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10minute pitch clinic_w_examples_v2
- 1. The Anatomy of the 10 Minute Pitch Introduction {00:30 seconds} The Problem The Solution Traction {03:00 minutes} Market Size Customers Sales Strategy Partners Revenue Model Competition Management Advisory Board {08:00 minutes } Financials {10:00 min.} The Offer Copyright 2007, Alliance of Angels
- 2. Act1: The Introduction Copyright 2007, Alliance of Angels
- 3. Introduction Alliance of Angels: Providing the Venue for Angel Investors and Startup Companies to Meet 10 Minute Pitch Clinic ~ April 10, 2007 Rebecca Lovell, Program Manager Alliance of Angels 2006-07 Preston Gates & Ellis Fellow Copyright 2007, Alliance of Angels
- 4. The Problem The Problem • Define the problem and WHO has this pain – Graphs – Pictures – Describe a problem scenario /usage case Copyright 2007, Alliance of Angels
- 5. The Solution The Solution Overview of primary product or service that will solve the problem • Use multiple slides if necessary • Do not exceed time limits • Product Photos, Screen shots • Logical Flow and Architecture diagrams • Short list of Feature/Benefits Be clear about the status of product development Copyright 2007, Alliance of Angels
- 6. The problem: Recorded Claims Weeks and Months 75-100 Million Interviews (Per Yr) $350 Billion Claims Related (Per Yr) Process is “Off The GRID” 6
- 7. The solution: Digital Service Claims Interviewe Bridge .WMA Rep es Minutes $15M Savings (Per Yr): Farmers Insurance 24 x 7 x 365 Availability 7
- 8. Traction Slide Traction • Founded in 2003 • 3 full-time employees, 3 part-time • Released v.1 fall of 2004 • 15 Beta Users, 10 Paying customers • Signed up 3 channel partners • Received ABC certification • 1 provisional Patent filed • Press coverage, awards Copyright 2007, Alliance of Angels
- 9. Questions about Act 1: the Introduction? Copyright 2007, Alliance of Angels
- 10. Act 2: The Business Copyright 2007, Alliance of Angels
- 11. Market Size Market Size • Build the number from the ground up • Total Addressable Market • Use drivers relevant to your product • Show the different segments – Pie Graph works well – Explain how you prioritize the segments • “This is our initial market” (speak to why) • If you must use 3rd party figures, cite the source Copyright 2007, Alliance of Angels
- 12. Market Size Example Total Addressable Market: US home broadband users ages 12 to 34 who actively consume internet video 8.5 2.7 22.4 2006 14.1 2011 7 14M 45M 4.4 18-28yrs 12-17yrs 29-34yrs Copyright 2007, Alliance of Angels
- 13. Customers Customers • Current Customers – 83 startup companies like the following: • Potential Customers • Early stage technology companies raising between $250K to $2M – Your Company, Inc. – His Company, Inc. – Her Company, Inc. Copyright 2007, Alliance of Angels
- 14. Sales Strategy Sales Strategy How do you sell your product? Direct and/or Channel Sales If Direct, • How many sales people? • How long does it take to close a deal? • Who is the key decision maker? (Especially if that differs from the key user) If Channel, • Who are the partners? • How many are required? • How are the territories divided? (If relevant) Copyright 2007, Alliance of Angels
- 15. Partners Partners • Revenue share • Content provider Targeted Partners • Distribution partner/broker Copyright 2007, Alliance of Angels
- 16. Revenue Model Revenue Model • Licensed Software • Hosted Solution, Monthly Fee + 2% of all transactions booked through our system • We Sell Widgets; Direct and Through a Channel • Time and Materials Customer $2500 Average Customer is worth $60,000 in annual Revenue 20% Retailer $2000 Avg Customer Buys 10% Distributor 24 Widgets per year $1750 Gross Profit Gross Margin Cost $650 $1100 >60% This is an example for demonstration purposes only Copyright 2007, Alliance of Angels
- 17. Competition Competition • Indirect Competition – Summarize the current alternatives (other technologies or types of products) • Direct Competitors (logos are easier to read than text) – List competing company 1 and an analysis – List competing company 2 and an analysis – List competing company 3 and an analysis • Use a matrix if possible Copyright 2007, Alliance of Angels
- 18. Competition ABC B Co XYZ Synchronization OS/Player Agnostic Distribution Agnostic File Format Agnostic Copyright 2007, Alliance of Angels
- 19. Management Team Management • Name, Position – Prior Company, Position (VP or above), Years – Prior Company, Position (VP or above), Years • Name, Position – Prior Company, Position (VP or above), Years – Prior Company, Position (VP or above), Years • Name, Position – Prior Company, Position (VP or above), Years – Prior Company, Position (VP or above), Years • Open positions – VP Sales – Head of QA Copyright 2007, Alliance of Angels
- 20. Advisory Board Advisory Board • Name, Area of Expertise – Company, Position (VP or above), Years – Prior Company, Position (VP or above), Years • Name, Area of Expertise – Company, Position (VP or above), Years – Prior Company, Position (VP or above), Years • Name, Area of Expertise – Company, Position (VP or above), Years – Prior Company, Position (VP or above), Years • Name, Area of Expertise – Company, Position (VP or above), Years – Prior Company, Position (VP or above), Years Copyright 2007, Alliance of Angels
- 21. Questions about Act 2: the Business? Copyright 2007, Alliance of Angels
- 22. Act 3: The Future Copyright 2007, Alliance of Angels
- 23. Financial Projections Financials Five Year Projections (Millions, US) Assumptions: $150 $120M $130 Revenue – In 2010, $__ per sale $110 Income $80M – In 2010, __customers $90 – 2010 market share: __ % $70 – In 2010, __% from new $40M $50 sales; __% from $30 $10M recurring $3M $10 – U.S. market only -$10 – Does not include future 2007 2008 2009 2010 2011 product extensions This is an example for demonstration purposes only Copyright 2007, Alliance of Angels
- 24. Funding Requirements The Offer Prior Funding: - $ from founders, $ from outside investors, $ grants Current Round: - Seeking $1 million ($500,000 raised) - Pre-money valuation: $2 million Use of Funds: - Finish v 2.0 Prototype - Launch in xxx market - File patents Future rounds: - Series B of $ million expected in early 2007 Exit Strategy: - Acquisition (perhaps Microsoft, IBM, Nike, or Gatorade) Copyright 2007, Alliance of Angels
- 25. Why Invest • Experienced Management Team • Generated $x in revenue in 2002 • Strong IP position • Large and growing market • Signed partnerships with key players Copyright 2007, Alliance of Angels
- 26. Questions about Act 3: the Future? Copyright 2007, Alliance of Angels
Editor's Notes
- What we’ll present in terms of a layout is a recommendation, not a requirement. Though the particularities of one business may suggest alternate slides here and there, we have found this is a good way to organize a pitch in a coherent fashion and hit all the key points. We’ve set this up as a sort of Three-Act play, where the story you tell is about the problem that exists in the world, and how you are the solution to that problem. Start with Act I: The Introduction. This is where you set the stage and introduce yourself as the solution to a real problem 2-1/2 minutes should do it, other than particularly complex technology plays. Act II: The business. These are the moving parts of a startup: market, customers, sales cycle, competition, etc- give us a sense of how you can compete within the context of a changing environment. We recommend that this is the bulk of the pitch- 5 minutes. Act III: the future (or the resolution). The financials slide demonstrates that if “if all my assumptions are true, our future will look like this”. We always end strong on the offer, as this is why people are here. It might seem a little over the top to be talking about 15 and 30 second increments, but Avniel and I work with companies all day every day and do find that this level of coaching makes a difference. Ending in 9-1/2 minutes would be a good problem to have, so shaving a few seconds here and there really adds up!
- questions.
- The one two punch goes here. Who are you, and what does the company do. Though there will be a management slide later in the deck, it is appropriate and helpful if you can lead off by saying, as the CEO of ABC Wireless, I’ve started two companies in this space, both with successful exits. A brief credibility-builder will really help put your endeavor into the best light- and will make your audience want to listen to you for another 9 minutes! Never get a second chance to make a first impression, so being engaged, making eye contact, and conveying your passion are all critical. This can be a great time to tell a really short story about what it is that makes the business so compelling to you. “We’ve known each other since business school and share a passion for mountain climbing- the other two founders and I felt that the granola snacks on the market were either bad for you or tasted terrible- so we decided to fix that.” Something along those lines can capture the investors’ imagination right off the bat. It’s important to keep this all brief– 15 to 30 seconds- which is why we’re working through this one-sentence exercise to describe your company; there’s nothing worse than to get to the end of a pitch and have an investor ask, “now what is it that you do?” and we’ve heard it happen. Basically, we make x product for y customer that enables them to do z.
- It is helpful to illustrate the problem as literally as possible- graphics help paint the picture for the nature and magnitude of the problem you’re addressing. It is key not to be a solution looking for a problem- an entrepreneur needs to attack a real pain that existed in the world before the startup came along. In addition to graphs, a story or usage scenario really cuts to the chase. “Imagine you’re an exchange student on a budget and need to communicate with your family”–describe the frustration they experience in performing a task or searching for a service.
- This is where the entrepreneur gets to highlight the elegance of their solution. Depending on the complexity of the product or solution, it could take a couple of slides. Just be sure not to exceed the time limit, as we want to clock in around 2-1/2 or 3 minutes here. Again, graphics work really well– flow charts, screen shots for online solutions, product photos all crystallize your offering in the investors’ mind. Do include a very short list of benefits, which should map very clearly to the way the problem was initially set up. Most importantly, those benefits should map to the pain points you described- be consistent in your description of the priorities in the market place, so that you can show how you represent the solution to the specific problem. Last but not least- be forthcoming about the status of your product- whether it’s in development, a working prototype, it’s being beta tested, patent pending, phase 1 FDA approved, etc.
- Told a story about an insurance claims agent- tied to her desk, using analog equipment to record conversations with clients- time consuming, expensive, and no way to track the information.
- Digital Statement Service: with this company’s digital solution, offered as a hosted software service, these conversations could occur anywhere (cell phone, working from home), saves money, gets to the database within minutes, and available for tracking and analysis purposes. Note the parallels to the solution slide.
- As you finish out the first section of the presentation, it’s a good idea to further entrench your credibility with the audience. Next is the traction slide; in this section, tick off the tangible milestones that you’ve accomplished- things you can count.You can see some of the examples of the accomplishments that are important to list- this gives investors a sense of your productivity and efficiency and your commitment to the business.
- Ed: Original:
- Market research is really critical to your credibility, and there are a few ways to go about it. You could cite a Forrestor research or gartner report stating that the blogosphere is a $2 billion market- that’s a top-down approach, and though these are credible sources, it tells me very little about what’s the cause of this phenomenon. Instead, and whenever possible, describe and quantify the statistics that will enable you to monetize this opportunity. such as there are 55 million blogs on the internet today and, 200 million page views, or, 15 million YouTube videos downloaded daily, if your business is driven by registered users, 60 million MySpace users. Whatever metric you use to describe the market should be the same metrics you will later describe in your revenue model and financial projections. These are some good ways to describe the total market opportunity, but in all likelihood, you’ll be going after some subset of that market, perhaps teens aged 12-18 or soccer moms- so make sure you depict what portion your target market represents. Might seem simple but sometimes simple is best, and a pie chart works well.
- Here’s an example of a graphical representation of market size, and a few brief assumptions that help your investor audience do the math on gut checking those revenue projections. This shows that the market is large and growing, the segment you’re targeting, and the drivers fueling the market growth.
- Next, drill down on your market by highlighting your current or targeted customers. It should reflect the priority scheme you laid out in the prior slide. Here, it’s helpful to get an understanding about the segmentation in the market- do 5 players own 80% of the market? Or are there thousands of small-to-medium business who could be served by your solution? Again, be explicit about the status- either beta, paying, or targeted customers.
- To further justify your revenue projections, describe your go to market strategy. Based on your customer segmentation, you’ll need to determine if you will sell directly to your customers or leverage channel relationships. There will be different players involved whether you go direct or indirect, and this must be consistent with your go-to-market strategy-- are you going after tens of thousands of individuals or small businesses, or are you going after a few big fish- and how can you most effectively penetrate that segment? Are you going to be competing for shelf space in a retailer? Or looking for national distribution through a chain? Give your investors confidence that you know whom you have to talk to, how long it takes, and what it takes to close a sale. Whether you’re selling to business, or directly to consumers- it’s also helpful to understand conversion rate. What percentage of the time will you close a sale, or on the internet or software service, what percentage of visitors become members, or how many folks who receive a free trial subscribe to a paid service?
- Totally depending on your business model, partnerships may be important- the last slide will set up that expectation if it’s the case in your business. Logos are again a great way to summarize your traction, but just as important is demonstrating how your partner relationships are mutually beneficial, which, particularly if it’s for deals that have not yet been signed lends credibility to the idea that you could feasibly enter a contract. Briefly list the nature of the relationship for each type of partner, whether they contribute deal flow, content or distribution.
- After you have painted the picture of your sales strategy, it logically follows to describe your revenue model, including both revenue and cost drivers– greatly affected by your go-to-market approach. If you’re part of an ecosystem dealing with brokers, value added resellers, wholesalers, or affiliates, each member of the value chain tends to get a piece of the pie or a share of the revenues. A graphical representation of how this pie gets sliced can give us a clear understanding of the profitability of the business, which in turn will feed directly into your break even calculations.
- Another tremendous red flag is for an entrepreneur to suggest there is no competition. Competition valides the market, and those who fail to understand the direct and indirect competitors show they lack the imagination or the research to truly capitalize on the market need. Some entrepreneurs are hesitant to recognize the elephant in the room- the presence or threat of a microsoft or google in the space. Acknowledge the threats and remember that today’s mammoth competitor could be tomorrow’s acquirer depending on your competitive positioning. In illustrating your understanding of the competitive landscape, it can be helpful to call out a few dimensions or user criteria, then comment briefly on each competitor’s offering. A grid or two-by-two matrix works well. As you’ll see, a graph can save you some time, and allow you to focus on what’s most important here: reinforcing your value proposition and clearly stating your differentiators.
- Here is one of two ways you can demonstrate it graphically. Make sure your selected criteria matches the pain or business problem and solution slides that you mapped out in the introductory act of the presentation- it’s not just ours is the only widget that’s purple- it has to be criteria that are meaningful to the customer. The dimensions you select here should echo those same pain points you describe in the “problem” slide, and the same benefits you describe in your “solution” slides. Original:
- The management team is a really critical slide, because even if everything stacks up with your market and your offering, investors need to trust that your team can execute on the vision. This slide will likely be a bit heavier on text, so let the audience read it for themselves-- don’t read it to them-- and make it easy for them to note the pedigree of your team. You can take a moment to highlight one particularly impressive recruit, but if you’ve introduced yourself well, you shouldn’t have to spend much if any time reminding them of your own qualifications. It’s really powerful if you can talk about your team in aggregate- some highlights might be how long some of you have worked together (it comes down to execution, and teamwork is a huge part of that. ) You can also focus on who many startups in which you’ve been involved, how many total years of domain expertise you have as a group.
- The set up for this slide is very similar. Perhaps choose one board member to highlight, but resist the temptation to read each description aloud. If your advisory board is in the early stages, but you’ve had some success in retaining key paid advisors -- such as legal counsel- you may highlight that relationship on this slide as well. Be explicit about the status of your board and make sure that they are willing to verify their involvement in your organization-- they should know that they’re on your board, and provide a good reference. Handling this correctly can greatly boost the credibility of an early-stage endeavor.
- Ed: Original:
- This is the slide that nobody believes but everybody wants to see. They have been primed to expect something of a hockey-stick like curve, and will most likely do their own mental discounting. That being said, be aggressively reasonable, and if everything ties back to the addressable market and revenue model, investors can determine if it passes their own “sniff test.” The things being showcased on this slide are: The size of the ramp Margins Change in revenue over time / revenue mix Assumptions that create this chart. All of these assumptions should be stated clearly- and we’ve seen it most effectively done when off to the side of the graph- but each of these must hold water for the investor to want to pursue the opportunity.
- Here’s where the rubber meets the road, and what everyone is waiting for. Remember, unlike with venture deals, you explicitly state the terms. A cautionary note- don’t convert your own sweat equity into dollars. Actual, personal financial capital invested in the company can help an investor feel more comfortable about handing over that nest egg, but be careful not to do any hand-waving and mysteriously turn it all into owners’ equity. Break down each source of funding, be specific about the ask (if it’s a debt round or bridge, don’t be shy- let them know it’s convertible debt) and also make your best guess as to future rounds so investors can predict diliution and their ultimate return. With exit strategy, using logos for potential acquirers can break up the slide visually, as well as get your point across.
- We highly recommend you end strong on the offer slide- different forums like to end on a summary, so if you must include this slide given your audience, try to avoid platitudes like great team, huge market, best technology.
- Ed: Original: