Transcript Strategic Options & Financial Management

DKH Enterprises, Inc.
So You Want to Raise Capital…
Presentation to Venture 128 North
at The Enterprise Center
March 26, 2008
DKH Enterprises, Inc.
Overview of DKH Services
DKH Enterprises works with early stage companies to refine
strategic focus and clarify the business model especially the
economic engine for growth. DKH’s goal is to preserve the
entrepreneur’s ownership and to ensure that they participate in
the success of the company they founded. Capital strategies
involve all forms of asset financing, alternative debt, angel and
venture equity. DKH Enterprises works with a number of
business colleagues - collectively they can help with the
strategic, marketing, financial planning/modeling and
operational aspects of the business to assist in growth. Bonnie
Henry’s particular experience is with consumer packaged
goods companies.
June 2007
DKH Enterprises, Inc. Business Advisors
2
DKH Enterprises, Inc.
Bonnie Henry’s Background
•
Bonnie has over 25 years of proven entrepreneurial and leadership experience across multiple
industries; 13 of those years with P&L responsibility. Her success in launching new ventures both
internally and externally is supported by her unique blend of experience as a successful
entrepreneur, general manager, and strategy consultant. She has worked with both large and
early stage companies including: Frito-Lay, Pillsbury, Estée Lauder, Ross Stores, Blue Cross &
Blue Shield of Massachusetts, and Scottish Rite Children’s Hospital.
•
Bonnie was the co-founder of Hellas International, Inc. where she developed the preeminent
brand of Greek specialty foods in North America. She successfully sold that company to Krinos
Foods in 2004. She serves on the Boards of several food products companies and is a past
member of the Commonwealth Institute.
•
Bonnie works with early stage companies and their management teams to clarify strategy,
accelerate growth, and position for exit. She brings particular strength in strategic issue analysis,
strategic positioning, new channel development, product development processes and driving
operating results. A recent client engaged her to work with them to raise 2 rounds of capital, work
on the conceptual team for product launch, and serve as interim COO.
•
Bonnie earned an MBA at The Wharton School, University of Pennsylvania and holds an
undergraduate degree in Business and Communications from State University of New York,
Plattsburgh.
June 2007
DKH Enterprises, Inc. Business Advisors
3
DKH Enterprises, Inc.
What Investors Want
• What evil lurks inside?
You are going to be living together for
several years; find someone you will
respect and enjoy working with
June 2007
DKH Enterprises, Inc. Business Advisors
4
DKH Enterprises, Inc.
What Investors Want
• First and foremost this is an investment
•
•
Many are active philanthropists, but not how they are looking at your business –
can you produce venture level returns – 6 to 10x within 4-5 years
What is your company’s current value, how will you exit and what examples have
occurred in your industry?
• Management Team – experience and character
•
•
•
Confidence versus Humility - Have you been honest about what your personal
capabilities are; can you hire up?
Be honest about the risks and challenges you face – investors don’t expect
perfection
You are entering a relationship – love at first sight versus building trust; integrity
above all else
June 2007
DKH Enterprises, Inc. Business Advisors
5
DKH Enterprises, Inc.
What Investors Want
• Proven Business Model
•
Customer behavior model; economic drivers; how do you make a profit?
• Model Scalability
•
Organic growth versus step function growth
• Financial Management & Integrity
•
Often look for some track record to gage capability
• Knowledge of standards for capital structure and for
corporate governance
•
They will look for protection against shareholder suits; involvement and control of
certain decisions
June 2007
DKH Enterprises, Inc. Business Advisors
6
DKH Enterprises, Inc.
When to Look for Investment
• Is equity capital right for your company?
•
Why are you doing this? Are your interests aligned with investors or are you
looking for a lifestyle company?
• Why do you need the capital? What is it for?
•
•
Does your business need to build infrastructure or invest in distribution in order to
grow?
Is the path to growth clear (new customers, new channels) or is it more likely that
you will grow organically?
• Have you considered other forms of financing?
•
•
Self, Family & Friends, SBA loans, Banks, Grants, Revenues
Why would you want to give away your company if you don’t have to?
June 2007
DKH Enterprises, Inc. Business Advisors
7
DKH Enterprises, Inc.
How to Position for Success
Demonstrate that you know your business
• Business, market, opportunity snapshot (what business are you in) [this is
also your elevator pitch]
• Opportunity summary – what makes this a compelling investment
opportunity – the market, the solution, the exit
• Big Market Opportunity
• Management Team supplemented with the key advisors
• Problem/Unmet Needs/Aspirational Needs and Solution
• How has the brand been received – evidence a brand is being built
• Penetration Strategy/Channel Strategy – what already accomplished
• Comparison to competiton (best if this is market facts, eg., consumer spend,
turns, etc)
• Key financials (see JR format)
• Capital raise and use of funds
• Potential exit and path to exit
June 2007
DKH Enterprises, Inc. Business Advisors
8
DKH Enterprises, Inc.
What You Should Want
• All investors are not created equal- you get to chose
as well
• Trusted advisors to help you navigate and negotiate
• Fairness in valuation of your company and its
assets, especially IP
• Investors who understand your business and can
bring their knowledge to bear to help you grow.
Find investors that respect you and what you
have created
June 2007
DKH Enterprises, Inc. Business Advisors
9
DKH Enterprises, Inc.
What you can expect
•
•
•
•
It will take longer than you expect (a factor of 4)
You will give away more than you expect
It will take almost all of your time
You will find it nearly impossible to “read” potential
investors
• You will not be in control
• Or left in control
June 2007
DKH Enterprises, Inc. Business Advisors
10