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
– 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
– 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,
– Management
– Technology
– Market
– Financials
Coaching Tips
•
•
•
•
Show passion
Show confidence
Demonstrate knowledge
Minimize hyperbole
– 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
– 10-20-30 rule
• Do not read the slides
– 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
– Cheat sheet
• Curve balls
– May be asked for a term sheet
– 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
5th 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
Alpha
Sales & Mkting
Cash
$20
Investment
$150
$110
Beta
Production
Hire Sales
Sign 1st Distr
$15
$350
$205
1st Sale
Continued Sales
$120
$90
$135
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 the
Management Team
Can they pull this off?
The Elevator Pitch
• 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
• Early ‘hook’
• Brief description of the product or
service
• Revenue model
• Management team
• Competition
• Competitive advantage
• Call to action
24
Sample Pitch
Hook
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.
Product/
Service
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.
Market
Revenue
Management
Competition
We have a compelling two page executive summary that I would like to send you. Can I get your
address?
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 ‘5th 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’
David Clark
Director
Investment
Services
Startech
210.458.2523
drc@startech1.org