pitching to investors: financing your business for...

© 2013 AQAL Capital. Strictly Confidential. For qualified investors only.

1 1 © 2013 AQAL Capital. Strictly Confidential. For qualified investors only

Dr. Mariana Bozesan Club of Rome Full International Member

President & Founder, AQAL Investing Partner, AQAL Capital

June 2013, Kuala Lumpur

Pitching to Investors: Financing Your Business for Growth

An Integrated Approach

© 2012 AQAL Investing. All rights reserved.

Dr. Mariana Bozesan

• Masters Degree in Computer Science – Studied at Stanford University and Karlsruhe Institute of

Technology

• Doctorate, Ph.D. in Psychology, ITP Palo Alto California

• Private Equity Investor: – 18 Years of high-tech, bio-tech, & clean-tech investing

• Serial Entrepreneur: founded 4 companies

• Venture Philanthropist: Supporting > 38 NGOs

My MOTTO: PARITY OF PEOPLE, PLANET, PROFIT, with PASSION, and PURPOSE

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Outcomes Today

1. Why understanding the global context in which you operate is crucial for your success?

2. Why your business must be an integrally informed business to succeed?

3. Why understanding capital will help you attract it to make your dream come true?

4. Why you are the biggest investor in your business and why you are the most important person in your life?

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© 2012 Integral INVESTING. All rights reserved. © 2013 AQAL Capital. Strictly Confidential

Lehman, Fukushima, Madoff, Libor, Climate Change, Debt Crisis…


… lead to wealth owners’ sinking confidence in institutional investors*

*Source: BCG Report, Regaining Lost Ground: Resurgent markets and new opportunities. Becerra et al.2010.


>= 10% of High Net-Worth Individuals want sustainability in both financial terms and impact, but cannot get it


…. because innovative financial products that can fulfill their needs are

missing at large scale

© 2012 Integral INVESTING. All rights reserved.

Thus, many HNWI are bypassing institutions

• Seeking alternatives to traditional fund products, often sobered by weaker than expected past product performance

• Wealth owners are self-organizing: –AVIVA Corporate Sustainability Coalition ($2 trillion)

– International Integrated Reporting Committee (IIRC)

– International Stock Exchange Initiative

–Sustainable Capitalism Manifesto – Al Gore

–The Giving Pledge, GIIN, incl. self-organizing family offices, TONIIC, PYMWYMIC, AQAL Investing, etc.

*Source: J. P. Morgan & GIIN Report: Insight into the Impact Investment Market. December 14, 2011

Market drivers


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Traditional investing is challenged*

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Market drivers

• Financial crisis lead to fear and uncertainty

– Falling revenue and margins

– Massive capital migration

– Frustrated wealth owners losing trust in their asset managers

– Alternative and customized investing are on the rise

• Traditional investing often focused on short-term profit maximization at the expense of long-term health of global community, culture, environment, ethics, and overall human happiness

• Traditional investment metrics often missed sustainable, time-based businesses and responsible investment opportunities

• Many traditional asset managers failed to develop a core competency in alternative investing opportunities including impact investing (SRI/RI/ESG) Profit

TRADITIONAL INVESTING

Profit Metrics

e.g.

WALL STREET BERKSHIRE-HATHAWAY

KKR SEQUOIA CAPITAL

*Source: Mulcahy, D. & Weeks, B. & Bradley, H. S., (2012, May). We have met the enemy …. And he is us: Lessons learned from twenty years of the Kauffman Foundation’s investments in venture capital funds and the triumph of hope over experience. Kauffman Foundation Research


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Impact Investing is growing but is fragmented


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Impact Investing is fragmented in terms of motives and approach Two types of Investors* • Financial (Profit) First Investors

– Pursue the optimization of financial returns before having an impact floor

– Investors “are not willing to accept lower than market returns as a cost to optimizing social or environmental goods, although they still make a positive impact”

• Impact (People/Planet) First Investors – Seek to optimize social and

environmental impact with a financial floor

– For greater impact, investors are willing to accept lower than market financial returns.

IMPACT INVESTING

Sustainability Metrics: ESG

Triple Bottom Line

Profit

People

Planet

e.g. GRAMEEN BANK TRIODOS BANK

GLS BANK BANK SARASIN

Market drivers

*Definition after (Eurosif, 2010, p. 7)


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Global Sustainable Investing (SRI/RI) is growing*

• Global Sustainable Investments using some kind of ESG criteria reached US$ 13.6 trillion (=21.8 % of total AUM in 2012) with

– Most common strategy being Negative/exclusionary screening, US$ 8.3 trillion AuM

– Norm-based screening, US$ 3.0 trillion AUM mostly Europe (65% of known SRI AuM)

– Positive/best-in-class screening 1.0 trillion AuM, mostly US

– Assets utilizing ESG integration are at US$ 6.2 trillion

Market drivers

*Source: The Global Sustainable Investment Alliance (GSIA) Report 2012, http://gsiareview2012.gsi-alliance.org

• Impact Investing theme investments are still fragmented and

– Comparatively small at US$ 89.0 billion

• Sustainability theme investments

– Are also comparatively small at USD 83.0 billion


The Integration between Traditional Investing and

Sustainable Impact Investing is needed


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Integral Metrics

Planet

People

Profit

Ethics, Ego, Emotions &

Consciousness

Behavior

Exterior Interior In

div

idu

al

Co

llect

ive

Culture &

Morals

INTEGRAL INVESTING AQAL Investing, AQAL CAPITAL, Natural

Investing

Integrating Traditional and Impact Investing

Profit

TRADITIONAL INVESTING

Profit Metrics

e.g.

TRADITIONAL WALL STREET

BANKS AND

VENTURE CAPITAL FIRMS

IMPACT INVESTING

Profit

People

Planet

Sustainability Metrics ESG, IRIS, SAM

Triple Bottom Line

e.g. GRAMEEN BANK

LGT VENTURE PHILANTHROPY

Integral Investing is based on Ken Wilber’s Integral theory that is widely applied in 35 disciplines including science, politics, economics, education, medicine, and business; Ken Wilber is endorsed by Nobel Prize laureate Al Gore, former US President Bill Clinton, former Secretary of State Hillary Rodham Clinton, and is also used i.e. at McKinsey and Company.

Source: Wilber, K. (2000). A theory of everything: An integral vision for business, politics, science, and spirituality. Boston: Shambhala.

Strategy


Your best bet in financing your

business are

Integral Impact Investors


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Outcomes Today



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What business are you in?

© 2011 Dr. Bozesan. All rights reserved.

SOCIAL

ENVIRONMENTAL

PROFIT

EGO

VALUES NEEDS

EMOTIONS CONSCIOUSNESS

Ethical BEHAVIOR

Exterior Interior

Ind

ivid

ual

C

olle

ctiv

e

CULTURE& MORALS

PROFIT

TRADITIONAL BUSINESS

SOCIAL BUSINESS

INTEGRALLY INFORMED BUSINESSESS

Whole Foods, Patagonia, REI

Evolution of Business

SOCIAL

ENVIRONMENTAL

ENRON WALL STREET

BP MONSANTO

PHILLIP MORRIS GILLETTE

McKinsey & Co.

GRAMEEN BANK PHINEO

LGT VENTURE PHILANTHROPY

UBS GLOBAL PHILANTHROPY SKOLL GLOBAL THREATS FUND


Are you creating a valuable,

sustainable, and responsible business

that is also financially successful?


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e.g. Whole Foods:

+40% Higher ROI than FoEs

over 10 years (1800% shareholder value 1995–2006)

Sample: 8.0x higher ROI than market average (S&P 500) over

10 years; and -

3.1x higher than GGCs

3.0x higher ROI than market average (S&P 500) over

15 years

GOOD TO GREAT COMPANIES (“GGC”s) - 2002

•Nucor; Kimberly-Clark

•Kroger; Walgreens

•Wells Fargo; Gillette

ESG & INTEGRALLY

ACTING BUSINESSES

•The Container Store; REI

•Whole Foods; Trader Joe’s; Patagonia; DM

•Stoneyfield Farms

FIRMS OF ENDEARMENT (“FoE”s) - 2007

•Patagonia; Amazon

•Southwest Airlines

• IKEA; BMW; eBay

•Google; AVEDA

*Source: Sisodia, R., Sheth, J., Wolfe, D.B. (2007). New Jersey: Wharton School, p. 16

Evidence: Risk reduction & inclusive sustainability already visible with ESG & integrally acting companies

Evidence

Results of the ongoing Shift to Conscious Capitalism

© 2010 AQAL INVESTING. All rights reserved.

Outcomes Today



3. Why understanding capital will help you attract it to make your dream come true?

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To empower yourself financially you must understand sources of capital

how it works, and how to get it


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Strategy

GOVERNMENT CAPITAL Debt, Equity, Grants

PUBLIC-PRIVATE PARTENRSHIPS

German Kreditanstalt für Wiederaufbau (KfW), European Investment Fund, USAID

Exterior Interior

PLANET

PEOPLE

PROFIT

ETHICS EGO

EMOTIONS CONSCIOUSNESS

BEHAVIOR

Ind

ivid

ual

C

olle

ctiv

e

CULTURE& MORALS

INTEGRAL CAPITAL Generation, Giving Pledge, Capital Missions

Company, Natural Investing

Integral capital regular - government - philanthropic - donations

PROFIT

TRADITIONAL CAPITAL

Debt & Equity

WALL STREET GOLDMAN SACHS

JP MORGAN KLEINER PERKINS

PHILANTHROPIC CAPITAL Donations

PEOPLE

PLANET

BERTELSMANN ROCKEFELLER

FOUNDATIONS


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TAR

GET

FIN

AN

CIA

L R

ETU

RN

TARGET SOCIAL, ENVIRONMENTAL, ETHICAL, CULTURAL, & HAPPINESS IMPACT

PROFIT FLOOR

IMPA

CT

FLO

OR

FINANCIAL FIRST INVESTORS Optimize financial returns with an impact floor

IMPACT FIRST INVESTORS Optimize social and environmental impact with a financial floor

Philanthropy

Making Money INTEGRAL INVESTING

Risk-adjusted optimal financial return and premium impact returns

Strategy

Integral Investors care about the 6Ps: Parity of People, Planet, Profit, Passion and Purpose


But, how to convince investors to invest in your business?


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The Elevator Pitch

• Be concise, <250 words, 90 seconds

• Explain the problem you solve

• Describe the benefits of your product/service

• Make it easy to understand

• Grab attention

• Qualify the prospective (integral?) investor

• Show your passion: People invest in YOU!!!!

• End with an action plan

• You want them to listen to YOU, not to invest (yet) in your company !!!!!


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A Good Fundraising Presentation

• Use simple pictures, diagrams, and graphs

• Be specific

• 20 minutes

• Build bullet points - 30 point font and Arial • No fancy animations • No clutter • Put your corporate logo on every page • Think different • Be a mensch – simply be YOU


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The Ten Slide Presentation

• Slide 1: Title: What does your company do?

• Slide 2: Problem: What problem are you solving?

• Slide 3: Solution: How do you solve this problem?

• Slide 4: Biz model: What is your business model?

–How do you make money?

–What is your social, cultural, environmental impact?

–How do you distribute your goods/service?

–How do you create value?


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The Ten Slide Presentation (cond.)

• Slide 5: The Magic: What makes your company

better than the others?

–Technology?

– Intellectual Property (IP)? # of patents?

–People?

–Where’s the magic?

–NEVER share your “secret sauce” without an NDA


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• Slides 1-5: get their attention by telling the investor why to invest in your business

• Slides 6-10: now that you have their attention, tell them why you will succeed


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• Slide 6: Marketing and Sales:

–How do you reach your customer and close sales in a reasonable time and on a tight budget?

• Slide 7: Competition:

–Who are your competitors and why are you better?

• Slide 8: Management Team: Why you?

• Slide 9: Financial Projections and Key ESG Metrics:

–The promises you make to your investors

• Slide 10: Milestones: status, timeline, use of funds


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Key Advise

• Tell an exciting story. People invest in YOU • Your customers are suffering terribly in the world

as it is today • They desperately want the world/current

business situation to change for the better. • “Better” means that _________________. • But, something terrible is preventing this

change… • But, there you come ….. With the solution


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Key Advice (continued)

• A HAPPY ENDING!

– Your company has the magic solution

– Life will get better in the world

– Your customers will buy your solution because they have to have it

– They will buy lots of it

– They will pay lots of money for it

• PS: This will happen quickly, on budget, and then there will be an juicy exit/ a liquidity event….


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Storytelling techniques that work

• Good analogies powerfully connect your concept to a concept that the listener is familiar with

…it’s a Yahoo! for your town…

…it’s an IPOD for non-contextual data…

…it’s like the FAX machine …..

…just like digital cameras are replacing traditional silver halide chemistry, this technology is the revolution in printing substrates…

© 2011 by Dr. Mariana Bozesan. All rights reserved.

Storytelling Techniques

• Tell your personal story of pain and suffering that led you to found your company.

• Move the story along in an interesting way

• Explain why you‘re the right woman for the job


For an investor, an investment decision is all about managing

RISK


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Q & A: Addressing Concerns

• Potential Risks:

–Technology risk

– IP-related risk

–product risk

–market risk

–people risk, the competition, financing risk, barriers to entry, regulatory risk, environmental concerns, political risk, liquidity concerns…

• You MUST to have the answers


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The 11th Slide

• The Offer:

– How much are you raising? How much of this amount is spoken for?

– Do you have a valuation in mind? How flexible are you?

– Do you have a lead investor yet?

– What is your timetable for this financing?

• How will you use the funds?

• What are the milestones? Where will the company be when this money runs out?

• What are the next steps?

• GIVE YOUR CONTACT INFORMATION


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What Investors Are Looking For?

• Management team: experienced, driven, ambitious

• Market attractiveness: big, in pain, adoptable, rich

• Competition: weak, unable to adapt, missing the market, do they look more like potential acquirers?

• Technology/Product: unique, patentable

• Forecasting results: clear understanding of the business, clear business model, sensible relationship between milestones, new hires and additional capital requirements, path to liquidity

• Making a difference and having an impact!


Outcomes Today



3. How to attract and where to look for capital to make your dream come true?

4. Why you are the biggest investor in your business and why you are the most important person in your life?

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Measuring Success: Keeping the Promise of Millennium Development Goals

Sustainable Development

Clean Water

Population and Resources

Democratization

Long-term Perspectives

Global Convergence of IT

Rich/Poor Gap

Health Issues Capacity to Decide

Peace and Conflict

Status of Women

Transnational Organized Crime

Energy

Science and Technology

Global Ethics 1 2 15

3 14

4

5

6

7

8 9 10

11

12

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Source: Millennium Project of WFUNA, www.millennium-project.org


What is missing?


The interior aspects are missing


Source: “Heart Disease and Stroke Statistics—2005 Update”, American Heart Association; “United States Cancer Statistics—2002 Incidence and Mortality”, CDC and the National Cancer Institute

Some interior challenges

1 in 2 adults are dying of cardiovascular disease 1 in 3 people are

dying of cancer

Obesity is one of the most significant public health challenges of this century: 2 in 3 adults in the industrial world are overweight or obese

1 in 3 children in developed countries are overweight

Diabetes is one of the fastest growing diseases of this century

Copyright 2010 |


Divorce Average rate in the West 50%*

There Is More

Social Isolation

Depression 7 in 100 people, 10% treated 1 man 2 women

Addictions Shopping: 1 in 20 suffers from shopping addiction in the US; 30% of Austrians are endangered

Violence WHO: Leading public health problem Cost to victims in the US 10% of GDP

Compulsive Disorders Online gaming: 10% of 40M Chinese teenagers; 8.5% US teenagers

Source: Sieglitz, Sen, Fitoussi, (2009) “Report by the Commission on the Measurement of Economic Performance and Social Progress”


We only have a consciousness crisis today


How are you doing as a human being?


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Summary

1. Evolution is on our side • Thinking globally and acting locally is crucial for your success

2. The future of business is integrally informed • Implement the 6Ps and you will be wildly successful

3. Attract integral impact investors and you will succeed

• Remember: You are the biggest investor in your business

4. You are the most important person in your life • Take good care of yourself

• Have fun

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57 57 © 2013 AQAL Capital. Strictly Confidential. For qualified investors only

THANK YOU! Dr. Mariana Bozesan

[email protected]

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