David R Clark
Director of Investment Services
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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
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This show is
entertainment but:
Not far from the truth
• Hard questions
• Business focused
• Common format
Deal on the spot not
realistic
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5
©
2004
Recommended
Documents
(In order of importance)
1. Investor Presentation
2. Executive Summary
3. Elevator Speech
4. One Page Summary
5. Business Plan
6. Customer Brochure
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Why a Business Plan
that nobody reads?
Business Strategies
Product Development
Sales & Marketing
Financial
Others
Management in sync
(Equity Funding World)
Sell the venture
Due Diligence
Business Plan
1. What is the technology?
2. How big is the market?
3. Who is on the Management
Team?
4. Is this a good deal?
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Note the word “product”
Technology
Detailed description of the problem
Set up the Value Proposition
What is the solution
5th grader rule
Product Description
FeatureFunctionBenefit
Intellectual Property
State of Development
Also known as the
“pain” statement
Market
Market Need
Market Size
Competition
Direct & Indirect
Competitive Response
Differentiators
Pricing Strategy
Sales Strategy and process
Revenue sources
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Management Team
Who is on the team
Domain Expertise
Entrepreneurial Experience
Board of Advisors
The Management Team
Version 2.0
Chief Executive
Product
Development
Finance
Sales &
Marketing
Attractive Investment
Pro Forma P&L – 3-5 years (or Exit)
Assumptions driving the numbers
20X in 5 years
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
Alpha
Sales & Mkting
Cash Balance
$20
Investment
$150
$110
Beta
Production
Hire Sales
Sign 1st Distr
$15
$205
1st Sale
Continued Sales
$120
$90
$135
$350
“Dry powder”
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
Is there a ‘hook’?
How much &
20X N5?
$ Revenue line
3. Look at
Management Team
Can they pull this off?
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Biggest Mistakes by
Entrepreneurs
1. Talk too much about the
technology and not the business.
2. Cannot articulate assumptions
driving revenue and expenses.
3. Failing to involve former
entrepreneurs.
4. No independent validations
(1% fallacy; “no competition”)
( of course you think it works)
5. Failing to realize that investors want to ‘cash
out’ - not get a share of profits.
6. Not understanding IP issues.
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So where’s the money?
Venture Capitalists
 Probably too early
Angel Networks
 Texas Angel Networks
 GUST
Government & Education
Initiatives
 SBIR/STTR
 Texas Emerging Technology Fund
 Texas Transform
Private Funds
 Targeted Technologies
 T3DC
Do you want to be rich?
Do you want to be King?
The Take Away
Clever technology or a good idea
is not enough.
There must be a strong
management team around
the technology.
Know the market and
competitive landscape.
The objective is to sell the
company.
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David Clark
Director Investment
Services
T3DC
210.558.3915
dclark@t3dc.org
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