1. Pitching the Plan: The Investor Perspective
December 12, 2012
1

2. Experts
• Chuck
Goldman
-­‐
Founder,
Apperian
• Arnie
Sco<
–
Investor,
Hub
Angels
• Tom
Egan,
LaunchCapital
• Mirena
Bagur
–
President,
CONTeXO
Group
2

3. Agenda
• PROCESS
• PLANNING
AND
MARKETING
MATERIALS
• PRESENTATION
SKILLS
• INTERACTING
WITH
INVESTORS
• Q&A
3

4. PerspecTve
• Map
Analogy:
Detail
and
Overview
Balance
• Watch
for
Zoom
In
vs.
Zoom
Out
moments
4

5. PLAN
-­‐
Strategic
Financing
Plan
• How
much
outside
capital
should
you
raise
now?
• Generally
-­‐
the
least
capital
you
need
to
get
to
next
major
valuaTon
milestone
(with
90-­‐120
day
/
10-­‐20%
cushion).
You
need
enough
cash
to:
• Hire
criTcal
team
members
at
(start-­‐up)
market
compensaTon
• A<ract
Customers
/
Convert
beta
customers
to
paying
customers
• Acquire
criTcal
technologies,
systems
and
resources
• How
much
capital
will
you
need
later?
• ConTnued
R&D
• Sales
and
R&D
Development
Teams
• Sales
and
MarkeTng
Efforts
• Growth
and
Expansion
• Impact
on
valuaTon
and
diluTon
5

6. The
Fundraising
Sales
Process
• Financing
Plan
• IdenTfy
and
qualify
opTmal
and
backup
investors
• Gather
direct
and
indirect
contact
informaTon
and
prioriTze
• Contact
through
trusted
source
• OpTmizing
first
impressions
-­‐
Don’t
Pitch!
Get
a
MeeTng!
• Be
prepared
for
diligence
• Contracts
and
paperwork
• IP
and
Market
Diligence
about
opportunity
(freedom)
to
operate
• Reference
customers
or
thought
leaders
• Close,
or
move
on
• Deal
syndicaTon
&
Investor
CoaliTon
PoliTcs
6

7. Deal Size, Funding Sources and the Company Lifecycle
Deal
Size
PE; II
VCs
Early VCs
Angels
FF
Idea Beta 1.0 2.0, Lifecycle
Alpha Commercial
Rollout expansion Stages
7
Source: The CONTeXO Group, Spring 2012

8. The “Right” Investors
Funds
available
Stage
Size
Geography
Create a shortlist No direct
- don’t use a shotgun approach competitors
in portfolio
Track
record
Relevant
portfolio
8

9. Fundraising Sales Process
Inform/
Pique
Interest
ValidaTon
Investment
Evaluate
Investor
Process 4-6 months
Due
Prepare
Engage
“Pitch”
Marriage
Diligence
Entrepreneur
6 months -1 year 9
Process

10. Investor Screening Process
• Who
is
the
referral
source?
Credible?
• Does
the
company
fit
my
criteria?
– Geography
– Sector
– Investment
size/Stage
• Is
the
team
credible?
(honest,
authenTc,
upfront,
confident,
humble,
passionate)
• Do
I
get
excited
about:
– CEO
–
Do
I
‘like’
him/her
– Target
Market
– Unmet
need/problem
being
solved
– Technology
being
developed
10

11. MARKETING
MATERIALS
• Matching
Materials
and
Process
to
Investor
Type
and
Seqng
• Pre-­‐first
mee*ng/
Investor
Conferences
• The
1
Page
Summary
(the
“Teaser”)
• The
5
Page
“ExecuTve
Summary”
• The
15
–
20
page
“Slide
Deck”
-­‐
foundaTon
• The
10
second
oral
presentaTon
pitch
(the
“Elevator
Pitch)
• The
30
sec
–
2:00
min
oral
presentaTon
(the
“Quick
ConversaTon”)
• One-­‐on-­‐one
VC
mee*ng
• The
full
Business
Plan
–
Formal
presentaTon
• Back
up
materials
• Financials
• Tailoring
the
emphasis
of
materials
for
the
specific
investor
(similar
to
tailoring
a
resume)
vs.
Consistency
across
all
iteraTons
• Tracking
distribuTon
of
materials
11

12. PresentaTon
and
Slide
Deck
1. Cover Slide OrganizaTon
2. Problem or Opportunity + Metrics + Core Customer
3. Company Value Proposition + Investment Rationale
4. Product/Service Solution
5. Product/service Value Proposition
6. Addressable Market
7. Business and Revenue Model
8. Sales and Distribution Model
9. Competitive Landscape/Competitive Advantage
10. Defensibility / Barriers to Entry/IP
11. Team
12. Current Status
13. Funding Requirements, Cash and Use of Proceeds
14. Risks and Plans
15. Exit Strategy and Options
16. Investment Rationale/Summary Slide
12
+ Appendices or backup slides

13. Improve Your Odds by Building a Great Team
Investors
bet
on
the
Jockey
A
Team
+
B
Idea
vs.
B
Team
+
A
Idea
• Balance skill sets –
complement
• Only people make things happen
• Aligned motivations
• Prior success
• Passionate
13

14. Management Team and Advisors
• List top executives and key advisors
– Include choice words about them
• Experience with startups, domain experience and customers
• Don’t put their whole resume on the slide
• Show current staffing gaps and strategy for filling
• Board of Directors
– Scientific Advisory Board
– Key Opinion Leaders
• Don’t list advisors unless they are actively involved
14

15. General PowerPoint Dos and Don’ts
“Presentation is a visual not a reference”
Do Don’t
• Use one topic per slide • Use sounds with slide transitions
• Limit text on each slide • Overdo the ALL CAPS, bolded,
• Use pictures, graphs, video’s italicized or underlined text
– Not all bullets • Use too many different fonts
• Choose fonts and colors that are • Overuse special effects – focus
easy to read on the content
• PowerPoint is the accessory to • Have technical difficulties – test
YOUR presentation before the meeting
• Spell Check
15

16. PRESENTATION
SKILLS:
Part
I
• Know
your
material
cold!
Don’t
wing
it.
• Use
note
cards
&
appendix
slides
for
easy
access
to
informaTon.
• DON’T
READ
your
presentaTon.
• You
should
have
answers
to
likely
quesTons,
even
if
you
don’t
intend
to
cover
such
material
in
your
core
presentaTon.
AnTcipate
the
quesTons
–
be
surprised
only
once!
• It’s
okay
to
not
know
everything
–
no
one
does.
Unless
someone
asks
you
something
that
you
clearly
should
know,
it
is
okay
to
directly
state
that
you
don’t
have
an
answer
and
that
you
will
get
back
to
someone.
This
builds
credibility
with
your
audience.
• When
possible,
know
the
room.
Arrive
early,
walk
around
the
speaking
area
and
pracTce
using
the
microphone
and
any
visual
aids.
• Wear
clothes
that
represent
you
and
which
reinforce
your
authority
and
confidence.
• Work
to
control
filler
words
such
as
“Um” “Ah”
Eh”
or
“Like”.
Try
to
limit
distracTng
repeTTve
hand
or
body
gestures.
• Realize
that
audiences
want
you
to
be
interesTng,
sTmulaTng,
informaTve
and
entertaining.
They’re
rooTng
for
you.
16

17. PRESENTATION
SKILLS:
Part
II
• PrioriTze
and
eliminate
less
criTcal
points.
• Be
flexible
–
be
prepared
to
be
interrupted.
• Understand
the
goal
of
your
presentaTon.
Is
it
to
inspire,
to
educate,
to
connect,
to
get
a<enTon,
to
get
a
second
more
personal
meeTng?
Your
focus
should
help
you
prioriTze.
• Modulate
your
pace,
pitch,
volume,
tone
and
enthusiasm
–
like
when
you
are
telling
a
story.
This
helps
keep
the
audience
focused.
• Use
humor,
personal
stories
and
conversaTonal
language
where
possible.
Your
use
of
easy
to
understand
analogies
can
help
you
draw
in
the
audience
and
create
tracTon.
• PracTce.
PracTce.
PracTce!
Rehearse
out
loud
with
all
equipment
and
with
a
Tmer.
Allow
Tme
for
the
unexpected.
GO
SEE
OTHER
PRESENTATIONS!
• Every
slide
should
be
consistent
with
your
corporate
image
–
each
should
bear
the
company
name
and
should
have
a
background
or
theme
consistent
with
the
company
type
or
culture.
• Slides
should
HELP
the
oral
presentaTon,
not
BE
the
presentaTon.
Avoid
wriTng
down
your
presentaTon
on
the
slides.
17

18. PRESENTATION
SKILLS:
Part
III
• Always
bring
a
backup
copy
of
the
presentaTon
with
you
in
paper
and
on
a
flash
drive
(it
is
also
useful
to
have
it
available
by
web
email).
• The
professionalism
of
the
powerpoint
may
convey
informaTon
to
the
audience
about
your
credibility.
If
it
looks
like
a
last-­‐minute
effort,
it
probably
was.
• Without
minimizing
the
above
rule,
spend
more
Tme
building
a
great
business
and
less
building
a
great
presentaTon.
• The
deck
is
just
a
tool.
If
the
computer
or
projector
cease
working
–
you
should
be
able
to
carry
on
with
your
presentaTon
without
geqng
flustered.
Remember,
this
is
just
a
tool,
it
is
not
the
presentaTon.
• Stand
up
(unless
it
is
one-­‐on-­‐one)
• Leave
Tme
for
quesTons.
• RELAX,
BREATHE
and
SLOW
DOWN
18

19. Interacting with Investors
Basic Principles - Overview
DO
• Research the investor in advance
• Realize investors are thinking about exit strategy
• Pay attention to what you say during the presentation banter
• Communicate
• Be likeable
• State your value proposition up front
• Come prepared with sufficient data (including back up slides)
• Enjoy yourself and let it show
• Keep the presentation within allotted time
• Be realistic about valuations in the market
• Make due diligence easy
19

20. Interacting with Investors
DO NOT Cautionary Overview – Don’t do the following
• Give investors a reason to turn you down
• Bash the competition
• Hype
• Condescend, talk down or be arrogant
• Be vague about your technology
• Deluge investors with facts
• Act desperate for funding (even if you are)
• Act like you don’t need money
• List ‘the company is undervalued’ as a reason to invest
• Overprice your rounds so you can keep stepping up valuation
20

21. VC Glossary
What We/They say… and What We/They Really Mean…
Acquisition Strategy the current products have no market
Basically on plan revenue shortfall of 25 percent
Currently revisiting the budget financial plan is in total chaos
Cyclical industry posted a huge loss last year
Entrepreneurial CEO totally uncontrollable, bordering on maniacal
Funding Interruption investors tapped out; unwilling to fund again
Ingredients are there in two years we might find a workable strategy
Investing heavily in R&D trying desperately to catch the competition
Long-selling cycle yet to find a customer who likes the product
Possibility of a slight shortfall a revenue shortfall of 50 percent
Repositioning the business multimillion-dollar investment recently written off
Somewhat below the plan revenue shortfall of 75 percent
Too early to tell results to date have been grim
Turnaround opportunity lost cause
Unique no more than six competitors
Upgrading the management team the organization is in complete disarray
Window of opportunity without more money, the company is dead
21
Source: Eugene Hill, SV Life Sciences Advisers, LLC at HST921, Spring 2012