Transcript New Venture Challenge Phase II Kickoff

11th Annual Edward L. Kaplan
New Venture Challenge
Phase II Kickoff:
Orientation Session
Monday, March 5th, 2007
Professors Ellen Rudnick and Linda Darragh
The University of Chicago Graduate School of Business
L. Darragh
E. Rudnick
Agenda
• Course overview and objectives
• Course logistics and administrative details
• Classroom presentations
• Business plan development guidance
• Q&A
• Team introductions and “elevator pitches”
L. Darragh
E. Rudnick
Course Overview and Objectives
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What the course does:
– Provides opportunity to work on a business plan and get
course credit.
– Leaves most of the work and responsibility on you.
– Provides guidance and constructive criticism for improving the
plan and your presentation.
– Provides access to a resource network.
– Provides an experiential learning opportunity to apply the
knowledge and skills you have acquired at the GSB .
– Creates a few good companies.
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What the course does not do:
– Lecture.
– Tell you exactly what to do.
L. Darragh
E. Rudnick
Course Logistics and Administration
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To participate in course as presenter, at least one member of the
team must take the course for credit.
– Teams with no team member taking course for credit can
audit, but cannot present and do not get coaching.
Course begins now!
Syllabus in Book Store provides a number of articles and sample
business plans.
Presentations of your business plan will begin the first week of
class.
Both sections will have sessions on presentation skills, legal
insights and developing the marketing and financial forecasts
Part-time coaches available:
– Bob Rosenberg/Waverly Deutsch;
Other coaches/mentors may be assigned
Presentation days: 3-5 outside judges will be in class
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Course Logistics and Administration
(cont.)
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Important Dates:
– March 26th, first week of class, first round of presentations.
– April 27th, full business plans due.
– Week of April 30th, second round of presentations begin.
– May 24th, finals at Hyde Park Center.
Other business plan competitions.
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Confidentiality.
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Registration process.
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Adding new team members.
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L. Darragh
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Course Logistics and Administration
(cont.)
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Grading
– Business Plan – 70%
• Quality of work on plan (not quality of idea)
• Quality of classroom presentation
– Class participation – 30%
• Credit for helping other teams with their ideas
Provisional Grades
– Participate in class
– Hand in plan on April 27th  guarantees a D
– Miss either of these  No provisional grade
L. Darragh
E. Rudnick
Functions of the Business Plan
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Planning tool
– Evaluate strategies, define needs, set objectives.
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Sales Document for Raising Capital
– Introduction to the business.
– Tool for basing investment decision.
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Measure and Monitor Performance
– How much progress is made against original objectives.
– Identify emerging problems.
L. Darragh
E. Rudnick
Business Plan Is a Process
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Plan will be edited, reworked, revised over time.
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No one can predict the road map for success.
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Ability to adapt to new and unforeseen developments key to
success.
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Elements of the Business Plan
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Executive Summary
Company Description
Management
Product
Marketing and Sales (including competitive information)
Operations
Financial Statements and Projections
Appendices
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Executive Summary
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Most important part of plan; investors will not read further if story
not compelling
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2-3 pages
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Should be done after preparing the rest of the plan and it should
distill each section of the plan
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Should include:
– The company’s background
– The product / service and its technology (any proprietary
advantages)
– Description of value proposition
• How do customers benefit? Before and after
• Why will they buy from you?
• How will you get them?
– Market potential for the product
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Executive Summary (cont.)
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Management team and its track records
Key advisors and/or strategic relationships
Key financial data: five year forecasts
Amount of capital required
Key milestones
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Items for Appendices
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Detail of Financial Forecasts
Management resumes/bios
Patent Information
Pictures or drawings of product
Relevant articles in press or trade journals
Market research information
Summary of key contracts or business relationships
L. Darragh
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Strategy for Presentations
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Between now and presentation:
– Talk to customers / potential customers.
• Will they buy product / service? Why?
• What do you have to do to get them?
• What will they pay?
– Get beta customers?
– Identify and approach resources that can help.
• Advisors?
• Employees / management?
• Alliances / partners?
• Suppliers?
• Other strategic relationships?
L. Darragh
E. Rudnick
Strategy for Presentations
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First presentation should be designed with goal to elicit
feedback and get information.
– Idea is to be as open as possible, not defensive.
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Ask for help / suggestions:
– Describe what you are unsure of that you need to investigate.
– Describe the resources you would like to obtain:
• Advisors?
• Employees / management?
• Alliances / partners?
• Suppliers?
• Other strategic relationships?
L. Darragh
E. Rudnick
Investor Presentation
Key elements of an investor presentation:
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The Opening
Problem and Solution
Market
Competition
Sales Strategy
Business Model
Management
Funding Request/Exit Strategy
Closing
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Opening
Goals for your opening:
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Get their attention (positive reaction)
Give them a reason to listen further
Establish credibility
Build rapport
Tell a story
Use an analogy
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Problem and Solution
• What is the current problem?
• How does your business solve this problem?
• How big is the pain?
• Succinctly provide enough information for your
audience to understand the basic principles of
your product or service and how it solves the
problem.
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Market Opportunity
Industry Dynamics
• Is this market growing?
• At what rate?
• What factors are affecting this industry?
Market Size – (the Carl Sagan number)
The Addressable Market
L. Darragh
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$ 2.8 Billion art supply
industry
Paint
Frames
Brushes
Addressable Market
Surfaces: 21% or $558
Million
75% market
is price
sensitive
25% Prof
artists or
$147Million
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E. Rudnick
Competition
Avoid these statements!
• We have no competition.
• We have the first mover advantage
Analyze your competition with respect to
key features and benefits
What are your barriers to entry?
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Evaluation of Competitive Advantages
•xxx
•Std
Calc
•Online
calc
•PDA
solution
•Barcode
scanners
•CPOE
•IV Smart
Pump
•Criteria/Metrics
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•Price
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•Ease of Use
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•Portability
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•Implementation Time
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•Integration w/other Tech
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•Database Integration
•Functionality
Best
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Marketing and Sales Strategy
What is your Go-to-Market strategy?
• How do you know your customers will buy from
you?
• How are you going to sell to them?
• Does your product need support and service?
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Revenue Model
How will you make money?
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Expense assumptions:
• Unit Economics
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Revenue assumptions:
• How many will be bought?
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Financial Projections
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% of Company ABC Revenue
Unit Economics
13%
Customer Service
19%
Sales & Marketing
11%
Sensors, Gateways and Other Technology
11%
Maintenance, Insurance and Overhead
Transaction Processing and Wireless Data
8%
38%
Operating Profit
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Financial Projections
$17 M
Revenue
$17 M
$15 M
$13 M
$11 M
Cash flow
positive in Q4Y2
Expenses
$9 M
$7 M
Net Income
and
Cash Flow
$4.1 M
$5 M
$3 M
$1 M
($1 M)
Management
Contracts:
Markets:
Year 1
Year 2
Year 3
Year 4
3
45
135
267
SF
LA
Seattle
Houston
Financial Projections
Revenue
Cost of Goods Sold
Gross Income
Operating Expenses
Net Income (Loss)
2005
$122,500
$73,500
$49,000
$223,900
($186,100)
2006
$612,500
$312,500
$300,000
$283,100
$3,300
2007
$1,000,000
$555,000
$445,000
$374,000
$47,600
2008
$1,643,750
$848,750
$795,000
$529,375
$208,297
2009
$2,000,000
$1,037,500
$962,500
$622,300
$203,808
Gross Margin
EBITDA
IRR
Owner Interest
Angel Investment
40.00%
($174,900)
N/A
$75,000
$200,000
48.98%
$16,900
N/A
73.00%
27.00%
44.50%
$71,000
-27.87%
48.37%
$265,625
34.85%
48.13%
$340,200
58.38%
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Funding Request
Funding request should be illustrated in the
financial projections
1.
Table: Use of Funds
2.
Table: Source of Funds
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Exit Strategy
• List of likely acquirers
• Comparables – recent exits in similar
businesses
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Management Team
• What type of skills and expertise is required to
launch and grow the business?
• Who is on the current team? What do they bring
to the business?
• Who do you still need to recruit?
• Advisory Board?
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Closing
Make this memorable!
• Accomplishments to date
• List the strengths of your business and team
• Reiterate how much pain there is and this is the
best solution.
Show Passion!
Convince the Judges!
L. Darragh
E. Rudnick
Our Availability:
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Generally available. Call or e-mail first to make
appointment.
Linda Darragh
– Call: 773-702-9108 / E-mail: [email protected]
Ellen Rudnick
– Call: 834-3781 / E-mail: [email protected]
Waverly Deutsch (Coach)
– Call: 834-0484 / E-mail: [email protected]
Bob Rosenberg (Coach)
– Call: 834-0812 / E-mail: [email protected]
L. Darragh
E. Rudnick
Team Assignments
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Professor Darragh
(34104-01, Mon pm)
643.com
Albion Software
Connexions
Earth Rise
FinancialSharp, Inc
Green Greeting Card, Inc.
Greener House
KnowledgeBid, Inc.
Megapolis
Phoenix Consulting
Power Links
RT-CBM Group
Samplesaint
Septet Systems
Smartalog
TravelersMeet
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Professor Rudnick (34104-81,
Mon eve)
Brains.com
Braintree
Centralia Solutions
DQI USA, LLC
E2Bio
Hilltop Interactive
HydraStats
iAutomotives.com
Jade Biomed
Jaya
ParkWhiz, Inc.
Peekaboo Intimates
Stepping Stones
The Perfect Dinner, LLC
Varna Research
L. Darragh
E. Rudnick
Team Introductions
and Elevator Pitches
• 643.com
• Jade Biomed
• Albion Software
• Jaya
• Brains.com
• KnowledgeBid, Inc.
• Braintree
• Megapolis
• Centralia Solutions
• ParkWhiz, Inc.
• Connexions
• Peekaboo Intimates
• DQI USA, LLC
• Phoenix Consulting
• E2Bio
• Power Links
• Earth Rise
• RT-CBM Group
• Financial Sharp
• Samplesaint
• Green Greeting Card, Inc
• Septet Systems
• Greener House
• Smartalog
• Hilltop Interactive
• Stepping Stones
• HydraStats
• The Perfect Dinner, LLC
• iAutomotovies.com
• TravelersMeet
• Varna Research
L. Darragh
E. Rudnick