1.apply online by november 20 – – by answering 19 questions – you can paste from a word doc...
TRANSCRIPT
1. Apply online by November 20– www.EntrepreneurshipFoundation.org– By answering 19 questions – You can paste from a word doc– Answers limited to 1500 characters/spaces
2. Start-up Grants: $1000 - $1000 - $10,000.3. Winner pitches to CT Angel Investor Guild4. Cost: No entry fee
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University Business Plan Competition
1. Apply online– www.Back-Offices.com/VCFair – $225 including two attendees
2. Three-minute PowerPoint presentation plus exhibit table.
3. 1:00 – 7:00 pm4. New Haven Lawn Club5. 30 Companies/ 30 Investors
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Early Stage and University Venture Fair
Evaluating Business Opportunities
North Bridge Venture PartnersSignal Lake Ventures
Connecticut Angel GuildConnecticut Venture Group
The Deal Scorecard
1. Management
2. Market
3. Competition
5. Ability to Forecast Results
6. Capital Intensity (Risk/Reward)
10 1
4. Product/Technology
Management
Good Teams have:
• Done their jobs before (no OJT)• Experienced ramp from startup to big company• Relevant industry experience & contacts• Specialized expertise and insight• Ability to adapt to change• Brains and hunger
Senior TeamProven Record
No OperatingExperience
10 1
Management
A Good Incomplete Team
• Vision• Energy and hunger• Efficient (Not a drain on capital)• Appropriate role for each person• Acknowledges management gaps
Market
> $1 BillionGrowth capacity > 30%
Stagnant
10 1
Attractive Markets:• Big ($50,000,000 potential)• Target users adopt new products
quickly• Customers feel real pain• Customers can be reached
economically• The time is (will be) right
Competition
Potential forLeadership
SeveralEstablished
Players
10 1
Leading Companies:
• Typically first to market• Leaders define “Market”• Leaders get market share• Market share critical to success
Product/Technology
Clearly SuperiorProviding Leverage
NoAdvantage
10 1
• Difficult to replicate• Special technical skills required• Special user knowledge required• Proprietary technology (patents)• Many man-months to develop (time, $)
• Improves rapidly with customer feedback
Ability to Forecast Results
High Low
10 1
Great companies create and execute operating plans:
• Plan is financial expression of strategy• Defines business model• Shows interrelation of timelines, functions,
hires• Reflects detailed understanding of the
business
Capital Intensity
Low High
10 1
A function of:
• Start-up and working-Capital needs (Risk)• Gross margins (Reward)• Sales and marketing expenses
(Potential to deflate margins)
No Single Recipe
1. Management
2. Market
3. Competition
5. Ability to Forecast Results
6. Capital Intensity
10 1
4. Product/Technology
A B C
Real World Feedback
• Interview:Customers, Analysts, Potential hires,
Potential partners, Other CEOs• Where is the pain?• Would you buy?• How many?• At what price?• How do you buy?• What could we do better?
• Listen for what you don’t want to hear
Venture Capital Financing TodayInnovation and Entrepreneurship
PanelUniversity of Massachusetts at
Amherst24 October 2009
Venture Funding in theCurrent Environment
Early stage companies that require relatively small amounts of capital to reach positive cash flow, with low valuations are getting funded
• LENDERS: –No Risk–Low Return
• EQUITY INVESTORS:
– Low Risk–High Return
Objective of Investors
Roer’s Continuum
Per Cent of Ownership Retained
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Idea stage Proto-type Patent Productionmodel
Orders Productsdelivered
At break-even
Profit>$1mm
Profit>$10mm
Variables Affecting the Curve
Per Cent of Ownership Retained
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Idea stage Proto-type Patent Productionmodel
Orders Productsdelivered
At break-even
Profit>$1mm
Profit>$10mm
External factors: Economy – Capital available – Confidence – Competition Internal Factors: Hot New Tech – Serial Entrepreneur – Mega Potential
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A $1 Million Investment …
After YearAfter Year @ 40% IRR =@ 40% IRR = @ 60% IRR =@ 60% IRR =
11 $ 1.4 MM$ 1.4 MM $ 1.6 MM$ 1.6 MM
22 $ 2.0 MM$ 2.0 MM $ 2.6 MM$ 2.6 MM
33 $ 2.7 MM$ 2.7 MM $ 4.1 MM$ 4.1 MM
44 $ 3.8 MM$ 3.8 MM $ 6.6 MM$ 6.6 MM
55 $ 5.4 MM$ 5.4 MM $ 10.5 MM$ 10.5 MM
CAPITAL SOURCE Amount Pros Cons
Bootstrapping with Savings Small but critical
No dilution Limited amounts
Credit Card Debt Up to $100k Easy access Interest can balloon
SBIR Funded Research www.ctinnovations.com
$125-700K Don’t have to pay back
Equity ”Angel” Investors www.EntrepreneurshipFoundation.org
$250k-$1MM Industry connections - Dilution
- Partnership
Connecticut Innovations www.ctinnovations.com
$500k-$1mm Accessible
Venture Capital Fund www.CVG.org
$1 - 100M - Experience- Deep pockets
- Difficult to meet profile- Will want 10-50%
Bank Loans Limited to assets
No dilution Guarantees = personal liability
Leasing Varies Reduces capital needs Interest Cost
Strategic Corporate Partner $1m – Unlimited
Access to markets Loss of Control