The Money Hunt© 2008 1

The Money Hunt

Pitching to Investors

By Karen Rands

The Money Hunt© 2008 2

Why do you care what I have to Say?

• Who is Karen Rands?• Education—Emory Grad, U.F. MBA• Career Experience– IBM, Serial Entrepreneur• Lifelong Learner

• Kugarand Holdings (established 2001)• We are Venture Catalysts • We represent the energy that is created

when a venture meets speed.

• Opportunist• Launch Funding Network (www.launchfn.com )• Network of Business Angels and Investors (www.nbai.net)• KYR Media (www.howtobeanangelinvestor.com)• Our Funding Planet (www.OurFundingPlanet.com) OUR FUNDING PLANET

The Money Hunt© 2008 3

Our Goal Today is to Educate You

• Changing the Paradigm– Selling is Selling

• Hunting Protocol– Don’t take a BB Gun to Hunt Elephants

• Different Strokes for Different Folks– Subjective vs Objective

• What about the Pitch– The goal of a pitch is not what you think– 5 common mistakes entrepreneurs make– Telling the Story in 7-10 minutes

• Not the Legal Side of Selling Equity

The Money Hunt© 2008 4

Changing the Paradigm

• Selling is Selling• Similar to Selling Your Product• Two Things to Think About

– Target & Messaging• Understand your Target Market• Understand their Needs• Tailor the Message

• Develop the Pipeline and Process

The Money Hunt© 2008 5

Understand the Stages of Capital

Stage of Business

Amount of Capital

Sources of Capital

Concept $100K to $300K Seed Capital: Founders, Friends & Family, Affinity Group.

Start – Up / Early Stage

$500K to $3M A Round: Friends & Family sourced, Angel Groups, Individual Angels

Emerging $5M to $15M B Round: Angel Groups, Venture Capital, Institutional

Growth $20M to $50M C Round: Venture Capital, Institutional

Expansion $20M to $100M D Round: Venture Capital, Private Equity Funds, Institutional, PIPE

Don’t take a BB Gun to Hunt Elephants

The Money Hunt© 2008 6

Two Types of Angel Investors

• Subjective Investor• Friends and Family – Not Really• Affinity Group• Seed Round and Start of A Round• Connection• Catch the vision

• Objective Investor• In the Business of Investing• Stranger to You• Criteria Different• A Round and Sometimes B Round

The Money Hunt© 2008 7

Role of an Angel Investor

• Recognize Why they are Angel Investors– Experience, Connections, Capital– See it as a Wealth Creation Strategy– Opportunity to Give Back

• Active Investor – Build Companies– Like a Marriage

• Passive Investor– Monitors Money– Expects an occasional loss

The Money Hunt© 2008 8

Subjective Investors

• Much more of an Emotional Sell• Belief in the Founder• Vision for the Business• Not as concerned about all the details

– Still need business plan and a presentation – seed– Fully compliant – A round

• Two approaches– Small amount from few direct connects - seed– One or Two Strategic Investors – seed & A round

• Always seek “subjective” investors at every round

The Money Hunt© 2008 9

Subjective Investors

• Getting the appointment– Working your relationships

• Relationships sell– Get them to like and trust you

• Casting the Vision• Negotiating Terms

– If in a founders round or exec with a check©

• Gaining their involvement at whatever level– Advisor– Rolodex– Investor

The Money Hunt© 2008 10

Objective Investors

• Business of Investing– Create Jobs and Contribute to the Economy– Stay Active– Different Criteria than Subjective Investors

• Make More Money---all about the exit– Buy Back not appealing in most cases– Acquisition (70-80%)– Small Cap IPO (Registered Public Offering)– Traditional IPO (Initial Public Offering

• Mitigate their Risk while Maximizing their Returns• Expect you to have raised capital and have all your

documents in order---Balance Sheet Raise done

The Money Hunt© 2008 11

Cost of Raising Capital

• Seed Round, Subjective Investor– Cost Time, Should not cost $$– Selling Hope

• A Round, Objective Investor– Legal Fees– Coaching/Consulting Fees– Broker Fees & Finders Fees– Presentation Fees– Travel, Meals, Misc– Time

• If don’t have the time or expertise, hire a professional

The Money Hunt© 2008 12

Raising Capital from Objective Investors

• Average Investment $30K to $50K for first investment in a company

– Invest More based on relationship– Gotta Understand the Asset Allocation Pie

• Most Challenging Money to Attract• Never have the Same Sense of Urgency• Nothing Bad Happens if they Don’t Invest

– To them there will always be another “Great” deal

• Kugarand Theory of Private Equity Investing– 1 invests, 3 Consider it, 15 look at it

• Must have a Plan to Reach enough Investors to Improve your Odds

Wealth

Property401KLiquid CapitalAlternative

The Money Hunt© 2008 13

Objective Investors, Making the Pitch

• Most often in a group setting• Goal is NOT to get them to Invest TODAY• Goal IS to entertain and entice

– Interesting, compelling– Spend time doing the due diligence– Create the buzz for you

• Gold is in the Follow Through• Only 23% raise all the capital they seek!!!

• Why? Volume & Follow through

The Money Hunt© 2008 14

5 Most Common Mistakes

1. Using a Sales Presentation– Not selling a customer

2. Selling the decision– Sell the follow up meeting

3. Not being prepared– Get Coached, Practice

4. Trying to cram too much info– Hit the Highlights– Large Font, Limited Bullet Points

5. Not understanding what is important

The Money Hunt© 2008 15

Most important things to cover

• USP / UVP• Target Market• Why You• How to Execute• Status, next steps• Use of funds• Competition• Exit

The Money Hunt© 2008 16

Introduction

The Problem

The Solution

Market Size

Business Model Sales Cycle

Customers

Partners

Traction

Advisory Board

Management

Competition

{00:30 seconds}

{02:30 seconds}

{06:30 seconds}

{08:30 seconds}

{10:00 min.}

Financials

The Offer

Based on Original “Anatomy of a Pitch” as provided by, Alliance of Angels, Copyright 2005

Barriers to Entry IP Protection

Anatomy of the Pitch

JT Ventures

Elevator Pitch

Use of Funds

The Money Hunt© 2008 17

In Conclusion

• Prepare Your Strategy– Budget– Volume of Investors– Time to Do the Raise

• Be Prepared– Presentation Practice– Correct Documents– Business Plan that is Investor Ready

• Right amount for Right Time and Stage– Too much Too soon Too Bad

The Money Hunt© 2008 18

At your Service

Questions?

Presented by Karen Randswww.KugarandHoldings.com www.KYRMedia.com

www.LAUNCHfn.com www.EntrepreneurBlogSpace.com

www.NBAI.net www.MyVirtualAngelWorld.com

www.blogtalkradio.com/karen-rands www.kugarand.podomatic.com

www.OurFundingPlanet.com

Podcast and presentation will be available on EntrepreneurBlogSpace.com

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