Transcript Your Fundraising Weapons - UTSA College of Business
David R Clark Director of Investment Services
Pop Quiz
I want to start a new venture because:
a)My invention/discovery will help mankind.
b)I want to build a company dominant in the market.
c)I want to get rich.
d)All of the above
Recommended Documents
(In order of importance) 1. Investor Presentation 2. Elevator Speech 3. Business Plan 4. Executive Summary 5. One Page Summary 6. Customer Brochure
Recommended Documents
(Probable Chronology) 1. Business Plan 2. Elevator Speech 3. Investor Presentation 4. Executive Summary 5. One Page Summary 6. Customer Brochure
Venture Investment 101 What they want to know
1. What is the technology?
2. How big is the market?
3. Who is on the Management Team?
4. Is this a good deal?
Investor Presentation
• • • • •
Single most important aspect of fund raising Play to your audience Be respectful of time Business attire Objectives:
– – –
Not to close the deal Invitation to ‘talk’ Build investor confidence in you
Typical South Texas Format
• • • • •
Presentation: 20 minutes Q&A: 20 minutes Investor discussion: 20 minutes
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You’re not in the room Timekeeper usually present BTW: This is a ‘somewhat’ universal format for angel groups
Content Elements
• • • • • •
The problem?
Product/Service Value proposition Market Competition Competitive advantage
• • • • • •
Management team Revenue model
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Revenue received Funding request Uses of funding Funding milestones Pre-money cap table
Content Timing
• • •
Every deal is different It’s your message and your deal However,
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Management
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Technology
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Market
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Financials
Coaching Tips
• • • • • • •
Show passion Show confidence Demonstrate knowledge Minimize hyperbole
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Name dropping It’s a business deal not an invention Presentation Team members Consistent team attire
More Coaching Tips
• • • • • • • •
Graphics, color, & photo’s No hard to read slides
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10-20-30 rule Do not read the slides
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Watch the audience Well choreographed Numbers all ‘foot’ Copies for audience “show & tell” Practice timing
Q&A Coaching Tips
• • • •
Short direct answers No ‘piling on’ Backup slides
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Cheat sheet Curve balls
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May be asked for a term sheet
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Avoid technical discussions Don’t get defensive or angry
Après-Presentation
• • • • •
Do a post mortem on each presentation given Build an inventory of slides Be prepared to give many presentations Remember you are only looking for a few investors Expect ‘stay in touch’
Why a Business Plan?
Business Strategies Product Development Sales & Marketing Financial Others Management in sync
(Equity Funding World)
Sell the venture Due Diligence
Preliminary Remarks
No proprietary warnings About 20 pages without exhibits About 6500 -7500 words 10 or 12 pt Times New Roman Spellchecker Flesch-Kincaid Readability <30 Table of Contents and page numbers
Technology
Detailed description of the problem Set up the Value Proposition What is the solution 5 th grader rule Product Description Feature
Function
Benefit Intellectual Property State of Development
Market
Market Need Market Size Competition Direct & Indirect Differentiators Pricing Strategy Sales Strategy and process Revenue sources
Management Team
Who is on the team Domain Expertise Entrepreneurial Experience Board of Advisors
Attractive Investment
Pro Forma P&L – To Exit (5-7 years) Assumptions driving the numbers 20X N5 Pro Forma Balance Sheet Cap table Funding Request Pro Forma Cash Flow The ‘Deal’ and Liquidity Events Use of Funds Integrated timeline
Integrated Timeline ($K)
Development Sales & Mkting Cash
$20 Alpha $110 Beta Production Hire Sales Sign 1 st Distr 1 st Sale $15 $205 $120 Continued Sales $90 $135
Investment
$150 $350
Cosmetics & Presentation
Lots of graphics and color Puppies & Kittens Professional binding with heavy paper Double sided printing May want to consider a Marketing Communications advisor The objective is make it easy to read
What really happens
1. Read the first paragraph 2. Look at the financials $ Revenue line 3. Look at the Management Team Is there a ‘hook’?
How much & 20X N5?
Can they pull this off?
The Elevator Pitch
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Origins in “.com” period around 2000 Short pitch which tells potential investor about the deal Objective is to get an invite to present the deal Could be investors ‘first cut’ 23
Key Elements
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Early ‘hook’ Brief description of the product or service Revenue model Management team Competition Competitive advantage Call to action 24
Sample Pitch
SeekingCapital.com is changing the future of private equity investing.
Private equity is a $100 billion a year market, with over 400,000 entrepreneurs aggressively seeking capital at any given time.
SeekingCapital.com offers entrepreneurs and investors an efficient and uniquely interactive method for obtaining or investing capital in pre-IPO companies.
SeekingCapital.com is not an "Internet only" company, but supports its online community with local franchises in the United States and internationally.
Our team has decades of experience in the securities industry, investment banking, private equity, and executive management. My partner and I have worked together side by side for several years co-managing and running the entire Internet operations of a publicly traded brokerage firm.
Our competitors such as XYZ Corp. and ABC Capital have had much success-ABC Capital was recently valued at $550 million . . . despite several limitations.
SeekingCapital.com isn't just a listing or matching service, we offer a community that breeds interaction, education, and discussion. We work with companies globally, through all stages of funding, and across all industries.
We are anticipating $XXX million this round to be used for employee building, increased office space, and marketing.
We have a compelling two page executive summary that I would like to send you. Can I get your address?
Hook Product/ Service Market Revenue Management Competition Advantage Call to action 25
Coaching Tips
• • • • •
Show passion Show confidence Minimize hyperbole It’s a business deal not an invention Google “elevator pitch” 26
Biggest Mistakes by Entrepreneurs 1. Too much on the technology 2. Too little on the Management Team 3.
Failure to abide by the ‘5
th grader rule
’.
4. Failure to articulate the Value Proposition 5.
“There is no competition.” 6.
“This assumes only a 1% market penetration.” 7. Too much or too little detail on the Pro Forma 8.
Does not state ‘The Deal’