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Essentials of a Great Investor Pitch - Entrepreneurship 101


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This lecture covers all the essentials of building and delivering an effective pitch to help you find financing for your entrepreneurial venture or sell your product to customers. Learn the elements of a good pitch deck and identify the key elements of good communication that successful start-ups use.

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Published in: Business, Technology

Essentials of a Great Investor Pitch - Entrepreneurship 101

  1. 1. May 2, 2012! Presented By:! Peter Evans ! Entrepreneur-In-Residence, MaRS! Founder & CEO, Speakerfile! @techmarketer! @speakerfile! Pg 2! © 2012 Peter Evans, MaRS Discovery Distric
  2. 2. Vision | Talent | Money Other People’s Money Fundamentally Changes Everything! Pg 3! © 2012 Peter Evans, MaRS Discovery Distric
  3. 3. The Investment Paradox!Entrepreneurs & Investors Take Different Approaches! Entrepreneurs! Investor! Getting to! Getting to! ! ! YES! NO! Pg 4! © 2012 Peter Evans, MaRS Discovery Distric
  4. 4. Finding the Right Match!Matching the Venture to the Investor! Capacity! Team! Has funds ! Skills & " to invest! Track Record! Compatible! Platform!Successful! Match of ! Market! Track ! Significant " Size/Stage/! Sizable and " Record! Technological" Geography! Addressable! Advantage! The Right! The Right! Investor! Investment! Friendly! Traction! No directly! Strategic! Early " IP &! competitive! Relevant! Customers" Bus. Model ! investments! Portfolio! ! Entry Barriers!Entrepreneurs want…! Investors want...! Pg 5! © 2012 Peter Evans, MaRS Discovery Distric
  5. 5. Getting to Yes: 3 Levels of Engagement! Emotional! Rational! Financial! Pg 6! © 2012 Peter Evans, MaRS Discovery Distric
  6. 6. Engaging Investors on All 3 Levels!!Some tips for scoring on emotional, rational financial elements !!!  Storify! Create a well paced, logical narrative….think storyboard!!  Disnify! Use visuals - frameworks, graphics and images…But only where they make sense…you are not keynoting a TED talk!!  Personify! Relate to the team’s personal experiences…investors are in the people business.!!  Simplify! Avoid too much detail, overused buzzwords and jargon…getting a term sheet after first meeting is not the goal !!  Verify! Can you finish this sentence? “As evidenced by…” Show a sense of discipline in measuring the right things from market research to key metrics for the business! Pg 7! © 2012 Peter Evans, MaRS Discovery Distric
  7. 7. Components of the Investor Pitch! #1! #3! Real! Unique!Problem! Advantage! #2! #4!Attractive Compelling Market! Investment! Pg 8! © 2012 Peter Evans, MaRS Discovery Distric
  8. 8. Pacing the Pitch! Selling your story in 12 minutes! #1! #2! #3! #4! Real! Attractive Unique! Compelling Problem! Market! Advantage! Investment!Start! End! (3 min)! (4 min)! (4 min)! (3 min)! (2 min)! !"#$%&"()*+,&-"./&,"*0&"123-&)34&,"$4)5""" Pg 9! © 2012 Peter Evans, MaRS Discovery Distric
  9. 9. Answering the “So What?”!Focusing a Problem that Matters! 1! Real! Problem! Pg 10! © 2012 Peter Evans, MaRS Discovery Distric
  10. 10. Creating Impact! The Company & It’s Solution – Elevator Style! Introduction" !  Core Value Proposition: Use a single sentence:! !  Unique Benefit: Focus on one single aspect of what you do (aka…”the big idea”)! !  Metaphors: Provide a cognitive connection (the movie pitch) i.e. ”we’re the x of the y business.” ! Start! Real Problem! Min 3! !  Emotion: Create a visceral response (why are things still done this way?) Be provocative….Nice to have’s aren’t investable!Key Message: We’re fixing the insanity of the status quo! Pg 11! © 2012 Peter Evans, MaRS Discovery Distric
  11. 11. Defining the Problem! Paint a picture of who has this pain! Introduction" !  Current State: Show the insanity of how customers address the issue today! !  Historical Evolution: What’s changed in the customer’s mindset ! !  Personas: Describe the main players in your Start! Real Problem! Min 3! market you address! !  Pictures: Every picture tells a story! Problem"Key Message: We’re solving real pain…not “nice to haves”! Pg 12! © 2012 Peter Evans, MaRS Discovery Distric
  12. 12. Your Solution to the Rescue! Describe WHAT you do and HOW you do it! Introduction" !  Product: What is it? " (screen shots, product photos)! Solution" !  Functionality: The Who + Do! !  Benefits: High level value! Start! Real Problem! Min 3! !  Category: Where do you play?! !  Stage: What is the readiness of the solution? ! Problem" !Key Message: Our solution is novel and easy to understand! Pg 13! © 2012 Peter Evans, MaRS Discovery Distric
  13. 13. What’s Been Achieved to Date?! Show your ability to succeed: On lots of sweat…little $! Introduction" !  Founded (Year)! !  Employees (FT/PT) Offices! Solution" !  Product Release(s)! !  Beta Users/Unique Views/ Registrations! Start! Real Problem! Min 3! !  Paying Customers! !  Partners (Technology/Channel)! !  Certifications/Industry Awards! Problem" !  Media Coverage! !  Patents! Traction"Key Message: Our team is committed and can execute! Pg 14! © 2012 Peter Evans, MaRS Discovery Distric
  14. 14. Case Study: Quantum Dental! Changing the Way Dentists Detect & Treat Tooth Decay Investor Presentation: October 20th, 2010 MaRS Angel Breakfast Quantum Dental Technologies Lisa Crossley, CEO Pg 15! © 2012 Peter Evans, MaRS Discovery Distric
  15. 15. Case Study: Quantum Dental! Existing Tooth Decay Diagnostics Gold standard detection methods (visual & x-ray) fundamentally unchanged for decades. Tooth Decay Detected Pg 16! © 2012 Peter Evans, MaRS Discovery Distric
  16. 16. Case Study: Quantum Dental! The Canary Console by Quantum Dental Technologies Canary interactive software and printed patient reports Pg 17! © 2012 Peter Evans, MaRS Discovery Distric
  17. 17. Case Study: Quantum Dental! Company Overview What we do !  Quantum Dental Technologies has developed a new platform which uses a low- powered laser to detect tooth decay earlier and more accurately than conventional technologies, allowing dentists to treat & heal the teeth instead of “drill, fill & bill”. Milestones !  Product - Dental Clinic model designed, first commercial units manufactured !  Customers - Over 50 pre-orders secured !  IP - Strong patent portfolio !  Clinical - First Health-Canada approved clinical trial completed, second trial in progress, providing independent validation of safety & efficacy !  Partnerships – Relationships with key global distributors and major multinational strategic partners Financing !  $3.3M raised to date, seeking an additional $2.5M to reach breakeven !  Funds: Sales/marketing to support launch; large-scale mfg; final reg. approvals Pg 18! © 2012 Peter Evans, MaRS Discovery Distric
  18. 18. Case Study: Quantum Dental! Market Problem Dentists’ Concerns Limitations of Current Patients’ Concerns Detection Methods !  Need to increase !  High false positives / !  Discomfort during revenues, leverage false negatives x-rays office staff to reduce !  Can’t detect early !  X-ray exposure costs tooth decay !  Painful and costly !  Need to attract new !  Can’t detect decay on restorations patients all tooth surfaces !  Weakened tooth !  Need new !  Interference from structure diagnostic tools that orthodontics provide more accurate detection of tooth decay Pg 19! © 2012 Peter Evans, MaRS Discovery Distric
  19. 19. Case Study: Quantum Dental! Value Proposition Value to the Dentist !  Attract new patients: with state of the art technology and a minimally invasive approach !  More patient visits: more frequent visits for patients enrolled in remineralization programs !  Reduce costs: scans can be performed by other staff (hygienists, assistants) !  Affordable: flexible leasing options provide immediate profitability Value to Patients & Insurers !  Reduce costly & painful restorations Pg 20! © 2012 Peter Evans, MaRS Discovery Distric
  20. 20. Case Study: Quantum Dental! What it is – Canary Console !  Show product with call outs Laser & Intra-oral Camera Console Eye Shield Handpiece CA Patent # 2314691 US Patent # 6584341 Pg 21! © 2012 Peter Evans, MaRS Discovery Distric
  21. 21. Case Study: Quantum Dental! What it is - Screenshot Odontogram Menu Options Camera Image Canary Number Pg 22! © 2012 Peter Evans, MaRS Discovery Distric
  22. 22. Case Study: Quantum Dental! The Life Cycle of Tooth Decay Healthy Early Advanced Tooth Enamel Decay Enamel Decay Demineralization Remineralization Remineralization Therapies The Canary System Scan X-Ray, Drill Fill & BIll Pg 23! © 2012 Peter Evans, MaRS Discovery Distric
  23. 23. Opportunity Awaits!Lots of Room in the Market to Scale a Business! 2! Attractive Market! Pg 24! © 2012 Peter Evans, MaRS Discovery Distric
  24. 24. Sizeable Market Opportunity! It’s Very Big …And you Can Get To It! !  Size: What’s being spent today on problem? Build from ground up. Can the market support multiple Market Size" players?! !  Addressability: What’s the reasonable market you can serve? ! !  Trends: Focus on Formative Forces (PESTLEC) –Is the problem getting worse or growing over time?!Min 3! Attractive Market! Min 7! !  Charts: Keep it visual and engaging! !  Segments: Going Niche or broad?! !  Global: Identify other markets! !  Proof: Use 3rd Party reports! !  Thought Leadership: Are you using primary research to gain insight?! Key Message: We have unique insight into the market! Pg 25! © 2012 Peter Evans, MaRS Discovery Distric
  25. 25. Early Customers/Prospects! Nothing really matters till somebody buys/downloads something! Market Size" !  Status: Closed vs. Prospects and " Paid vs. Free Trial ! !  Categorize: Key segments etc.! !  Contextualize: Why they bought! !  Personas: Describe customer characteristics!Min 3! Attractive Market! Min 7! !  Logos: Categorize …Avoid “logo soup”! !  Evangelists: Customer quotes to validate Customers" market pain and size ! ! Key Message: We have buyers who must have our solution ! Pg 26! © 2012 Peter Evans, MaRS Discovery Distric
  26. 26. Making Money! Where does the growth and profit come from?! Market Size" !  Key Metrics: Pricing, Avg. Deal Size, Registrations/Subs., Churn, LTV etc. Note: Revenue Model" Cost to Acquire is perhaps the most overlooked and important metric! !  Channels: What are the downstream costs to sell and service the customer (is this built in?)!Min 3! Attractive Market! Min 7! !  Competition: Is your model sustainable if competitors start stealing share? Have you factored in potential of downward price pressure over time? ! Customers" Key Message: We’ve validated our revenue model and can ! demonstrate how it will allow us to scale the business ! Pg 27! © 2012 Peter Evans, MaRS Discovery Distric
  27. 27. Acquiring Customers! The most visible proof there’s a market for your solution ! !  Visibility: Critical to success.. " what’s your unique story?! Market Size" !  Lead Generation Programs: What marketing Revenue Model" approaches will you use (stay high level – categorize)! !  Sales Model: Direct vs. Channel (Do you have partners? Have you built a wave for channels to ride?) !Min 3! Attractive Market! Min 7! !  Systems: Do you have an infrastructure to scale (CRM/Inbound Mktg. Platforms etc.)! !  Testing: Do you have capability to test value prop./ Customers" offers?! !  Stages: Do you have the ability to pivot from launch Marketing & Sales" to growth to maturity?! Key Message: We have programs, systems and talent to ! drive visibility, lead gen. and close deals! Pg 28! © 2012 Peter Evans, MaRS Discovery Distric
  28. 28. Case Study: Wave Accounting! Changing the business of small business accounting. November 9th, 2010! Kirk Simpson, President & CEO MaRS Angel Breakfast" Pg 29! © 2012 Peter Evans, MaRS Discovery Distric
  29. 29. Case Study: Wave Accounting! The Market Opportunity Wave is at the forefront of some powerful trends: 1.  The explosion in SaaS •  primary driver is accessibility anywhere •  collaboration Free Agent •  auto-backup Nation 2.  Paper to digital •  lose the shoebox by bringing in digital 28.5 million copies of the transaction in North America! 3.  Wireless •  turn downtime into productive time Strong desire to be organized, •  increase automation lack competency in this area but looking for control. 4.  Collaborative Consumption •  show me what my peers are spending so I can make better decisions Confidential – Wave Accounting Inc., 2010 2 Pg 30! © 2012 Peter Evans, MaRS Discovery Distric
  30. 30. Case Study: Wave Accounting! Recent Successes !  1.8 million users in 2 years – !  2 million + users 4.2 million after 4 years !  Monthly fee for use !  Sold for $170 million (17 times rev or $140 per user) to Intuit in 2009 Confidential – Wave Accounting Inc., 2010 3 Pg 31! © 2012 Peter Evans, MaRS Discovery Distric
  31. 31. Case Study: Wave Accounting! Revenue Model Targeted Offers & Research !  Wave will embed targeted offers within the app based on users’ data (never against personally identifiable information) – Telus now a customer !  Selling aggregated research about what’s happening in this key market Confidential – Wave Accounting Inc., 2010 4 Pg 32! © 2012 Peter Evans, MaRS Discovery Distric
  32. 32. Case Study: Wave Accounting! Revenue Model Premium Products Tax Returns Web-based tax preparation (for a fee) Additional modules available for a fee (built by Wave or through 3rd party integrations) !  Payroll (in discussions with several U.S. and Canadian providers) !  CRM !  Receipt entry (shoeboxed) !  Email learning Confidential – Wave Accounting Inc., 2010 5 Pg 33! © 2012 Peter Evans, MaRS Discovery Distric
  33. 33. Case Study: Wave Accounting! Go to Market Strategy CAPTURE RETAIN !  PR – already featured in the !  Integration Stickiness Financial Post and Profit Auto-syncing banking data Magazine. U.S. PR through every night November Hoffman. !  Communication: !  Social media and blog to drive Informative, insightful weekly 16 SEO emails !  Partnerships, i.e. Freshbooks, !  Offers: Value-added, banks, accounting firms contextual, time sensitive offers LAUNCH !  Vertical Communities: Custom chart of accounts for 40+ !  Collaboration tools with industries internal and external advisors (i.e., accountant) !  Advertising: Google Adwords, Facebook Ads, LinkedIn DirectAds !  Focus on customer service Confidential – Wave Accounting Inc., 2010 6 Pg 34! © 2012 Peter Evans, MaRS Discovery Distric
  34. 34. You are in the Best Position to Win!Many of the essential pieces are in place ! #3! Unique! Advantage! Pg 35! © 2012 Peter Evans, MaRS Discovery Distric
  35. 35. Partners! Show how you can punch above your weight ! !  Role: What value will they add to your solution Research/Development/Sales/Support etc.! Partners" !  Reputation: Do you you have the right players in the market you are serving? ! !  Category Fit: Do they have sufficient market power?! Min 8! Unique Advantage! Min 10! !  Executive Sponsorship: Do you have buy in from key people inside the channel? ! !  Incentives: Is the partner aligned financially to support you?! !  Longer Term: Is there competitive threat or potential M&A?!Key Message: Important market players buy into our !vision and want to work with us! Pg 36! © 2012 Peter Evans, MaRS Discovery Distric
  36. 36. Technology/IP! Creating barriers to entry! !  Technology: Validate how you are different? Partners" How much market lead do you have? What degree of leverage and scale do they create?! !  Process: Are there unique process elements of how your technology works?! !  Licenses: Are there 3rd party components of your solution that are licensed? Do you have an Min 8! Unique Advantage! Min 10! exclusive right to the technology? ! !  Patents: What is the focus of the patent and what stage are you at? (provisional filing, patent Technology/IP" granted) – Not a bad idea to mention any name brand attorneys you work with.! !Key Message: We’ve nailed a problem that is hard to solve. !It will be hard for competitors to catch up! Pg 37! © 2012 Peter Evans, MaRS Discovery Distric
  37. 37. Team & Advisors! The capabilities to execute on the plan! !  Company Background: List experience in terms Partners" of key companies each team member worked for. List “pedigrees” (notable exits).! Team & Advisors" !  Planned Hires: Speak briefly to what primary role they will play in the venture! !  Achievement: Focus on a key aspect of their Min 8! Unique Advantage! Min 10! experience that uniquely qualifies them for the venture! !  New Hires: Where applicable, speak to any key Technology/IP" people you may be hiring to build out the team!Key Message: We have assembled the right mix of people whounderstand our target customers and the dynamics of the marketplace.We have “know how” and “know who.”! Pg 38! © 2012 Peter Evans, MaRS Discovery Distric
  38. 38. Case Study: Verold! Automating 3D! Jad Yaghi! Co-Founder and CEO!! Pg 39! © 2012 Peter Evans, MaRS Discovery Distric
  39. 39. Case Study: Verold! Competitors! Manual Tools ! Automated! Other Scanners! Rapid Asset Creation! !! !! No Special Hardware! !! !! !! Ready to Animate ! !! !! Any Size Object! !! !! !! Full Automation! !! !! Simple to Use! !! #$%&"6%7&0"83,2*),",297"*,":;:<,"9*4"*),$"=&"2,&-"7&0&"" Pg 40! © 2012 Peter Evans, MaRS Discovery Distric
  40. 40. Case Study: Verold! IP Portfolio! •  R&D conducted top German University (Computer Graphics Lab! •  Concepts, high level methods by our CTO, Matthew Sloly! •  Key Patents:! IP Developed by Verold! Licensed IP! Work-flow for automated creation of Automatic retargeting of 3D meshes! animation-ready 3D models! Animation content transfer! Multi-user real-time 3D model Automated Rigging! reconstruction! 3D City reconstruction from images! Pg 41! © 2012 Peter Evans, MaRS Discovery Distric
  41. 41. Case Study: Verold! Team/Advisors! Name! Position! Background! Matthew Sloly! Co-Founder & •  Internationally recognized digital artist with work in the CTO! collection of the National Gallery of Canada! •  Co-Invented majority of the IP being commercialized! Jad Yaghi! Co-Founder & •  Serial entrepreneur with over eight years management CEO! experience in startup environments! •  Previously Strategy Consultant with Monitor! Oliver Schiffers! CMO! •  Founded two online and VR companies 1996 and 1998! •  10 years experience, Senior Consultant and Head of Marketing Strategy in ICT, Sapient! Alexander Oganov! Business •  Angel InvestorSuccessfully invested in 32 early stage Development! companies! Nils Martins! 3D Engine •  Virtual Reality Center, Aachen! Developer! •  4 years geometry processing and game engine development! Dr. Leif Kobbelt! Chief Computer •  Computer scientist at RWTH Aachen! Scientist! •  Geometry Processing! Advisory Board! Chris Cole (Co-founder of Mathematica, ActiveWorlds, consultant Disney Imagineering) ! !! Robert Quance (entrepreneur in Residence, MaRS)! Georgy Oganov (Chief strategist at Gaz-Prom, former Russian ambassador)! Pg 42! © 2012 Peter Evans, MaRS Discovery Distric
  42. 42. There is Upside for Investors!Presenting the Offer for Investment! #4! Compelling! Investment! Pg 43! © 2012 Peter Evans, MaRS Discovery Distric
  43. 43. How You Will Make Money! Key Metrics that Explain the Bottom Line for Investors! ! Financials" !  Key Numbers: Revenues, Expenses, EBITDA, Customers, Headcount ! !  Burn Rate: What is the net cash out month! !  Assumptions: Be prepared to defend them !Min 10! Compelling Investment! End! !  Scenarios: Be able to speak to impact of various scenarios (i.e. Cost of Acquisition is x % higher than forecast or lack of conversion from free to premium)!Key Message: Our venture clearly offers a superior return for ourinvestors.! Pg 44! © 2012 Peter Evans, MaRS Discovery Distric
  44. 44. The Ask! Value & Deal Structure/Terms & Use of Funds! !  Investment Structure/Terms: Type of Instrument (Convertible Debt, Equity) and what are the terms Financials" of the deal ! !  Amount: What’s been raised and what is left in the round? Use of Proceeds: What milestones will you achieve (with the investors money)! !  Runway: What amount of time does the current money buy (can you hit breakeven or is a newMin 10! Compelling Investment! End! round required?) ! !  Pipeline: Be prepared to speak to who is committed so far and who are you approaching. You must show momentum – “herd dynamics.”! Offer Details" !  Valuation: Be careful about “premature” discussions regarding pre-money value – don’t price from the podium! !Key Message: Our structure and terms should meet your investment criteria! Pg 45! © 2012 Peter Evans, MaRS Discovery Distric
  45. 45. Financial Projections! 2011 2012 2013 2014 2015 Number of Licenses # # # # # Revenue $______ $______ $_______ $_______ $_______ Expenses $______ $______ $_______ $_______ $_______ Gross Margin % % % % % EBITDA $_______ $_______ $_______ $_______ $_______ Total Head Count # # # # # Pg 46! © 2012 Peter Evans, MaRS Discovery Distric
  46. 46. Financing & Use of Funds!!  Investment to Date: $_______! –  $______ support from government programs/grants (if applicable) ! –  $______ cash investment from founders and angels!!  Current Raise: $________!!  Use of Funds (See Examples Below)! –  Build Marketing programs! –  Hire US and European sales team! –  Commercial launch of V1.0 product in North America and Europe! –  Secure final regulatory approvals! –  Finalize Patents! –  Initiate large scale manufacturing!!  Further Fundraising (Speak to Runway – See Example Below)! –  Planned A Round Financing (Jan. 2013) … or….! –  Expect to achieve cashflow positive with the proceeds of this raise ! ! Pg 47! © 2012 Peter Evans, MaRS Discovery Distric
  47. 47. A Recap: The 4 Components of the Pitch! #1! #3! Real! Unique!Problem! Advantage! #2! #4!Attractive Compelling Market! Investment! Pg 48! © 2012 Peter Evans, MaRS Discovery Distric
  48. 48. In the End…The Investment is in You!11 signals smart investors look for!! 1. Honesty…….........................Gives straight answers to investor questions! 2. Credibility…..........................Demonstrates customer insight/thought leadership! 3. Resourcefulness……………!Can make an investor’s dollar go far! 4. Logic …………….……………Makes wise, pragmatic decisions quickly! 5. Drive…………………………..Genuine passion for early stage & ability to excite! 6. Humility……………………….Coachable and seeks help to address weak spots! 7. Leadership……………………Has the ability to attract and lead a winning team! 8. Critical Thinking……………..Challenges assumptions and spots the false +’s! 9. Commitment……………........Not just involved - sweat &/or capital invested!10. Patience……………...............Tolerance to the ambiguity of innovation !11. Agility……………...................Decisive…Cuts losses & pivots at the right time ! Pg 49! © 2012 Peter Evans, MaRS Discovery Distric
  49. 49. Peter Evans, Entrepreneur-In-Residence, MaRS! @techmarketer!! Pg 50! © 2012 Peter Evans, MaRS Discovery Distric