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BDVe Webinar Series - Help to face an investor

  1. Webinar: Help to face an investor Angel Torrecillas (Partner at Murcia Business Angel Networks, Board member of WANASEED Private Investors Network) Tonny Velin (CEO Answare) 25/09/2020
  2. Goal ▪ Help START-UPS and SMEs to face investors with tips about how to attract investors, get funding, prepare a pitch, expectations from investors, etc. ▪ 1/ How to present a pitch deck to potential investors? – Tonny Velin ▪ 2/ What does an investor expect before investing? – Angel Torrecillas ▪ Tip: For an investor, what is important is not the product but how to sell it on the market.
  3. Pitch Deck ▪ A pitch deck is a 10-20 slides presentation designed to give a short summary of your company, your business plan and your startup vision. ▪ It serves very different purposes, from trying to get a meeting with a new investor, to presenting in front of a stage, and each one of them should follow a different structure. ▪ A demo day presentation should be very visual and contain very little text. It is going to be seen from by a wide audience (projector) and you will do all the talking. ▪ A pitch presentation that you are planning to email should be completely self-explanatory (and it is going to be seen on a laptop monitor).
  4. Tips ▪ The Pitch Deck is an intro to the company. ▪ Don’t overload the slides! ▪ Investors take max. 4 minutes to review a Pitch Deck they receive via email. ▪ Try to manage to catch their attention in 1 minute or so. ▪ Tip: simple is better! ▪ You won’t be successful the first or the second time -> You will need to pitch in front of many investors, might be 100!
  5. More tips ▪ Ideas are just this: ideas -> what matters is your ability to execute them. ▪ With the Pitch Deck prove why you are going to make the investor rich. ▪ No investor will sign a NDA to view a Pitch Deck. ▪ No investor will give you money because they like you or because they like your team or because they like your product. ▪ Investors will give you money because they believe: o Your team with your vision can grasp this market opportunity. o You are able to create a sizeable company. o You can give them a sizeable return on their investment.
  6. Structure (standard) 1. Cover 2. Problem 3. Solution 4. Product demo 5. Market Size (with TAM (Total Adressable Market), SAM (Serviceable Available Market), SOM (Serviceable Obtainable Market ) 6. Business model (KEY POINT!) 7. Competition 8. Competitive advantages 9. Go to market (Strategy for growth) 10. Team 11. Traction / Milestones / Metrics up to date (OTHER KEY POINT!) 12. Fundraising information / Needs for investment 13. Thanks and contact details
  7. EXAMPLES – ORIGINAL PITCH DECKS ▪ AIRBNB ▪ FACEBOOK ▪ UBER ▪ https://piktochart.com/blog/startup-pitch-decks-what-you-can-learn/ ▪ https://pitchdeckexamples.com/startups/
  8. 1. COVER ▪ The pitch is the very first impression investors might get from your company / business -> It therefore has to impress them at the very first time! ▪ You present your case, your problem and your proposed solution -> This is a critical part of your pitch because it will capture the attention of investors for the rest of your presentation! ▪ The design is important!
  9. 2. PROBLEM ▪ Where we are today. ▪ Make it clear: do not use complex wording. ▪ Make your case/premise solid: o No debetable arguments/No statement that is questionable/All can be verified 100%. o Otherwise doubts raise for the rest of the presentation. ▪ This is were you create empathy with investors !
  10. 3. SOLUTION ▪ The solution is you, your team, your company and your product. ▪ Mention 3 or 4 funtions of your product and how they address the problem you just talked about. ▪ Think of benefits instead of features: o Don’t talk about what the product does. o Tell what you can do with your product. ▪ Tips: o Avoid technical jargon. o Use one killer line.
  11. 4. PRODUCT DEMO ▪ For investors to get a first overview/glimpse of the solution/product/service. ▪ You cannot asume investors will go to your web site and check by themselves. ▪ Tips: o If you do it live -> you risk the demo crashing. o Safe to stay with a video. o If you share the pitch with an investor via email, the video is a must! ▪ Demo should last 30 seconds or less!
  12. 5. MARKET SIZE ▪ You look at how large the company can become. ▪ Two ways to tacke it: Top down or Bottom up market approach. o Top down approach: calculate the total market share and estimate your share of that market. o Bottom up approach: • Made by calculating potential sales to determine a total sales figure. • Study to determine where products can be sold, the sales of comparable products and the sales you could make. • More effort but the results is more accurate. ▪ Tip: worst case scenario, realistic scenario, best case scenario.
  13. Top-Down ▪ Makes the investment decisions based on the most global or international variables to gradually go down progressively until reaching the most specific. ▪ The process to follow would be the following: o Analyze the situation of the international economic cycle. o Analyze national economies. o Analyze the sectors to know which will grow more than the economy as a whole. o Analyze the aspects of each company taking into account their competitive situation. ▪ This approach is intended for the analysis of large macroeconomic figures, such as potential client trends, demographic data, GDP evolution, trade balance, raw material prices, surveys, industrial activity, energy consumption, etc. ▪ From these data, we try to guess what behaviors different markets can register. Source: https://thepowermba.com/2018/12/11/como-calcular-el-tamano-de-mercado-tam-sam-som/
  14. Bottom-up ▪ Is the reverse process. ▪ Start with the details and the smallest parts trying to solve the smaller problems that together are giving solutions to other problems. ▪ Three basic elements are involved for decision-making: business, valuation and risk (business or market). ▪ To carry out their calculation, the analysts study the concrete reality of the companies that are under their monitoring with: financial statements, investment plans of new markets, annual reports, financial restructuring plans, etc. ▪ Based on the detailed knowledge of the companies and comparing them with their competitors, we try to guess the behavior that can be expected from the price of their shares in the medium and short term. Source: https://thepowermba.com/2018/12/11/como-calcular-el-tamano-de-mercado-tam-sam-som/
  15. TAM (Total Adressable Market) ▪ Total size of the market = how much turnover our business opportunity represents. ▪ Very interesting for investors because it gives an idea of the financial possibilities of the project and its possibilities to scale. ▪ To get a value, we can sum up the turnover of our main competitors at global level or look at existing studies. Source: https://thepowermba.com/2018/12/11/como-calcular-el-tamano-de-mercado-tam-sam-som/
  16. SAM (Serviceable Available Market) ▪ Represents the available market or the market volume that we are able to serve with the definition of our current business model and with the sales channels we have developed for the launch of our product and / or service. ▪ When we start our first sales, we have to size our capacity very well and figure out if we can reach the market we want to cover. ▪ This calculation also indicates our growth potential by offering the services and products that we have defined. ▪ The calculation of the SAM will be done taking as reference the maximum number of units that our current business model is able to sell in a year. It is advisable to take competitors as an example. Source: https://thepowermba.com/2018/12/11/como-calcular-el-tamano-de-mercado-tam-sam-som/
  17. SOM (Serviceable Obtainable Market) ▪ Serves to assess the potential in the short / medium term that we can obtain with the resources that we are going to invest. ▪ We must take into account not only the size of the current market but the percentage of the market that we can capture with our strategy of recruitment and resources. ▪ The SOM will offer us an estimate of who will be the buyers of our product and / or service. ▪ A very important fact when validating our business idea. Source: https://thepowermba.com/2018/12/11/como-calcular-el-tamano-de-mercado-tam-sam-som/
  18. 6. BUSINESS MODEL ▪ How are you going to make money? ▪ Crucial part of your pitch: makes your pitch successful or breaks your pitch !! ▪ The idea might not be brilliant -> never mind if you make money! ▪ Example: give a percentage (10% AIRBNB).
  19. 7. COMPETITION ▪ Easy to understand grid to compare you with your competitors. ▪ Was made famous by Steve Jobs in his talks. ▪ Think about the horizontal and vertical axis.
  20. 8. COMPETITIVE ADVANTAGES ▪ What makes you different! ▪ Elaborate on the technologies you have developed that make your solution/product/ service unique. ▪ Highlight patents if you have.
  21. 9. GO TO MARKET ▪ Describe your strategy for growth: What are your plans to acquire clients/audience? ▪ Strategy: o Pitch your plans as if you are 100% sure this is the way to go. o The reality is that there is no way to know how these plans will work out until you try them. o You might try and fail with different marketing tactics -> You will need to update this slide regularly. o But always have a plan -> Simulate / Fake till you make it! ▪ What is key: o You can figure out ways to grow your business with a large pool of plans/ideas. o You must prove that you have the ability to execute your plans/ideas.
  22. 10. TEAM ▪ This slide should be simple! ▪ No companies can raise money will a fully formed and committed founding team. ▪ Mention the founders and why you are the right people to grow the company. ▪ Why is your team complementary -> Example: o CEO: Good seller / Make deals with investors. o CTO: Technical abilities / Lead Product development. o CDO: Build a Brand / High Quality Design & Marketing ▪ Only talk about who is 100% dedicated to the company. ▪ Do not talk about your advisors / external people here.
  23. Build up a powerful team (1/2) Team “Solution” (inside the building) – coding, testing, versioning, etc Source: yoemprendo – José Antonio de Miguel Team “Problem” (outside the building) – interviews, customers, Ux, etc
  24. Build up a powerful team (2/2) 2 or 3 persons Easier communication You build less, you spend less Burn rate under control Source: yoemprendo – José Antonio de Miguel Sales Development Marketing Look for people who would believe in your idea and leave his/her job for you -> people who look for the shares/stock and not for the salary!
  25. 11. TRACTION AND MILESTONES (1/2) ▪ Another crucial part of your pitch! ▪ Traction captures people‘s attention -> it is the apogee of your story! ▪ Be careful with the press related to startups -> You look at other products that do not impress you (I have a better product) and you might asume it is easy to get funding. ▪ If you have revenues/sales: o In front of an audience, this slide should probably go first right after the cover. o If the business is growing this should be the only chart on this slide, i.e. a growing curve.
  26. 11. TRACTION AND MILESTONES (2/2) ▪ If you don’t have any sales: o Talk about your growth, the weekly or monthly active users you have gained. o Investors might still tell you “too early to invest”: You might want to reconsider pitching to investors. o How to get numbers if you don’t have money to start with? -> the answer is boostrapping (no or very Little resources, 3Fs (Fools, Friends and Family). ▪ It is very tough to raise money without income! o Very few companies raise money with just a prototype and no users. o Most companies raise money after getting traction. o TRACTION comes in the form of REVENUES -> X EUROS / month + X% growth month after month.
  27. 12. FUNDRAISING INFORMATION ▪ If you send this info privately to a VC then this should be OK. ▪ But when pitching on stage in front of an audience, be careful with the contents -> check if you can publicly advertise the fundraising achieved so far or if the deals remain “private”.
  28. 13. THANKS AND CONTACT DETAILS ▪ Always say “thank you!” for the attention. ▪ Include your contact details: name, email address, phone number and also web site.
  29. CHARACTERISTICS OF AN INVESTOR ▪ Reason: justify why you hold each company in your portfolio. ▪ Commitment: keep doing it! ▪ Discipline. Research and Research ▪ Flexibility: Follow the rules and break them ▪ Open Mind: Others VC don´t see ▪ Know Your limits: Don´t be another startup…. ▪ PATIENT: Long distance
  30. WHICH KIND OF INVESTORS ▪ FFF (Debt) ▪ Bank and Government Agencies (debt) ▪ Business Angels (Equity) ▪ Accelerators and Incubators (Equity) ▪ Family Offices. ▪ VC ▪ Corporate Investors
  31. WHICH KIND OF INVESTORS https://smallbusiness.chron.com/difference-between-seed-funding-earlystage- funding-33038.html https://fundingsage.com/startup-funding-rounds-and-the-funding-life-cycle/growth- stage/
  32. WHAT MAKES AN IDEA ATTRACTIVE TO INVESTORS ▪ TEAM Technical and business-oriented co-founders * A team that complements each other * Previous experience in the industry they are facing * Co-founders trying to solve a problem they previously had
  33. WHAT MAKES AN IDEA ATTRACTIVE TO INVESTORS ▪ Product. Not just an MVP => Metrics ▪ Size of Market ▪ Valuation
  34. KEY FIGURES FOR AN INVESTOR ▪ GROSS PROFIT ▪ CLTV LTV => Gross Margin % x (1/Monthly Cancelation Trend) x Avg. Monthly Customer Revenue ▪ CAC => (CAC) = Total Cost of sales + total marketing expenses for certain time frame / how many new customers were obtained during the time frame. ▪ MAU Monthly Active Users ▪ UAR User Activation Rate ▪ Month-on-Month Growth
  35. KEY FIGURES FOR AN INVESTOR ▪ Burn Rate => Burn rate = total cash inflow in month X – total cash outflow in month X à when outflow > inflow. ▪ RUNAWAY => Runway = current cash position / monthly burn rate.
  36. HOW TO FIND INVESTORS (1/3) ▪ Investors usually do not reply to emails. ▪ Use, expand and leverage your Linkedin Network. ▪ Link to your deck (no PDF no PPT) -> You can remove the access to the link at any time. ▪ After Linkedin, attend startup events and extend your Network.
  37. HOW TO FIND INVESTORS (2/3) H2020 project: http://innorate-project.eu/ “Data-driven tools for supporting and improving the decision- making processes of investors for financing innovative SMEs” https://www.youtube.com/watch?v=cXWKCmK6N6U&t=1s InnoRate introduces a novel service platform that evaluates and benchmarks tech-driven companies based on the well- established Korean Technology Rating System, that has a track record of assessing over 200,000 cases and helping SMEs acquire more than EUR 75 billion. Source: yoemprendo – José Antonio de Miguel
  38. HOW TO FIND INVESTORS (3/3) ▪ Invest Europe: https://www.investeurope.eu/about-private-equity/for- entrepreneurs/find-an-investor/ ▪ AngelList: https://www.linkedin.com/company/angellist/?originalSubdomain=ar) Source: yoemprendo – José Antonio de Miguel
  39. Other links https://www.inc.com/jeff-haden/bottom-up-or-top-down-market-analysis- which-should-you-use.html https://guykawasaki.com/the-only-10-slides-you-need-in-your-pitch/ https://piktochart.com/blog/startup-pitch-decks-what-you-can-learn/ https://slidebean.com/blog/startups-pitch-deck-examples Source: yoemprendo – José Antonio de Miguel
  40. Some reading …
  41. EUROPEAN BIG DATA VALUE FORUM 2020 The European Big Data Value Forum (EBDVF) is the flagship event of the European Big Data and Data- Driven AI Research and Innovation community organised by the Big Data Value Association (BDVA) and the European Commission (DG CNECT). The 2020 edition of the EBDVF will take place between the 3rd and the 5th of November 2020 in Berlin and online, and it is organised in collaboration with DFKI, Plattform Industrie 4.0, Plattform Lernende Systeme and Berlin Partner.
  42. • Event website: www.ebdvf.eu • Event booklet: https://www.european-big-data-value- forum.eu/wp-content/uploads/2020/07/EBDVF-2020-.- BerlinVirtual.pdf • Sponsoring booklet: https://www.european-big-data-value- forum.eu/wp-content/uploads/2020/08/EBDVF-2020- Sponsoring-Opportunities.pdf • Registration: https://whova.com/portal/registration/ebdvt_202011/ • For additional info: info@core.bdva.eu Some important links…..
  43. Contact ▪ Angel Torrecillas ▪ Email: atorreci@visualtis.com ▪ Tonny Velin ▪ Email: tvelin@answare-tech.com