This presentation introduces the POEM framework used by the Lagos Angel Network to evaluate investment opportunities and helps prepare entrepreneurs for engagement with Angel investors

1. 1!
“Funding Your Start Up”
A Lagos Angel Network POEM®
Workshop
GE Garages, Victoria Island
9th July 2014

2. Workshop Objectives
• Introduce the framework used by the
Lagos Angel Network to evaluate
investment opportunities
• Help prepare entrepreneurs for
engagement with Angel investors

3. The Investment Funding Value Chain!
Founder,
Family, &
Friends
Angels Bank Venture
Capital
PE/Stock
Market

4. About the Lagos Angel Network
• The Lagos Angel Network is committed to providing early-
stage seed funding and mentorship to early stage businesses
in Lagos, Nigeria.
• Member Angels acknowledge that anything they invest in
companies through the LAN is money and time that they can
afford to lose in its entirety.
• However, they also recognize they may earn a healthy return
on their investments while supporting the development of the
Nigerian economy by helping new business owners grow and
strengthen their start up businesses.

5. What are LAN Angels looking for?!
Entrepreneurs that are Investment
Worthy!
with
Businesses that are Investment
Ready!

6. What is the LAN looking for?!
Businesses that:
1. Are based in Lagos, Nigeria
2. Require less than N5,000,000
3. Are less than two years old
4. Have a team of at least 3 members (ideally commercial,
technical and operational but will consider other
compositions)
5. Can clearly show the Founder(s) have already invested their
own money
6. May have also received investment from Family and/or
Friends
7. Have a working prototype that clearly demonstrates the
business model of their idea

7. !
!
!
Investment Worthy?
Investment Ready?
The POEM ® Framework !
How does the LAN know if…?!

8. 12!
What’s your business vision?!
Vision: a vivid, imaginative conception or anticipation
• Every business starts with a vision! Founders need to be able to articulate
and share their vision in a way that shows they are solving a problem,
creating economic value and making an impact on the market they have
chosen.

9. The POEM ® Framework !
Angels
A tool for evaluating if your business is investment
ready
Entrepreneurs
A tool to help think-through all aspects of the
business building journey you are about to embark
on - something you won't have the luxury of doing
once you start the train.

10. 11!
The POEM ® Framework !
PROPOSITION!
ORGANISATION!
ECONOMICS!
MILESTONES!

11. 12!
P = PROPOSITION – what’s the value?
• Your vision should deliver a value proposition which provides
clear descriptions for the:
• Functions & Features on Offer (Customer experience)
• Target Market(s), Segment(s) & Customer Profile(s)
• Derived Benefits of Offer - WIIFM
• Alternatives and Differentiation
• Regulation & Compliance
• Competition & Substitution
• Inputs & Dependencies
• Elevator Pitch….90 second guide

12. 13!
O = ORGANISATION – who and how?
• PROCESS
• BUY
• PROCUREMENT & LOGISTICS
• VENDORS
• MAKE
• HUMAN CAPITAL
• RESEARCH
• ANALYSIS & DESIGN
• PROGRAMMING & DEVELOPMENT
• TESTING
• COMMISSIONING/LAUNCH
• SELL
• MARKETING
• SALES
• CUSTOMER SUPPORT
• CORPORATE AFFAIRS!
• PEOPLE
• BOARD OF DIRECTORS/ADVISORS
• EXECUTIVE
• TECHNICAL
• COMMERCIAL
• OPERATIONS
• NON-EXECUTIVE
• MANAGEMENT
• SENIOR
• MIDDLE
• JUNIOR
• STAFF
• CAREER PROFILE
• EXPERTISE & EXPERIENCE
• PERSONAL VISION/ MISSION/ OBJECTIVES
• CAPABILITIES & COMPETENCIES!
• TECHNOLOGY
• CLIENT
• INTIMATE, PERSONAL, DESKTOP!
TGY
• SERVER
• APPLICATION, INFRASTRUCTURE,
SECURITY, SERVICES!

13. 14!
E = ECONOMICS–show me the money!
P&L STATEMENT! PERIOD 1!
REVENUE! 1,000,000!
Less DIRECT COST OF SALES! 300,000!
GROSS MARGIN! 700,000!
Less OPERATING EXPENSE! 500,000!
EBITDA (Profit or Loss)! 200,000!
CASHFLOW STATEMENT! PERIOD 1!
INFLOWS!
- REVENUE! 1,000,000!
- LOANS & FACILITIES! 700,000!
- SHAREHOLDERS EQUITY! 500,000!
OUTFLOWS!
- EXPENSES! 800,000!
- INTEREST! 70,000!
- REPAYMENTS! 400,000!
NET FLOW! 930,000!
BALANCE SHEET!
ASSETS! LIABILITIES!
FIXED ASSETS! 1,300,000! PAYABLES! 300,000!
CASH & BANK! 300,000! LOANS! 700,000!
RECEIVABLES! 700,000! EQUITY!
TOTAL ASSETS! 2,300,000! PAID UP CAPITAL! 1,000,000!
RETAINED EARNINGS! 300,000!
TOTAL LIABILITIES &
EQUITY!
2,300,000!
MARKET(S)
• $ SIZE?
• % SHARE?
• % INFLATION?
• DEMAND
• TRENDS!
ROI - NPV - IRR
FORECAST
ASSUMPTIONS
ACTUAL
PERFORMANCE!

14. 15!
• SEED
• CONCEPT DEFINITION
• BUSINESS MODEL DEVELOPMENT
• FOUNDER, FRIENDS & FAMILY
(FFF) FUNDING
• START-UP
• BANKABLE BUSINESS PLAN
• ESTABLISHED CUSTOMER BASE
• FULL-TIME OPERATIONAL
STRUCTURE
• ANGEL/VC FUNDING
• GROWTH
• REVENUE, CUSTOMER & PROFIT
GROWTH
• INCREASED MARKET SHARE
• VC/PE FUNDING
• MATURE
• COST & PRODUCTIVITY
MANAGEMENT
• NEW PRODUCTS/SERVICES
• SELF FUNDING
… and when will you get there?!
M = MILESTONES–where are you going?
• EXIT
• ACCEPTABLE BUYER WITH AGREED VALUATION!

15. Investment Due Diligence (DD)!
16!
• “Due Diligence” is a systematic collection of
relevant business information for the purpose of
analysing the business, its vision, current status,
practices, processes and policies in order to
form an opinion for an investment decision.
• Helps LAN establish you are ‘who you say you
are’ and the business is “what you say it is”

16. Fact-based Opinion from DD!
18!
MANAGEMENT
Corp Governance, Entrepreneurial Vision, Track record of
success, Management depth, Operational capability
FINANCES
Revenue Strengths, Credible future profitability,
Acceptable Cash needs
ECONOMICS
MILESTONES
EXIT
Feasible strategy, Good exit routes, Feasible –follow
on investment, Satisfactory exit potential
MARKET
Product/Service Line, Competitive advantage, Market
Growth potential
PROPOSITION
ORGANISATION

17. SECTION(( OUESTION((
Vision& What&is&your&vision&for&the&company?&Describe this vision in a way that shows how you are solving a problem,
creating economic value and making an impact on the market you have chosen&
Offer Describe your product/service offering. Include the specific functions/features that make up the offer to your
customers. What is the customer experience you intend to deliver?
Industry Dynamics Describe the current dynamics in the industry in which you are operating? (i.e. key trends and issues),
What is the future outlook for the industry and how will it benefit or adversely affect your startup business?
Are there any relevant regulatory compliance requirements?
Market&Sizing&& How&large&in&customers&and&value&is&the&potential&market&for&your&product&or&service?&&
How&have&you&chosen&to&segment&your&market?&Please&describe&the different customer segments you intend
to attract and retain for your revenues?&
Competition&& Identify&current&and&potential&competitors&in&your&market?&What&are&their&strengths&and&weaknesses?&
Competitive&Advantage&& How do you intend to build barriers to entry for new entrants, and exploit the weaknesses you identified in the
incumbents?&
&
PROPOSITION (VALUE)!

18. SECTION(( OUESTION((
Corporate(Structure( Is(your(company(incorporated?(When?(
What(is(the(current(authorised(share(capital?(
What(is(the(current(paid(up(share(capital?(
Who(are(the(current(shareholders(and(what(does(each(person(own?(
Corporate(Governance( Describe the current corporate governance structure in your company? Board of Directors, Board of
Advisers, Management Team, Auditors and Company Secretary(
Organisation(Structure(( Provide(a(list(of(staff(in(the(organisation(and(give(a(brief(profile(of(each.(Including(their(roles(and(
responsibilities(
Vacant(Roles( What(key roles still(need(to(be(filled?(
(
ORGANISATION (PEOPLE)!

19. SECTION(( OUESTION((
Revenue&Model& Describe&your&revenue&model&and&how&you&intend&to&earn&revenue&from&each&customer&segment&
earlier&identified?&&Include&the&frequency&of&the&revenue&steams&as&appropriate&
Capital&Invested&&&Utilisation&& How&much&capital&has&been&raised&to&date?&How&has&it&been&utilised?&
Funding&Required&&&Expected&
Utilisation&&
How&much&funding&needs&to&be&raised&now?&What&will&the&funds&be&used&for?&
3&year&Revenue&and&Profit&
Projections&&
What&are&the&current&and&projected&revenue,&expenses&&and&profit&figures&over&the&next&3&years?&
Historical&Records&& Do&you&have&records&of&your&historical&revenues&and&expenditures?&Have&these&been&subjected&to&any&
accounting&methods?&If&so&please&describe&their&status.&
&
ECONOMICS (RETURNS)!

20. SECTION(( OUESTION((
History( When(did(the(business(start(operations?(When(did(it(receive(its(first(investment?((
Growth(Strategy( How(does(the(business(plan(to(grow?(
Growth(Milestones(=(Current( How(many(customers(do(you(currently(have?((
Growth(Milestones(–(Forecast( How(many(customers(are(you(targeting(to(have(in(6(months?((If(any)(
Next(Funding(Round( When(will(the(company(likely(have(to(raise(another(round(of(funding?(
(
MILESTONES (TIMING)!

21. CONCLUSION!
• The POEM ® framework provides Entrepreneurs with a model that meets
the need for organising the business of their company in a form which
they can use on a day to day basis.
• Each Entrepreneurs determines the level of detail required for each
particular situation they find themselves in be it operational, marketing,
selling, soliciting for funding or recruiting resources POEM ® provides
guidance for execution while ensuring that all critical information are
included in consideration
• Because investors don’t only come to organised pitch events and you
may run into them anywhere, a simple mental model such as POEM ®
that can be backed up with as much documentation as required gives
you edge in todays world where a growing number of entrepreneurs are
competing for a shrinking pool of capital.!
19!

22. Today’s LAN Ecosystem !

23. On Valuation & Fund Raising
A few factors to keep in mind as you think about valuation for your
business:
§ Traction - The proof of the pudding
§ Reputation – What have you done before, what do people say
about you
§ Revenues – Growing fast while making money
§ Tracking – Determine your key performance indicators and keep
track religiously
Two fund raising strategies you may want to consider:
§ Go big or go home - Raise as much as possible at the highest
valuation possible, spend all the money fast to grow as fast a
possible
§ Raise as you go - Raise only that which you absolutely need

24. What are investors thinking?
• Exit – how much can this company sell for,
x years from now?
• How much money will it take to grow the
company to that point when someone will
buy it for y amount?
• What percentage of this company will I
own? Now? Then?
• The sophisticated Investor Vs the novice Investor

25. ARE YOU INVESTMENT READY?

26. QUESTIONS?!
23!
THANK YOU!!
Website: www.lagosangelnetwork.net
eMAIL: secretariat@lagosangelnetwork.net
Twitter: @ekonetwork