales  /  Support  Briefly  explain  the  expected  selling  cycle   Common  Ques2ons…     •  What  channels  of  distribu2on  will  Describe  how  you  propose  to  reach  your  targeted   you  use  to  deliver  your  products  to  customers  –  focusing  on  the  ini2al  segments   your  customers?      •  Marke2ng  –  To  raise  customers’  awareness  of   •  How  will  these  channels  be   your  product  and  s2mulate  their  interest  in   established?    By  whom?    When?   buying   •  What  exper2se  does  your  company  •  Sales  –  To  give  buyers  (buying  decision-­‐makers)  a   have  to  execute  the  marke2ng  /   convenient  way  to  find  out  the  details  and  place   sales  program?   an  order   •  How  are  you  going  to  stand  out  •  Support  –  To  help  customers  understand  your   among  all  the  established   product  before  buying,  during  installa2on  and  in   compe2tors?   use   •  How  can  you  boil  down  the     advantages  of  your  sophis2cated  If  you  rely  on  indirect  channels,  explain:   technology  so  prospects  will   understand  it,  quickly  and  easily?  •  Your  approach  to  reaching  them  •  Whose  responsibility  it  is  to  raise  awareness  and   generate  demand  among  end-­‐customers  •  Who  provides  pre-­‐  and  post-­‐sales  support  Describe  special  sales  incen2ve  programs  (if  any)  
  10. 10. 6  –  Business  Strategy…  Growth  Past  Launch   Common  Ques2ons…  Describe  the  3-­‐5  year  goal  of  the  business  Iden2fy  the  several  most  important  steps  you   •  What  is  the  business  model?    (i.e.   what  will  produce  the  company’s  reaching  that  goal   revenue?      •  Specifically  say  what  you  need  to  do  to  achieve   posi2ve  cash  flow  and  how  long  it  will  take  to  get   •  Do  you  have  (or  plan)  any   corporate  partnerships  in  place?       there  •  Iden2fy  specific  steps  to  IPO  or  acquisi2on   •  What  are  the  significant  risks  your   business  faces?   readiness  •  Place  the  key  steps  and  milestones  on  a  Gand   •  What  needs  to  be  done  to  finish   your  first  product(s)?  What’s  your   chart   next  act?     •  Do  you  rely  on  outside  contractors?  Explain  the  development  status…  how  much  work   How  much  do  you  license  from  remains  before  it  achieves  full  func2onality?   others?  •  Show  your  intended  schedule  for  major  product   •  What  exper2se  do  you  have  at   development  on  a  2me-­‐line  (Gand  chart)  covering   developing  this  kind  of  product?   the  next  18  –  24  months   •  What  development  challenges  are  •  Iden2fy  major  development  risks  or  challenges   most  important  or  difficult  to  •  Provide  es2mated  levels  of  effort  &/or  costs  for   overcome?  How  do  you  intend  to   each  product   do  so?  •  Summarize  future  products’  fit  with  market  need  
  11. 11. 7  –  Financial  Projec8ons   Common  Ques2ons…  Provide  a  P&L  similar  to  this:     Financial Projections ($000s) • What  kind  of  revenues  can  the  business   produce,  on  an  annual  basis,  over  the  next     New Customers Last 12 Mo. This Year Mo. 13-24 Mo. 25-36 Mo. 37-48 five  years?         Units Shipped • Profits?         Revenues Gross Profit • What  investment  is  required  to  carry  the     Gross Margin % company  to  the  next  major  level  of   SG&A   EBITDA valua2on?       Cashflow   Cum. Cashflow • When  do  you  expect  the  next  rounds  to     take  place?  Be  prepared  to  explain  “drama2c”  numbers,  such   • What  specific  tasks  need  to  be  as:   accomplished  to  do  that?      •  “Instant”  market  penetra2on  &  dispersion   • How  long  will  it  take?  (Try  to  iden2fy  a  •  “Hockey  s2ck”  growth   “next  level”  that  can  be  achieved  in  less   than  18  months.)      •  Unprecedented  margins   • What  investment  will  be  required  beyond  •  Long  periods  of  nega2ve  cashflow   that?       (“goodness”  is  posi2ve  cashflow  in  6  –  12   • To  the  extent  possible,  explain  key   months)     assump2ons  behind  your  forecast.    And   make  sure  the  forecast  relates  in  a  logical   way  to  the  market  forecasts  you  described   previously.      
  12. 12. 8  –  Funding…  Amount  ,  Valua8ons,  Use   Common  Ques2ons…  Provide  a  capitaliza2on  table  similar  to  this:     • How  much  hard-­‐money   Pre-Money Post-Money Round 1 Round 2 Round 3 (cash)  have  the  founders  put     Valuation Raise Valuation Total Founders Investors Investors Investors IPO in?  Round 1 $ 1,191,892 $ 700,000 $ 1,891,892 100% 63% 37%   $ 1,191,892 $ 700,000 • How  much  cash  have    Round 2 $ 4,000,000 $ 2,500,000 $ 6,500,000 100% 39% 23% 38% $ 2,520,000 $ 1,480,000 $ 2,500,000 Directors  and  Advisory  Board    Round 3 $ 12,000,000 $ 7,000,000 $ 19,000,000 100% 24% 14% 24% 37% members  invested?   $ 4,652,308 $ 2,732,308 $ 4,615,385 $ 7,000,000  IPO $ 45,000,000 $ 15,000,000 $ 60,000,000 100% 18% 11% 18% 28% 25% • What  equity  is  available  to   recruit  key  execu2ves?     $ 11,018,623 $ 6,471,255 $ 10,931,174 $ 16,578,947 $ 15,000,000Iden2fy  the  major  uses  of  funds  for  each  round     • How  did  you  arrive  at  your   pre-­‐money  valua2on  for  this  prior  to  IPO  or  acquisi2on…  this  round,  prior  rounds   round?  and  next  round(s)   • What  comparables  are  you  Describe  the  size  and  composi2on  of  your  current   using  for  your  proposed  IPO/“burn-­‐rate”   exit  round?  The  “sweet  spot”  for  inves2ng?  E.g.  a  pre-­‐money  valua2on  of  $1.5M  -­‐  $3.0M.  Expect  tough  ques2oning  in  propor2on  to  any  valua2on  higher  than  this  range  
  13. 13. 9  –  Management  Qualifica8ons…   Common  Ques2ons…  Focus  on  the  management  team,  in  par2cular:  •  CEO  –  Prior  entrepreneurial  experience  in   • What  is  your  background  and  previous   experience?   similar  businesses   •   Where  did  the  idea  for  the  company  come  •  CTO  –  Proven  know-­‐how  in  your  core   from?       technologies   • Who  is  presently  involved  in  managing  the  •  CMO  –  Proven  knowledge  of  the  target   company?       markets;  strong  rela2onships  with  channel   • What  are  their  creden2als?       partners  &/or  key  industrial  customers  •  CFO  –  Prior  IPO  or  acquisi2on  experience   • Why  will  they  be  able  to  build  a  successful   company?         • If  not  all  management  spots  are  filled,  what  Iden2fy  who  is  full-­‐2me  and  who  is  part-­‐2me   is  the  plan  for  filling  them?      or  on  the  sidelines  awai2ng  funding…   • What  kind  of  people  are  we  seeking?    To  fill     what  roles?      Iden2fy  BOD  and  BOA  members,  highligh2ng   • If  you  do  not  expect  to  be  the  CEO  that  any  strategic  members’  value-­‐added   builds  the  business  to  $10  or  20  million,   what  kind  of  person  would  you  bring  in?     When?       • Who  is  on  your  board  of  directors?       • How  does  the  board  func2on?  
  14. 14. 10  –  Milestones…  Business  And  Financial   Common  Ques2ons…   Speak  to  a  milestone  chart  similar  to  this:   • What  is  your  track  record  at   2002 2003 2004 2005 hisng  schedules  on  similar  1.  Company  formed   efforts?  2.  $250K  seed  round   • Are  you  fully-­‐staffed  for  the  3.  Product  prototype   work  indicated  in  the  schedule?  4.  Field  tests   • How  are  you  going  to  get  your   partners  to  meet  your  schedule?  5.  $2M  angel  round  6.  1st  produc2on  ship   • What  makes  you  think  you  can   achieve  this  schedule  when  “X”  7.  Posi2ve  cashflow   failed?  8.  $7M  VC  round   • What  con2ngencies  have  you  9.  $75M  annualized  revenue   built  into  the  schedule?  The   budget?  10. IPO/Acquisi2on  
  15. 15. 11  –  Exit  Strategy…  Liquidity,  When  &  How   Common  Ques2ons…  If  shoo2ng  for  an  IPO…  •  Cite  recent  examples  of  successful   • Why  won’t  one  of  your  established   compe2tors  step  in  and  leapfrog  you?   comparable  offerings,  their  offering   • How  long  do  you  think  you  can  maintain   valua2on  and  their  current  market  cap   your  lead,  thus  preserving  your  company’s  •  Explain  why  you  believe  the  opportunity   value?   will  remain  when  your  company  is  “ready”   • Why  would  this  be  an  exci2ng  business  If  you  an2cipate  being  acquired…   opportunity  for  an  acquirer?      •  Iden2fy  the  two  or  three  most  likely  buyers   • Why  would  it  an  exci2ng  IPO  opportunity?      •  Explain  why  they  would  be  interested   • What  are  the  three  most  serious  risks  the  •  If  possible,  describe  recent  acquisi2ons  of   company  faces?   comparable  companies  and  the  deal  value  Describe  any  rela2onships  you  already  have  with  poten2al  acquirers,  investment  banks  or  VCs  that  might  facilitate  your  liquidity  plans   • NOTE:  If  you  aren’t  sure  how  to  value  the   company  in  the  future,  use  1  x  annual  sales   in  Year-­‐2  and  15  or  20  x  net  profits  in  Year-­‐3   as  reasonable  es2mates.    
  16. 16. Tools:  VISION   1.  "What  do  we  do?"   .  Purpose   2.  "For  whom  do  we  do  it?"   3.  "How  do  we  excel?  Vision  Values  FOCUS!  
  17. 17. Tools:  SWOT   Strengths   Weaknesses   Opportuni2es   Threats  
  18. 18. Tools:  BCG  Matrix  Market  growth     Ques2on  marks   Stars   Dogs   Cash  cows   Rela2ve  market  share  
  19. 19. Tools:  Red  ocean,  blue  ocean  
  20. 20. Tools:  Technology  adop8on  and  the  chasm  
  21. 21. Tools:  Team   Which  are  you?  Roles:    1.  The  plant   Ac2on  oriented  2.  Resource  inves2gator   Communica2on  oriented  3.  Co-­‐ordinator   Knowledge  oriented  4.  Shaper  5.  Monitor  6.  Team  worker  7.  Implementor  8.  Completer  9.  Specialist  
  22. 22. Tools:  Op8miza8on  3  loops:  1.  Draz  plan  2.  Refine  plan  3.  Op2mize  plan  In  each  loop:  1.  Gather  ideas  2.  Consolidate  into  a  concept  3.  Implement  
  23. 23. Tools:  More  thoughts  Culture  eats  strategy  for  breakfast  PASSION  eats  strategy  for  breakfast!  Speed  is  no  replacement  for  direc2on.  Do  what  you  know  and  care  about!  Do  not  compromise  on  people.  Acknowledge  and  appreciate  risk  takers.  Prima  donnas  are  OK.  Nega2ves  are  not.  
  24. 24. Tools:  Business  Model  Genera8on  
  25. 25. Tools:  Compe88ve  Differen8a8on  Being  different  from  compe8tors  isn’t  enough.  Make  sure  that  your  key  differen2ators  actually  maEer  to  customers.   Pick  any  differen2a2on  you   want  –  pricing,  features,   target  market,  market  gap,   performance,  etc.  –  unless   customers  really,  really,  really   care  about  the  difference,  it   does  not  mader!  
  26. 26. Tools:  Compe88ve  Differen8a8on  The  compe22on  i  any  alterna2ve  that  meets  the  same  need.  Percep2on  is  fact.  Know  the  “primary  value  proposi2on”  in  your  value  chain.  
  27. 27. Tools:  Porters  five  forces  
  28. 28. Tools:  Value  chain  analysis  1.  Ac8vity  Analysis,  where  you  iden2fy  the  ac2vi2es  that  contribute  to  the   delivery  of  your  product  or  service.  2.  Value  Analysis,  where  you  iden2fy  the  things  that  your  customers  value  in   the  way  you  conduct  each  ac2vity,  and  then  work  out  the  changes  that  are   needed.  3.  Evalua8on  and  Planning,  where  you  decide  what  changes  to  make  and  plan   how  you  will  make  them.    
  29. 29. Tools:  Core  Competence  Analysis  Relevance:  Firstly,  the  competence  must  give  your  customer  something  that  strongly  influences  him  or  her  to  choose  your  product  or  service.  If  it  does  not,  then  it  has  no  effect  on  your  compe22ve  posi2on  and  is  not  a  core  competence.    Difficulty  of  Imita8on:  Secondly,  the  core  competence  should  be  difficult  to  imitate.  This  allows  you  to  provide  products  that  are  beder  than  those  of  your  compe22on.  And  because  youre  con2nually  working  to  improve  these  skills,  means  that  you  can  sustain  its  compe22ve  posi2on.    Breadth  of  Applica8on:  Thirdly,  it  should  be  something  that  opens  up  a  good  number  of  poten2al  markets.  If  it  only  opens  up  a  few  small,  niche  markets,  then  success  in  these  markets  will  not  be  enough  to  sustain  significant  growth.      
  30. 30. silvija.seres@technorocks.com  5  minute  working  session  for  your  table:  Divide  the  tasks  Agree  on  the  leadership  Agree  on  the  overall  vision