the investor pitch - entrepreneurship 101 (2013/2014)
Post on 17-Oct-2014
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This lecture covers all the essentials of building and delivering an effective pitch to help you find financing for your entrepreneurial venture or sell your product to customers. Learn the elements of a good pitch deck and identify the key elements of good communication that successful start-ups use.TRANSCRIPT
Peter Evans Entrepreneur-In-Residence, MaRS Founder & CEO, ExpertFile
@techmarketer Entrepreneurship 101 May 7th - 2014 @expertfile
The Investor Pitch
The Beginning of a $10 Billion Story
Other People’s Money Fundamentally Changes Everything
The Investment Paradox
Getting to !
NO!
Investor!Entrepreneurs!
Getting to !
YES!
Venus & Mars
Successful!Track
Record
Compatible!Match of
Size/Stage/ Geography
Strategic!Relevant Portfolio
Friendly!No directly competitive investments
Capacity!Has funds to invest
The Right!Investor!
Entrepreneurs want… Investors want...
Platform!Significant "
Technological"Advantage
Market!Sizable and "Addressable
IP &!Bus. Model !
Entry Barriers
Traction!Early "
Customers"
Team!Skills & "
Track Record
The Right!Investment!
<Insert Your Logo Here>
How you see your venture
How investors see your venture
It’s a Hits Business*
30 Qualified Referrals
Get closer review 15-20 Company gets investment 1
* Ron Conway SV Angel 1/3
Success Rate
1/3 1/3 Fail 4-5X
Return Even
Return
What a week looks like
Getting to Yes: 3 Levels of Engagement
Emotional! Rational! Financial!
Signs an investor is just not that into you
“I still don’t know what you do”
“Isn’t your product just a nice to have?”
“Is your market really enough?”
“I still don’t understand how you
make money”
“Are you underestimating
your cost to acquire customers?”
“Couldn’t your competitors copy
you?”
“Do you have the right players on
your team?”
Components of the Investor Pitch
Real Problem
#1
Compelling Investment
#4
Unique Advantage
#3
AttractiveMarket
#2
Real Problem
(2 min)
#1 Attractive Market
(3 min)
#2 Unique
Advantage
(3 min)
#3 Compelling Investment
(2 min)
#4
(3 min)
#1 Real
Problem
(2 min)
#4 Compelling Investment
(4 min)
#2 Attractive Market
(3 min)
#3 Unique
Advantage Start
Pacing Your Investor Pitch Sample timeline: 12 minutes
End
* Note: Elapsed times are guidelines only
Answering the “So What?”
Real!Problem!
1
Focusing a Problem that Matters
Creating Impact
• Core Value Proposition: Use a single sentence
• Unique Benefit: Focus on one single aspect of what you do (aka…”the big idea”)
• Metaphors: Try to create a cognitive connection to something people understand
• Emotion: Create a visceral response (why are things still done this way?) Be provocative….Nice to have’s aren’t investable
The Company & It’s Solution – Elevator Style
Real Problem
Introduction
Key Message: We’re fixing the insanity of the status quo
Start Min 3
Start
• Current State: Show the insanity of how customers address the issue today
• Historical Evolution: What’s changed in the customer’s mindset
• Personas: Describe the main players in your market you address
• Pictures: Every picture tells a story
Real Problem
Introduction
Problem
Defining the Problem Paint a picture of who has this pain
Key Message: We’re solving real pain…not “nice to haves”
Min 3
• Product: What is it? "(screen shots, product photos)
• Functionality: The Who + Do
• Benefits: High level value
• Category: Where do you play?
• Stage: What is the readiness of the solution?
Real Problem
Introduction
Problem
Solution
Your Solution to the Rescue Describe WHAT you do and HOW you do it
Key Message: Our solution is novel and easy to understand
Start Min 3
• Founded (Year) • Employees (FT/PT) Offices • Advisors • Product Release(s) • Beta Users/Unique Views/ Registrations • Paying Customers • Partners (Technology/Channel) • Certifications/Industry Awards • Media Coverage • Patents
Real Problem
Introduction
Problem
Solution
Traction
What’s Been Achieved to Date? Show your ability to succeed: On lots of sweat…little $
Key Message: We’ve got meaningful traction
Start Min 3
Confidential PG 26
©NIMTech Inc. 2009
Metabolized by
Patient
Lost to the Atmosphere
Environmental Impact Average Annual Climate Change Footprint for 1 Hospital
2000
= 400
>1,600 Tonnes of eCO2 Vented per hospital/year
Automobiles
250 ml Bottles Anesthetic Agents
on the Road/yr.
Gold standard detection methods (visual & x-ray) fundamentally unchanged for decades.
Existing Tooth Decay Diagnostics
Tooth Decay Detected
by Quantum Dental Technologies
Canary interactive software and printed patient reports
The Canary Console
Company Overview
What we do • Quantum Dental Technologies has developed a new platform which uses a low-
powered laser to detect tooth decay earlier and more accurately than conventional technologies, allowing dentists to treat & heal the teeth instead of “drill, fill & bill”.
Milestones • Product - Dental Clinic model designed, first commercial units manufactured • Customers - Over 50 pre-orders secured • IP - Strong patent portfolio • Clinical - First Health-Canada approved clinical trial completed, second trial in
progress, providing independent validation of safety & efficacy • Partnerships - Strong relationships with key global distributors and major multinational
strategic partners
Financing • $##M raised to date, seeking an additional $##M to reach breakeven
Healthy Tooth
Early Enamel Decay
Advanced Enamel Decay
Demineralization
The Life Cycle of Tooth Decay
Remineralization
Remineralization Therapies The Canary System Scan X-Ray, Drill Fill & BIll
Market Visibility!
Real-Time Engagement!
Analytics & Control!
Website Integration "
(API/Widgets)
Search Engine Optimization
ExpertFile.com Directory
Sharable "Public Profile
Inquiry Workflow
Email & "System Alerts
3rd Party Agent Access
Publishing Controls
Lead Generation Reporting
Content"Asset Tracking
Lead Generation
Dynamic Publishing!
Intuitive Expert Profiles Corporate Profile"Rich-Media Plug-Ins
Mobile Compatible Advertising-Free No Registration Required to View
A Unique Platform for Expert Content Software built for management, marketing & measurement
Start End
Real Problem
(3 min)
#1 AttractiveMarket
(3-4 min)
#2 Unique
Advantage
(3 min)
#3 Compelling Investment
(2 min)
#4 Unique
Advantage
(3 min)
#3
Attractive Market!
2
Opportunity Awaits Lots of Room in the Market to Scale the Business
• Size: What’s being spent today on problem? Build from ground up. Can the market support multiple players?
• Addressability: What’s the reasonable market you can serve?
• Segments: Going Niche or broad? • Global: Identify other markets • Proof: Use 3rd party analyst reports
• Thought Leadership: Are you using primary research to gain insight?
• Charts: Keep it visual and engaging
Market Size
Attractive Market
Sizeable Market Opportunity It’s very big …and you can get to it
Key Message: We have unique insight into the market
Min 3-4
Min 7-8
• Status: Closed vs. Prospects and "Paid vs. Free Trial
• Categorize: Key segments etc.
• Contextualize: Why they bought
• Personas: Describe customer characteristics
• Logos: Categorize …Avoid “logo soup”
• Evangelists: Customer quotes to validate market pain and size
Customers
Attractive Market
Market Size
Early Customers/Prospects Nothing really matters till somebody buys something
Key Message: We have buyers who must have our solution
Min 3-4
Min 7-8
• Key Metrics: Pricing, Avg. Deal Size, Registrations/Subs., Monthly Recurring Revenue (MRR), Churn, LTV etc. Note: Customer Acquisition Cost (CAC) is the most overlooked metric
• Channels: What are the downstream costs to sell and service the customer (is this built in?)
• Competitive Scenarios: Is your model sustainable if competitors start stealing share? Have you factored in potential of downward price pressure over time?
Revenue Model
Attractive Market
Customers
Market Size
Making Money Where does the growth and profit come from?
Min 3-4
Min 7-8
Key Message: We’ve validated our revenue model and and we can scale the business.
• Visibility: Critical to success…what’s your unique story? • Lead Generation Programs: What marketing approaches
will you use (stay high level – categorize)
• Sales Model: Direct vs. Channel (Do you have partners? Have you built a wave for channels to ride?)
• Systems: Do you have an infrastructure to scale (CRM/Inbound Mktg. Platforms etc.)
• Testing: Do you have capability to test value prop./offers? • Stages: Do you have the ability to pivot from launch to
growth to maturity?
Marketing & Sales
Attractive Market
Revenue Model
Customers
Market Size
Acquiring Customers What’s your go-to-market strategy?
Key Message: We know how to drive visibility, lead gen.and close deals
Min 3-4
Min 7-8
Opportunity Example: B2B Healthcare
$1.1 Billion is spent globally every year by Healthcare sectors on inhalation anesthetic Demand is growing annually by 15%!"54,000 operating rooms in NA""3 dominant players own a monopoly position in the market, with no forthcoming alternatives"
Go to Market Strategy
Integration Stickiness Auto-syncing banking data every night
Communication: Informative, insightful weekly emails
Offers: Value-added, contextual, time sensitive offers
Collaboration tools with internal and external advisors (i.e., accountant)
Focus on customer service
PR – already featured in the Financial Post and Profit Magazine. U.S. PR through Hoffman.
Social media and blog to drive SEO
Partnerships, i.e. banks, accounting firms
Vertical Communities: Custom chart of accounts for 40+ industries
Advertising: Google Adwords, Facebook Ads, LinkedIn DirectAds
Retaining Capturing
Start End
Real Problem
(3 min)
#1 AttractiveMarket
(3-4 min)
#2 Unique
Advantage
(3-4 min)
#3 Compelling Investment
(2 min)
#4
You are in the Best Position to Win
Unique!Advantage!
#3 Many of the essential pieces are in place
Every company will eventually be run by an idiot
I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.
Warren Buffet
“
”
• Role: What value will they add to your solution Research/Development/Sales/Support etc.
• Reputation: Do you you have the right players in the market you are serving?
• Category Fit: Do they have sufficient market power?
• Executive Sponsorship: Do you have buy in from key people inside the channel?
• Incentives: Is the partner aligned financially to support you?
• Longer Term: Is there competitive threat or potential M&A?
Partners
Partners Show how you can punch above your weight
Key Message: Important market players get our vision and want to work with us
Min 6 Min 10 Unique Advantage
• Technology: Validate how you are different? How much market lead do you have? What degree of leverage and scale do they create?
• Process: Are there unique process elements of how your technology works?
• Licenses: Are there 3rd party components of your solution that are licensed? Do you have an exclusive right to the technology?
• Patents: What is the focus of the patent and what stage are you at? (provisional filing, patent granted) – Not a bad idea to mention any name brand attorneys you work with.
Partners
Competition Technology/IP
Competition: Technology/IP Leadership Creating barriers to entry
Min 6 Min 10 Unique Advantage
Key Message: We’ve nailed a problem that is hard to solve. It will be hard for competitors to catch up
• Company Background: List experience in terms of key companies each team member worked for. List “pedigrees” (notable exits).
• Planned Hires: Speak briefly to what primary role they will play in the venture
• Achievement: Focus on a key aspect of their experience that uniquely qualifies them for the venture
• New Hires: Where applicable, speak to any key people you may be hiring to build out the team
Partners
Technology/IP
Team & Advisors
Unique Advantage
Team & Advisors The capabilities to execute on the plan
Min 6 Min 10
Key Message: We have assembled the right mix of talent with the “know how” and “know who.”
Multimedia integration
Lead Gen. Workflow & Alerts
Professional Services
Detailed Expert Profiles
Competition
SEO Optimized
Searchable Expert Directory
3rd Party Agent/ PR Agency Admin.
Analytics Dashboard
On-Domain Content (API to Client Website)
Advertising Free
Competitor 1 Competitor 2
48
Achieving the $10 Billion Story
Peter Evans!CEO"
Robert Carter!Product Management"
Dan Stanhope!Software Development"
Lance Laking* (Ottawa)"TRM, BTI Systems, MaRS, IAF"Capital Angel Network"
Board*/Advisors!
David Meerman Scott (Boston)"Bestselling Author/Speaker – Advisor to Hubspot & Eloqua"
"Product management, strategy, business development Riverdale Partners, MaRS, Platespin, !FloNetwork/Doubleclick, Sympatico.ca, Bell Canada
MBA (Queens University) """
"Marketing research, product marketing, marketing & sales systems integration roles."
Riverdale Partners, MaRS, Platespin, !FloNetwork/Doubleclick, Sympatico.ca, Goldfarb Consultants!
MSc. Market Research (University of Guelph)
"""
"
Management!
"Agile software dev, UX & architecture/design of high traffic sites."
TorStar Digital, Platespin/NovellBSc., Computer Science (Brock University)!
"
"""
Team
Paul Philp (San Francisco)"Amity, Marketwire, Platespin"
John Vukovic (Toronto)"FloNetwork, Ernst & Young"
Randall Howard* (Waterloo)"VERDEXUS, MKS (Founder)"GTAN Angel Group"
Mark Greenfield (Buffalo)"State University of New York"
Skillsets Matter
Start End
Real Problem
(2 min)
#1 AttractiveMarket
(3 min)
#2 Unique
Advantage
(3 min)
#3 Compelling Investment
(2 min)
#4
There is Upside for Investors
Compelling!Investment!
#4 Presenting the Offer for Investment
Rule No. 1: Never lose money; Rule No. 2: Don't forget rule No. 1
Warren Buffet
“
”
Key Message: Our venture clearly offers a superior return for our investors.
• Key Numbers: Revenues, Expenses, EBITDA, Customers, Headcount
• Burn Rate: What is the net cash out month
• Assumptions: Be prepared to defend them
• Scenarios: Be able to speak to impact of various scenarios (i.e. Cost of Acquisition is x% higher than forecast or lack of conversion from free to premium)
Financials
Compelling Investment
How You Will Make Money Key Metrics that Explain the Bottom Line for Investors
Min 10 End
Key Message: We have clear exit opportunities
• Partners: Are there any important players who are showing interest in working with you? What problem do you help solve for them?
– Intellectual Property
– Talent
– Customer Base
• Acquisitions: Are there companies that have shown interest in your market space or technology?
• Comparables: Do your homework on past transactions that have happened in your market and note the prices paid to acquire companies.
Financials
Compelling Investment
Path to Liquidity Potential Exits for the Company
Min 10 End
• Investment Structure/Terms: Type of Instrument (Convertible Debt, Equity) and what are the terms of the deal
• Amount: What’s been raised and what is left in the round? Use of Proceeds: What milestones will you achieve (with the investors money)
• Runway: What amount of time does the current money buy (can you hit breakeven or is a new round required?)
• Pipeline: Be prepared to speak to who is committed so far and who are you approaching. You must show momentum – “herd dynamics.”
• Valuation: Be careful about “premature” discussions regarding pre-money value – don’t price from the podium!
Compelling Investment
Financials
Offer Details
The Ask Value & Deal Structure/Terms & Use of Funds
Min 10 End
Key Message: Our deal structure &terms are favourable.
Financial Projections
2011 2012 2013 2014 2015
Number of Licenses # # # # #
Revenue $______ $______ $_______ $_______ $_______
Expenses $______ $______ $_______ $_______ $_______
Gross Margin % % % % %
EBITDA $_______ $_______ $_______ $_______ $_______
Total Head Count #
#
# # #
• Investment to Date: $_______"– $______ support from government programs/grants (if applicable) "– $______ cash investment from founders and angels"
• Current Raise: $________ "
• Use of Funds See Examples of Activities Below!– Build Marketing programs"– Hire US sales team"– Commercial launch of V1.0 product "– Secure final regulatory approvals"– Finalize Patents"– Initiate large scale manufacturing "
• Further Fundraising? !– Planned ___ Round Financing in ____ of _____ "– Expect to achieve __________with the proceeds of this raise "
"
Financing & Use of Funds
A Recap: The 4 Components of the Pitch
Real Problem
#1
Compelling Investment
#4
Unique Advantage
#3
AttractiveMarket
#2
In the End…The Investment is in You A dozen attributes smart investors look for 1. Honesty…….........................Gives straight answers to investor questions 2. Vision….................................Demonstrates customer insight/thought leadership 3. Resourcefulness…………… Can make an investor’s dollar go far 4. Logic …………….……………Makes wise, pragmatic decisions quickly 5. Drive…………………………..Genuine passion for early stage & ability to excite 6. Humility……………………….Coachable and seeks help to address weak spots 7. Leadership……………………Has the ability to attract and lead a winning team 8. Critical Thinking……………..Challenges assumptions and spots the false +’s
12. Agility……………...................Decisive…Cuts losses & pivots at the right time
9. Commitment……………........Not just involved - sweat &/or capital invested 10. Patience……………...............Tolerance to the ambiguity of innovation 11. Credibility…………….............Well researched. Uses data to back assumptions
“You don’t need every investor to believe you can succeed…You just need one.” Ben Horowitz Andreessen Horowitz
Peter Evans | CEO, ExpertFile !Entrepreneur-In-Residence, MaRS!
@techmarketer http://ca.linkedin.com/in/peterevansprofile