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“Great Association with Quality Deal Flow”

Keiretsu Forum New York Tri-State
Informational Session
July 29, 2009
© Keiretsu Forum NY 2009. All rights reserved

Keiretsu Forum’s Network

1 Asian
Location:
B E I J I N G, China
18 U.S. Locations: 3 European Locations:
NEW YORK WASHINGTON L O N D O N, England
New York Seattle B A R C E L O N A, Spain
New Jersey Bellevue
P A R I S, France (October 2008)
Connecticut IDAHO
CALIFORNIA Boise/Sun Valley IRELAND 2009
East Bay OREGON INDIA 2009
Orange Co. Portland
Los Angeles COLORADO
North Bay Denver
San Diego
San Francisco
Silicon Valley
Westlake Village © Keiretsu Forum NY 2009. All rights reserved

Keiretsu Forum
“Great Association with Quality Deal Flow”

Keiretsu Forum
Process


Disciplined, Systematic
Deal Flow Process

30-50
Web Site Application

8-10
4-5

Committee Deal Keiretsu Due 2-3
Review Screening Forum Diligence
Meeting

Multi-chapter
sharing of
Week 1 Week 2 Week 3 Week 4 deal flow

JULY 13, 2009
THE MONEY GAME – “Perfecting the Pitch”

“What’s most important is to adequately explain all the assumptions on which the plan
[is] based,” says Larry Chaityn, New York chapter president of Keiretsu Forum, a global
network of accredited angel investors. “Less is more. We want them to present a
wealth of information in very few words.”

Finally, when evaluating offers, entrepreneurs should think beyond who will write them
a check. “Take a look at who can give you the best acceleration for your business,”
says Mr. Chaityn. “Not just money, but industry contacts and high-level connections.”


Your Company Name

[Note: Font size should be age
of audience divided by 2]


Mission

WHAT WE DO
this the "yahoo for X industry"
or the "cisco for Y industry"

[OK. I’ve looked at 10 companies today. What am I going to be looking at for
the next 45 minutes? Why I should be enthused?]

Market

•  Your total addressable market. In other
words, what your revenue would be if you got
100% of your target customers paying what
you expect?
•  Is this market big enough to yield a highly-
valued company. Could this be a Cisco or
Yahoo?
•  For institutional VC you typically need
opportunity for > $250M in revenues in a high
margin business © Keiretsu Forum NY 2009. All rights reserved

Problem We Are Solving

•  Who is the customer? do they matter? what
problem does the customer have today? why
is that a big problem, why is it their biggest
problem?

•  Ideal: We solve the most important problem
for customers who are high gross margin,
high growth companies in high growth sectors
who move very quickly and frequently buy
products from startups.

How We Solve The Problem

•  What is your solution? why is it unique?
why has nobody done this before?
•  What has changed that allows room for
a startup here?
•  Ideal: you have come up with a solution
that you found due to exclusive domain
expertise that is really hard for others to
match.
Copyright 2002-2004 Venture Mechanics, LLC

Technology Status

•  If big IP piece, several slides on the
state of technology development
•  Is there a lot of "R" left, lots of "D" left,
or is the product done?
•  Ideal: all the risk of research is done, no
major unsolved problems remain


Customers

•  Who has agreed to pay for the product?
who are beta customers, etc.?
•  Are there customers that matter with
high willingness to pay?
•  Ideal: reference-worthy customers who
are falling over themselves to get the
product


Get to Market Strategy

•  What is the acquisition cost/customer?
•  How will you get in front of the customer?
Direct, Indirect, Distribution, etc.
•  Is there a channel that can allow this
company to get their product to customers
profitably? Anyone in the way of this startup
reaching their customers?
•  Ideal: Product falls off the shelf fast; very
easy, short sales cycle.


Per Customer Economics

•  What they will pay? What will it costs to
service them? what will it cost to acquire
them?

•  Ideal: you can reach customers very
inexpensively, yet get big revenue out
of them


Key Milestones

•  What happens when? beta, first
customer shipment, breakeven cash
flow, etc.
•  What information does this round of $$
buy?


Team

•  Top 6-7 people with one bullet on relevant past.
Q: Why this is a world-class team with relevant
skills to pull this off? Why they can recruit from
their networks? What have they done before
that is special and relevant? Have they done it
before or are they learning on the job?
•  Ideal: Done it before, recruiting is easy, key
team in place, success follows all these guys
yet they are hungry for a defining moment in
their careers in building a world-class company.


Financials

•  Forecasts: P&L, Balance Sheet, Cash Flows.
Monthly detail for first year or two; quarterly
Years 3 & 4, annual Year 5
•  More important… Key metrics: # customers,
big revenue lines, COGS, gross margins, etc.
•  How competitive are the gross margin? How
quickly does the company ramp, how many $
$ invested before reaching profitability. Do
these guys understand how a company
ramps?
•  Ideal: Healthy ramp, not too many $$ and not
too long to profitability, great gross margins.

Competition Overview

•  2x2 matrix of the competition with the two
variables that matter on the X and Y
•  How is the company positioned in the
landscape with all the other companies I've
seen? How are companies in this category
valued? Do I know about competitors that
these guys don't have listed?
•  No big uglies to eat the startup’s lunch. Not a
bunch of $$ already invested by other VCs in
companies attacking the same over-
capitalized space.

Competition Specifics

•  The top 2 or 3 competitors, one/two
liner on their story (funding, etc), one/
two liner on why you beat them.
•  Do I believe these guys can win? Who
are the two or three competitors to
focus due diligence efforts on?
•  Ideal: no one else has raised significant
$$ yet.

Financing History

•  How much went in so far, when, at what price?
•  Cap Table: Who are current investors, how
much do they own, who is on the board, how
much are you raising now and at what price, how
big is the unallocated pool?
•  Ideal: First round guys are helpful, reasonable
folks who've helped the company get their DNA
right out of the chute. We know and respect
them - they can give us a quick read on the pros/
cons of the team and the opportunity.


Comparables

•  Companies in and around the space,
valuations, revenues, gross margin
•  Will this be a valuable company if they
execute?
•  Ideal: There are obvious big, well-valued
companies around who would try to buy the
company. All valued at very high multiples,
but an underserved segment that allows a
startup to build a valuable company


CONTACT

•  larry@keiretsuforum.com
–  917.859.4266
•  tfoulks@keiretsuforum.com
–  914.462.8175

–  www.keiretsuforum.com


Resources

•  Term Sheets & Valuations
–  Alex Wilmerding
•  Venture Capital Due Diligence
–  Justin Camp
•  Raising Venture Capital for the Serious
Entrepreneur
–  Dermont Bekery


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