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Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 1
How to Pitch the Wow!
to Investors
By Steve Austin
saustin7777@gmail.com
Presented by
http://www.meetup.com/Silicon-Valley-Startup-
Idea-to-IPO/
at Workspring
Palo Alto CA
28 May 2013
Startup Heroes
“Whatever you can do
or dream you can,
begin it.
Boldness has genius,
power and magic in it!”
Johann Wolfgang von Goethe
©Copyright 2013 Steve Austin, All Rights Reserved 2
Startup Heroes
WE ARE NOT ATTORNEYS
GET LEGAL ADVICE!
Follow SEC RULES – Stay out of Trouble!
©Copyright 2013 Steve Austin, All Rights Reserved 3
Startup Heroes
Agenda
1st hr
Pitch
What about
Angels?
What Investors
Need
2nd hr
Make it Simple
Pitch to Group
©Copyright 2013 Steve Austin, All Rights Reserved 4
Startup Heroes
4 Steps
1.
“Why”
I believe…
2.
“Wow”
Factor
©Copyright 2013 Steve Austin, All Rights Reserved 5
3.
Business
Model
4.
Simple
Message
Persona of Leadership
Startup Heroes
Act Like a Leader!
People follow
Inspirational
Extra effort
Credibility
Humor
Fair
Listens
Responsible
Not defensive
Learns & adjusts
©Copyright 2013 Steve Austin, All Rights Reserved 6
Steve Jobs
Richard Branson
Howard Schultz
Martin Luther King
Anne Mulcahy, Xerox
Indra Noori, Pepsi
Startup Heroes
Pitch Basics
1. Be Confident
2. Don’t apologize
3. No “superlatives”
– Huge market,
– Fastest widget, etc
4. Use facts & numbers
5. Ask
©Copyright 2013 Steve Austin, All Rights Reserved 7
Startup Heroes
Most Important to Investors –
Especially Angels
1.YOU & Team
2.Your ability to make it
happen
©Copyright 2013 Steve Austin, All Rights Reserved 8
Startup Heroes
Pitching
60 Second Pitch
• 20 Sec Pitch
– 1 Sentence each point
• 60 Sec Pitch
– 2 – 3 sentences/point
– Prioritize
• 5 – 6 Minute Pitch
– 10-15 Slides MAX
– No slides
©Copyright 2013 Steve Austin, All Rights Reserved 9
Startup Heroes
20 Second Elevator Pitch
• Name
• Title @ Company Name
• “I believe __ (what is
really important to you)
• Problem
• Big Market (optional)
• Our Solution
• Benefit is
• Ask
©Copyright 2013 Steve Austin, All Rights Reserved 10
Say “Awesome” or“Facebook”
an’ You Walk-the-Plank!
Startup Heroes
Angel
Investors
©Copyright 2013 Steve Austin, All Rights Reserved 11
Startup Heroes
Think Like an Angel
Entrepreneur
©Copyright 2013 Steve Austin, All Rights Reserved 12
Startup Heroes
1. Net Worth $1Million +
2. Not including primary
residence, or
3. Income $200,000/yr last 2 yrs
4. $300,000 if married
5. Expect same $ this year
From Securities Act of 1933
What is an Accredited Investor?
©Copyright 2013 Steve Austin, All Rights Reserved 13
Startup Heroes
What’s the 1 Thing Angels
Want Most?
©Copyright 2013 Steve Austin, All Rights Reserved 14
They don’t
want to loose
their money.
Photo used without permission.
http://www.zerohedge.com/article/value
-losing-money
Startup Heroes
Angel Investors
1. Invest their own money
2. Not someone elses $ (like VC)
3. Write you a personal check $
4. Don’t want to loose $!
©Copyright 2013 Steve Austin, All Rights Reserved 15
Startup Heroes
What is Usual Start-up’s ROI?
Its terrible!
About 90/100 fail
Almost anything else is better!
©Copyright 2013 Steve Austin, All Rights Reserved 16
Startup Heroes
How Much $ Invest of Total Wealth?
Prudent: Max 5% wealth
Wealth Invest $/Y
$5M $250K $50-100K
$10 M $500K $50-100K+
$25 M $1.25M $100-500K
Wealth Invest $/Y
©Copyright 2013 Steve Austin, All Rights Reserved 17
Startup Heroes
Investment
Stages
©Copyright 2013 Steve Austin, All Rights Reserved 18
Startup Heroes
www.privco.com/knowledge-bank/private-equity-and-venture-capital
Investment Stages
©Copyright 2013 Steve Austin, All Rights Reserved 19
Startup Heroes
www.privco.com/knowledge-bank/private-equity-and-venture-capital
Investment Stages
©Copyright 2013 Steve Austin, All Rights Reserved 20
Startup Heroes
Valuation
CEOs Job
Increase Value
$
SeedSeed
Pre-Money Value
+ $ Investment
= Post $
ExampleExample
$1.2M
+ 400K Invest
$1.6 M
ExampleExample
$1.2M = 75%
+ 400K = 25%
$1.6 M =100%
Series ASeries A
Pre-Money Value
+ $ Investment
= Post $
Series B (Mid)Series B (Mid)
Pre-Money Value
+ $ Investment
= Post $
©Copyright 2013 Steve Austin, All Rights Reserved 21
Seed
$1.00 /
Share
Series A
$2.50 /
Share
Series B
$4.75 /
Share
Startup Heroes
What if Value Goes Down?
CEOs Job
Increase Value
Series ASeries A
$10 M = 55%
+ 8 M = 45%
$18 M =100%
Series BSeries B
$12 M Pre $
+ 4 M Invest $
$16 M Post $
©Copyright 2013 Steve Austin, All Rights Reserved 22
Series ASeries A
$2.50 /Share
Series B
$1.60 /Share
1. Share price goes down
2. Investor’s “Anti-dilution clause” protection
3. Make “whole” from Founder’s Share
4. CEO / Founder can be washed out
Startup Heroes
Effect of
Anti-Dilution
on Founders
©Copyright 2013 Steve Austin, All Rights Reserved 23
Startup Heroes
What Do Angels
Look For?
©Copyright 2013 Steve Austin, All Rights Reserved 24
Startup Heroes
Mike Levinson, DreamIt Ventures
An angel investor… looks at
http://www.inc.com/guides/2010/10/how-to-pitch-to-angel-investors.html
1
1. Simple to understand
2. Problem / need?
3. Big enough market & customer
base?
4. Right people
©Copyright 2013 Steve Austin, All Rights Reserved 25
Startup Heroes
http://www.youtube.com/watch?
v=mBS0OWGUidc
Jerry McGuire – Movie
“Show Me the Money!”
2
©Copyright 2013 Steve Austin, All Rights Reserved 26
Startup Heroes
Angels Need to Know the $ Story2
©Copyright 2013 Steve Austin, All Rights Reserved 27
1.
How much $
do you
need?
2.
What will you
do with it?
Use of funds -
milestone
3.
When will I
get my
money back?
4.
What Co.
will buy
yours?
Exit
Startup Heroes
INVESTOR
CONCERNS
©Copyright 2013 Steve Austin, All Rights Reserved 28
Startup Heroes
What Entrereneur Sees
©Copyright 2013 Steve Austin, All Rights Reserved 29
Photos used withut permission with URLS on each
Our
Solution
for Problem
Startup Heroes
What Investor Sees: Alternatives
©Copyright 2013 Steve Austin, All Rights Reserved 30
Our
Solution
for ProblemOur
Solution
To Problem
Alternative
AlternativeAlternati
ve
alt
Alterna
tive
alt
alt
alt
alt
alt
alt
Alterna
tive
alt
alt
alt
Alterna
tive
Startup Heroes
Why So Much Return?
5 investments
2 Fail
1 Walking dead
1 Maybe
1 Great return!
20 XNeeds 5-20 X
to cover
High RISK of
Failures
©Copyright 2013 Steve Austin, All Rights Reserved 31
Startup Heroes
Slide Deck Template
From
angelsforum.com
©Copyright 2013 Steve Austin, All Rights Reserved 32
Startup Heroes
Company Name
“One Line Mission Statement”
Before you start presentation,
introduce yourself and
the general concept
From
angelsforum.com
Startup Heroes
1. The Problem
• Clearly define the problem
– Who is this a problem for?
– The problem(s) should be unserved by
competition
From
angelsforum.com
Startup Heroes
2. Solution
• How do you solve the problem ?
• Tie solution to specific pain point
• Create continuity in the story
Product = 15% of time
From
angelsforum.com
Startup Heroes
3. The Product
• 1 or 2 product slides
• Screen shots or pre-recorded video
• Show product meets the specifications
• Add detailed product features in appendix
From
angelsforum.com
Startup Heroes
4. Leadership Team
• CEO – Include company name & job title
• CFO
• CTO
• Relevant experience
From
angelsforum.com
Startup Heroes
5. Advisory board
• Who is on the advisory board
–What do you rely on them for ?
–(i.e. advisor for CEO coaching)
• CFO
• Relevant experience
Startup Heroes
6. Market
• How “big” is market – investors want to see in $
– Convince me this is a big opportunity for my investment.
– What market dynamics
• What are key market segments (if appropriate)?
• What is TAM and SAM? For SAM make bottoms up
analysis
• Have detail on TAM & SAM analysis - appendix
Startup Heroes
6a. TAM > SAM > SOM
TAMTAM
Total Available Market
– Ex: Total LED Market
SOM: ServiceableSOM: Serviceable
Obtainable Market
– Realistic market share
SAMSAM
Served/Serviceable Available
Market
– Ex: Living colors LED segment
TAM
SAM
SOM
Startup Heroes
7. Competition
• Direct and indirect
• Highlight how your solution fills gaps
• Recommend use a graphic on this slide
– Put competition on X axis title and key features on Y axis
– Highlight how your solution provides the right key features
– Alt: 2 prime points on X & Y; develop scatter plot of competitive
landscape
• Have back-up slide – competition details
Startup Heroes
8. Business Model
How do you make money?
From
angelsforum.com
Startup Heroes
9. Go-To Market Strategy
How will you launch this?• How will you launch this?
– Target customer now, - 12 months, 36 months?
– Direct vs. Indirect sales
– Leverage existing channels
• Having an advisor a plus
• How acquire customers in cost-effective
manner?
• “SEO” is not a strategy
From
angelsforum.com
Startup Heroes
10. Financial Projections
• Five year pro-forma
• Revenue
• COGS
• Gross Margin
• Key Opex (3-4 line items)
• EBITDA
• Cash
• In Appendix - detailed five year if needed
From
angelsforum.com
Startup Heroes
11. Capital Raise
• How much $ so far?
– What form, if priced round what was post-$
• How much $ Raising?
– Convertible note or equity?
– Valuation
– How much soft-circled?
– Specific milestones (i.e. use of funds)
– Milestones should be tied to value creation for company.
From
angelsforum.com
Startup Heroes
12. Future raises
• Sample chart below – show what $ you will need in the
future. Highlight CFP point (not on graph).
• Be ready to talk to exit points and drivers for exit
From
angelsforum.com
Startup Heroes
13. Exit
• Who are potential acquirers?
• What are comparable transactions?
– Seller
– Buyer
– Valuation
– Multiples, (revenue and EBITDA)
– Key driver
• Most likely exit?
From
angelsforum.com
Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 48
The Wheel This is
where
you pivot!
Startup Heroes
©Copyright 2013 Steve Austin, All Rights Reserved
49
Steve Austin
saustin7777@gmail.com
Call for Start Up Support!
Thank You!Thank You!
Startup Heroes
Difference Between Loan & Equity
Banker
• Loans $500K
• Wants LOW risk
• Does NOT want huge
returns
• Wants avg interest
~ 10%
• Pay back from SALES
Margin
DEMANDS PRINCIPAL BACK
InvestorInvestor
• Invests $500K
• Accepts risk
• Wants BIG returns
• Will risk $ - more fear =
• 5 – 40 X Return
EXPECT BIG FAT RETURN
FOR EARLY $ IN
©Copyright 2013 Steve Austin, All Rights Reserved 50
Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 51
Thank You!Thank You!
Steve Austin
saustin7777@gmail.com
www.linkedin.com/pub/steve-austin/1/ba2/35b/
email for Start Up Support!
Follow our meetups at
http://www.meetup.com/Startup-Heroes-Silicon-Valley/

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How to pitch wow to investors list, 28 may 2013

  • 1. Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 1 How to Pitch the Wow! to Investors By Steve Austin saustin7777@gmail.com Presented by http://www.meetup.com/Silicon-Valley-Startup- Idea-to-IPO/ at Workspring Palo Alto CA 28 May 2013
  • 2. Startup Heroes “Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it!” Johann Wolfgang von Goethe ©Copyright 2013 Steve Austin, All Rights Reserved 2
  • 3. Startup Heroes WE ARE NOT ATTORNEYS GET LEGAL ADVICE! Follow SEC RULES – Stay out of Trouble! ©Copyright 2013 Steve Austin, All Rights Reserved 3
  • 4. Startup Heroes Agenda 1st hr Pitch What about Angels? What Investors Need 2nd hr Make it Simple Pitch to Group ©Copyright 2013 Steve Austin, All Rights Reserved 4
  • 5. Startup Heroes 4 Steps 1. “Why” I believe… 2. “Wow” Factor ©Copyright 2013 Steve Austin, All Rights Reserved 5 3. Business Model 4. Simple Message Persona of Leadership
  • 6. Startup Heroes Act Like a Leader! People follow Inspirational Extra effort Credibility Humor Fair Listens Responsible Not defensive Learns & adjusts ©Copyright 2013 Steve Austin, All Rights Reserved 6 Steve Jobs Richard Branson Howard Schultz Martin Luther King Anne Mulcahy, Xerox Indra Noori, Pepsi
  • 7. Startup Heroes Pitch Basics 1. Be Confident 2. Don’t apologize 3. No “superlatives” – Huge market, – Fastest widget, etc 4. Use facts & numbers 5. Ask ©Copyright 2013 Steve Austin, All Rights Reserved 7
  • 8. Startup Heroes Most Important to Investors – Especially Angels 1.YOU & Team 2.Your ability to make it happen ©Copyright 2013 Steve Austin, All Rights Reserved 8
  • 9. Startup Heroes Pitching 60 Second Pitch • 20 Sec Pitch – 1 Sentence each point • 60 Sec Pitch – 2 – 3 sentences/point – Prioritize • 5 – 6 Minute Pitch – 10-15 Slides MAX – No slides ©Copyright 2013 Steve Austin, All Rights Reserved 9
  • 10. Startup Heroes 20 Second Elevator Pitch • Name • Title @ Company Name • “I believe __ (what is really important to you) • Problem • Big Market (optional) • Our Solution • Benefit is • Ask ©Copyright 2013 Steve Austin, All Rights Reserved 10 Say “Awesome” or“Facebook” an’ You Walk-the-Plank!
  • 11. Startup Heroes Angel Investors ©Copyright 2013 Steve Austin, All Rights Reserved 11
  • 12. Startup Heroes Think Like an Angel Entrepreneur ©Copyright 2013 Steve Austin, All Rights Reserved 12
  • 13. Startup Heroes 1. Net Worth $1Million + 2. Not including primary residence, or 3. Income $200,000/yr last 2 yrs 4. $300,000 if married 5. Expect same $ this year From Securities Act of 1933 What is an Accredited Investor? ©Copyright 2013 Steve Austin, All Rights Reserved 13
  • 14. Startup Heroes What’s the 1 Thing Angels Want Most? ©Copyright 2013 Steve Austin, All Rights Reserved 14 They don’t want to loose their money. Photo used without permission. http://www.zerohedge.com/article/value -losing-money
  • 15. Startup Heroes Angel Investors 1. Invest their own money 2. Not someone elses $ (like VC) 3. Write you a personal check $ 4. Don’t want to loose $! ©Copyright 2013 Steve Austin, All Rights Reserved 15
  • 16. Startup Heroes What is Usual Start-up’s ROI? Its terrible! About 90/100 fail Almost anything else is better! ©Copyright 2013 Steve Austin, All Rights Reserved 16
  • 17. Startup Heroes How Much $ Invest of Total Wealth? Prudent: Max 5% wealth Wealth Invest $/Y $5M $250K $50-100K $10 M $500K $50-100K+ $25 M $1.25M $100-500K Wealth Invest $/Y ©Copyright 2013 Steve Austin, All Rights Reserved 17
  • 18. Startup Heroes Investment Stages ©Copyright 2013 Steve Austin, All Rights Reserved 18
  • 21. Startup Heroes Valuation CEOs Job Increase Value $ SeedSeed Pre-Money Value + $ Investment = Post $ ExampleExample $1.2M + 400K Invest $1.6 M ExampleExample $1.2M = 75% + 400K = 25% $1.6 M =100% Series ASeries A Pre-Money Value + $ Investment = Post $ Series B (Mid)Series B (Mid) Pre-Money Value + $ Investment = Post $ ©Copyright 2013 Steve Austin, All Rights Reserved 21 Seed $1.00 / Share Series A $2.50 / Share Series B $4.75 / Share
  • 22. Startup Heroes What if Value Goes Down? CEOs Job Increase Value Series ASeries A $10 M = 55% + 8 M = 45% $18 M =100% Series BSeries B $12 M Pre $ + 4 M Invest $ $16 M Post $ ©Copyright 2013 Steve Austin, All Rights Reserved 22 Series ASeries A $2.50 /Share Series B $1.60 /Share 1. Share price goes down 2. Investor’s “Anti-dilution clause” protection 3. Make “whole” from Founder’s Share 4. CEO / Founder can be washed out
  • 23. Startup Heroes Effect of Anti-Dilution on Founders ©Copyright 2013 Steve Austin, All Rights Reserved 23
  • 24. Startup Heroes What Do Angels Look For? ©Copyright 2013 Steve Austin, All Rights Reserved 24
  • 25. Startup Heroes Mike Levinson, DreamIt Ventures An angel investor… looks at http://www.inc.com/guides/2010/10/how-to-pitch-to-angel-investors.html 1 1. Simple to understand 2. Problem / need? 3. Big enough market & customer base? 4. Right people ©Copyright 2013 Steve Austin, All Rights Reserved 25
  • 26. Startup Heroes http://www.youtube.com/watch? v=mBS0OWGUidc Jerry McGuire – Movie “Show Me the Money!” 2 ©Copyright 2013 Steve Austin, All Rights Reserved 26
  • 27. Startup Heroes Angels Need to Know the $ Story2 ©Copyright 2013 Steve Austin, All Rights Reserved 27 1. How much $ do you need? 2. What will you do with it? Use of funds - milestone 3. When will I get my money back? 4. What Co. will buy yours? Exit
  • 28. Startup Heroes INVESTOR CONCERNS ©Copyright 2013 Steve Austin, All Rights Reserved 28
  • 29. Startup Heroes What Entrereneur Sees ©Copyright 2013 Steve Austin, All Rights Reserved 29 Photos used withut permission with URLS on each Our Solution for Problem
  • 30. Startup Heroes What Investor Sees: Alternatives ©Copyright 2013 Steve Austin, All Rights Reserved 30 Our Solution for ProblemOur Solution To Problem Alternative AlternativeAlternati ve alt Alterna tive alt alt alt alt alt alt Alterna tive alt alt alt Alterna tive
  • 31. Startup Heroes Why So Much Return? 5 investments 2 Fail 1 Walking dead 1 Maybe 1 Great return! 20 XNeeds 5-20 X to cover High RISK of Failures ©Copyright 2013 Steve Austin, All Rights Reserved 31
  • 32. Startup Heroes Slide Deck Template From angelsforum.com ©Copyright 2013 Steve Austin, All Rights Reserved 32
  • 33. Startup Heroes Company Name “One Line Mission Statement” Before you start presentation, introduce yourself and the general concept From angelsforum.com
  • 34. Startup Heroes 1. The Problem • Clearly define the problem – Who is this a problem for? – The problem(s) should be unserved by competition From angelsforum.com
  • 35. Startup Heroes 2. Solution • How do you solve the problem ? • Tie solution to specific pain point • Create continuity in the story Product = 15% of time From angelsforum.com
  • 36. Startup Heroes 3. The Product • 1 or 2 product slides • Screen shots or pre-recorded video • Show product meets the specifications • Add detailed product features in appendix From angelsforum.com
  • 37. Startup Heroes 4. Leadership Team • CEO – Include company name & job title • CFO • CTO • Relevant experience From angelsforum.com
  • 38. Startup Heroes 5. Advisory board • Who is on the advisory board –What do you rely on them for ? –(i.e. advisor for CEO coaching) • CFO • Relevant experience
  • 39. Startup Heroes 6. Market • How “big” is market – investors want to see in $ – Convince me this is a big opportunity for my investment. – What market dynamics • What are key market segments (if appropriate)? • What is TAM and SAM? For SAM make bottoms up analysis • Have detail on TAM & SAM analysis - appendix
  • 40. Startup Heroes 6a. TAM > SAM > SOM TAMTAM Total Available Market – Ex: Total LED Market SOM: ServiceableSOM: Serviceable Obtainable Market – Realistic market share SAMSAM Served/Serviceable Available Market – Ex: Living colors LED segment TAM SAM SOM
  • 41. Startup Heroes 7. Competition • Direct and indirect • Highlight how your solution fills gaps • Recommend use a graphic on this slide – Put competition on X axis title and key features on Y axis – Highlight how your solution provides the right key features – Alt: 2 prime points on X & Y; develop scatter plot of competitive landscape • Have back-up slide – competition details
  • 42. Startup Heroes 8. Business Model How do you make money? From angelsforum.com
  • 43. Startup Heroes 9. Go-To Market Strategy How will you launch this?• How will you launch this? – Target customer now, - 12 months, 36 months? – Direct vs. Indirect sales – Leverage existing channels • Having an advisor a plus • How acquire customers in cost-effective manner? • “SEO” is not a strategy From angelsforum.com
  • 44. Startup Heroes 10. Financial Projections • Five year pro-forma • Revenue • COGS • Gross Margin • Key Opex (3-4 line items) • EBITDA • Cash • In Appendix - detailed five year if needed From angelsforum.com
  • 45. Startup Heroes 11. Capital Raise • How much $ so far? – What form, if priced round what was post-$ • How much $ Raising? – Convertible note or equity? – Valuation – How much soft-circled? – Specific milestones (i.e. use of funds) – Milestones should be tied to value creation for company. From angelsforum.com
  • 46. Startup Heroes 12. Future raises • Sample chart below – show what $ you will need in the future. Highlight CFP point (not on graph). • Be ready to talk to exit points and drivers for exit From angelsforum.com
  • 47. Startup Heroes 13. Exit • Who are potential acquirers? • What are comparable transactions? – Seller – Buyer – Valuation – Multiples, (revenue and EBITDA) – Key driver • Most likely exit? From angelsforum.com
  • 48. Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 48 The Wheel This is where you pivot!
  • 49. Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 49 Steve Austin saustin7777@gmail.com Call for Start Up Support! Thank You!Thank You!
  • 50. Startup Heroes Difference Between Loan & Equity Banker • Loans $500K • Wants LOW risk • Does NOT want huge returns • Wants avg interest ~ 10% • Pay back from SALES Margin DEMANDS PRINCIPAL BACK InvestorInvestor • Invests $500K • Accepts risk • Wants BIG returns • Will risk $ - more fear = • 5 – 40 X Return EXPECT BIG FAT RETURN FOR EARLY $ IN ©Copyright 2013 Steve Austin, All Rights Reserved 50
  • 51. Startup Heroes ©Copyright 2013 Steve Austin, All Rights Reserved 51 Thank You!Thank You! Steve Austin saustin7777@gmail.com www.linkedin.com/pub/steve-austin/1/ba2/35b/ email for Start Up Support! Follow our meetups at http://www.meetup.com/Startup-Heroes-Silicon-Valley/