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Workshops
Investor Repellers
“10” mistakes to avoid when
you present to investors
Andrea Baldini – Tomaso Rodriguez
WHAT’S THIS?
THIS?
WHAT’S GONNA HAPPEN?
HAPPEN?

Short workshop on some things you should (NOT)
do when presenting to investors…
…with a bit of humor and theatrics…
…for all the startuppers out there!
FORMAT: MISTAKE

RULE

Presented to you by Junior Jedi

2
Investor Repellers: gli Errori da NON Fare con gli Investitori
It’s a story I want to believe in

RULE # 0

GOOD COMMUNICATIONS
4
5
Investor Repellers: gli Errori da NON Fare con gli Investitori
What are you going to tell me?

RULE # 1

EXECUTIVE SUMMARY
7
FIRST THINGS FIRST
Golden rule:
Tell me what you are going to tell me,
then tell me,
then summarize (= tell me again)

8
Investor Repellers: gli Errori da NON Fare con gli Investitori
What is it? What is it for?

RULE # 2

IT’S THE PRODUCT, STUPID!
PRODUCT, STUPID!
10
Source: https://www.apple.com

11
Investor Repellers: gli Errori da NON Fare con gli Investitori
Financials will come

RULE # 3

BUSINESS MODEL FIRST
13
BUSINESS MODEL

Razor Blade

Reverse Razor Blade

14
SOME EXAMPLES
•
•
•
•
•
•
•
•
•
•

Advertising
Add On
Razor Blade
Freemium
Low Cost
Pay as you Go
Subscription model
Brick & mortar vs Digital Distribution
Virtual goods
…
15
BUSINESS CASE
• New product/service addressed needs
• Breakthrough innovation nearest comparable
• Business case: the reasoning for switching from the
existing to the new
• Always consider:
Pros
Cons
– Laziness of people
– Fear of the unknown
BE
CONVINCING!

• ...
• …
• …

• ...
• …
• …
16
Investor Repellers: gli Errori da NON Fare con gli Investitori
investors MANAGE risk

RULE # 4

SUPPORT WITH METRICS
18
METRICS
• Follow business model and strategy
• Financials should reflect them
• VCs love measurable things
– Make their job easier
– Help in proving the value of a concept
– Can validate an idea that «sounds good»

19
METRICS FOR A WEBCO (OLD SCHOOL)
•

SEM
•

•
•
•
•

CAC

•

Lead Lifetime

Customer
Acquisition
Cost

•

Churn Rate

•

Recurring Sales

•

•

MWA

…

SEO
Retargeting
Affiliation

LTV
Lifetime
Value

Mob Ads
…

LTV > CAC ???
20
YOUR OWN STRATEGY, YOUR OWN METRICS
• «old school» vs. start up VCs don’t like
buying user bases
• Key: acquire quality users at the lowest cost
possible

21
So you got an idea? That don’t impress me much

RULE # 5

EXECUTION
22
EXECUTION
•
•
•
•

Idea is NOTHING without execution
No plan = No money from an investor
Go-to-market plan coherent with strategy
Measurable performance

23
How to segment and identify my segments

RULE # 6

FIND THE MARKET BEFORE IT FINDS YOU

24
THE OLD WAYS
• segment = people with the same buying
motive
• Judging what people will buy based on:
– Job
– Salary
– Level of employment

• Largely irrelevant as:
– people do not conform to
stereotypes
– people from all classes and
occupations share similar aspirations.
© Prof. Paul Fifield
http://www.fifield.co.uk/

25
THE NEW SCHOOL
The best (real) segments comprise
people with the same needs &
motivations – these change depending
on the time, place and event

People share the same
needs and motivations, not
because of who they are, but
what brings them together
© Prof. Paul Fifield
http://www.fifield.co.uk/

26
HD AND THEIR BUSINESS DEFINITION

© Prof. Paul Fifield
http://www.fifield.co.uk/

27
IN WHICH BUSINESS ARE YOU IN?
“Product led”

Company

Motor Cycles
Watches
Electric Motors
Electronics
Watches
Cosmetics
Coffee Shops
Leather/Luggage
Encyclopedias

Harley Davidson
Swatch
B&D
Sony
Rolex
Revlon
Starbucks
Louis Vuitton
Britannica

Our Product?

Our Company

© Prof. Paul Fifield
http://www.fifield.co.uk/

“Market led”
Big Boys’ Toys
Fashion Accessories
DIY = Do It Yourself
Entertainment
Jewelry
“Hope”
The Third Place
The Art of Traveling
Parental guilt
Our Business

28
MARKET ≠ ADDRESSABLE MARKET
•
•
•
•
•
•
•
•

Sector / niche
Segmentation
Geography
Distribution
Legal constraints
Competition
Barriers to entry
…
29
Where does taht number come from…

RULE # 7

VALUATION
30
SHOW ME THE MONEY
• For VCs and investors valuation comes out of many
elements (strategy, focus, market, metrics, biz
model, etc., etc., etc.)
• Investors are (usually) in for the long term
• Market (usually) wins
• VCs reason BACKWARDS (exit and dilution)
• Incentives needs to be aligned
• CAVEAT: be certain to know what you are buying
with a certain valuation

31
Investor Repellers: gli Errori da NON Fare con gli Investitori
We are gonna find it out anyway…

RULE # 8

BE TRANSPARENT
33
SECURITY BY OBSCURITY IS NO GOOD
• Be transparent on TEAM, don’t hide missing
pieces, be practical
• Be transparent on COMPETITORS, which
one keeps you awake at night?
• Be transparent on LOCK-IN, how you avoid
losing ground and user base or customers?
• Be transparent on anything, there is going
to be a Due Diligence if everything goes
well…

34
Feedback is good, secrets are not

RULE # 9

GET CHALLENGED BEFORE PRESENTING
35
IRIDIUM CASE
• 66 low earth orbiting
satellites
• Allowing subscribers to
make phone calls all over
the world
• Cost of the project over
$6 bln
• IPOed in June 1997 for
$20 / share, in less than
one year price increased
to $ 72.19 / share
• In November 1998 the
service was launched
36
IRIDIUM CASE (cont.)
(cont.)
• In May 1999 share price was just $ 3.06
• Bankruptcy in August 1999
“We’re a classic MBA case study in how not to
introduce a product. First we created a marvelous
technological achievement. Then we asked how
to make money on it.”
Iridium Interim CEO John A.
Richardson, August 1999

Source http://lfp-blog.com/how-themighty-fall

Hey! Did
somebody tell
these guys
that the
product is too
bulky???

37
LESSONS LEARNED (AT HIGH COST)

Always get challenged,
feedback is good!

DON’T FALL IN LOVE WITH YOUR
PRODUCT/IDEA, OR YOU’LL SEE
ONLY WHAT YOU WANT TO SEE

38
Investor Repellers: gli Errori da NON Fare con gli Investitori
One size doesn’t fit all

RULE # 10

GET INFO ON VC BEFORE PRESENTING
40
GET INFO ON VCs BEFORE PRESENTING
• VCs will provide «smart» money for your business
• But every VC has its own expertise in terms of:
–
–
–
–
–
–

Geographies
Sectors
Network
Markets
Stages of growth
…

• Getting financed by a VC is like getting married,
you have to choose accurately!
41
One size doesn’t fit all

RULE # 10+

DON’T BE (TOO) BULLISH
42
THERE ARE NOT MANY GOOGLES AND
FACEBOOKS OUT THERE
Need of cash

€ 500 k

Planning to sell the company
at 15 x EBITDA in 4 years at

€ 1,2 B

43
Feature 8

Feature 7

Feature 6

Feature 5

Feature 4

Feature 3

Feature 2

Feature 1

COMPARISONS SHOULD BE FAIR ENOUGH

MyProduct

44
Thank You!
You!
Investor Repellers
“10” mistakes to avoid when
you present to investors
Andrea Baldini – Tomaso Rodriguez
Francesco
Inguscio

Matteo
Panfilo

Matteo
Scarabelli

Matteo
Faggin

Tomaso
Rodriguez

Andrea
Baldini

Emil
Abirascid

Giusy
Cannone

Anna
Sargian

Alessandra
Giuffranti

Marina
Calcagno

Federica
Pasini

Francesca
Brescia

Pierantonio
Luceri

Umberto
De Feo

Eugenia
Di Somma

Raffaele
Mauro

http://www.juniorjedi.com
46
Next workshop:

Finanziamento VC: capire un term sheet
Pierantonio Luceri , Matteo Panfilo
28 giugno 2012 @ StartMiUp
Register on EventBrite!
Q&A
49
GUERRILLA MARKETING
Drastic

Goodwill

Humorous

Guerrilla
Marketing

Cheap

One shot

Completely
Unexpected
50
EXAMPLE OF BAD EXECUTION
• Ben-Gay is a cream to relieve
pains very successful in US
• When the company decided
to launch the Aspirin it was a
flop
• It was just a naming
problem… would you
swallow a Ben-Gay?

51

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Investor Repellers: gli Errori da NON Fare con gli Investitori

  • 1. Workshops Investor Repellers “10” mistakes to avoid when you present to investors Andrea Baldini – Tomaso Rodriguez
  • 2. WHAT’S THIS? THIS? WHAT’S GONNA HAPPEN? HAPPEN? Short workshop on some things you should (NOT) do when presenting to investors… …with a bit of humor and theatrics… …for all the startuppers out there! FORMAT: MISTAKE RULE Presented to you by Junior Jedi 2
  • 4. It’s a story I want to believe in RULE # 0 GOOD COMMUNICATIONS 4
  • 5. 5
  • 7. What are you going to tell me? RULE # 1 EXECUTIVE SUMMARY 7
  • 8. FIRST THINGS FIRST Golden rule: Tell me what you are going to tell me, then tell me, then summarize (= tell me again) 8
  • 10. What is it? What is it for? RULE # 2 IT’S THE PRODUCT, STUPID! PRODUCT, STUPID! 10
  • 13. Financials will come RULE # 3 BUSINESS MODEL FIRST 13
  • 15. SOME EXAMPLES • • • • • • • • • • Advertising Add On Razor Blade Freemium Low Cost Pay as you Go Subscription model Brick & mortar vs Digital Distribution Virtual goods … 15
  • 16. BUSINESS CASE • New product/service addressed needs • Breakthrough innovation nearest comparable • Business case: the reasoning for switching from the existing to the new • Always consider: Pros Cons – Laziness of people – Fear of the unknown BE CONVINCING! • ... • … • … • ... • … • … 16
  • 18. investors MANAGE risk RULE # 4 SUPPORT WITH METRICS 18
  • 19. METRICS • Follow business model and strategy • Financials should reflect them • VCs love measurable things – Make their job easier – Help in proving the value of a concept – Can validate an idea that «sounds good» 19
  • 20. METRICS FOR A WEBCO (OLD SCHOOL) • SEM • • • • • CAC • Lead Lifetime Customer Acquisition Cost • Churn Rate • Recurring Sales • • MWA … SEO Retargeting Affiliation LTV Lifetime Value Mob Ads … LTV > CAC ??? 20
  • 21. YOUR OWN STRATEGY, YOUR OWN METRICS • «old school» vs. start up VCs don’t like buying user bases • Key: acquire quality users at the lowest cost possible 21
  • 22. So you got an idea? That don’t impress me much RULE # 5 EXECUTION 22
  • 23. EXECUTION • • • • Idea is NOTHING without execution No plan = No money from an investor Go-to-market plan coherent with strategy Measurable performance 23
  • 24. How to segment and identify my segments RULE # 6 FIND THE MARKET BEFORE IT FINDS YOU 24
  • 25. THE OLD WAYS • segment = people with the same buying motive • Judging what people will buy based on: – Job – Salary – Level of employment • Largely irrelevant as: – people do not conform to stereotypes – people from all classes and occupations share similar aspirations. © Prof. Paul Fifield http://www.fifield.co.uk/ 25
  • 26. THE NEW SCHOOL The best (real) segments comprise people with the same needs & motivations – these change depending on the time, place and event People share the same needs and motivations, not because of who they are, but what brings them together © Prof. Paul Fifield http://www.fifield.co.uk/ 26
  • 27. HD AND THEIR BUSINESS DEFINITION © Prof. Paul Fifield http://www.fifield.co.uk/ 27
  • 28. IN WHICH BUSINESS ARE YOU IN? “Product led” Company Motor Cycles Watches Electric Motors Electronics Watches Cosmetics Coffee Shops Leather/Luggage Encyclopedias Harley Davidson Swatch B&D Sony Rolex Revlon Starbucks Louis Vuitton Britannica Our Product? Our Company © Prof. Paul Fifield http://www.fifield.co.uk/ “Market led” Big Boys’ Toys Fashion Accessories DIY = Do It Yourself Entertainment Jewelry “Hope” The Third Place The Art of Traveling Parental guilt Our Business 28
  • 29. MARKET ≠ ADDRESSABLE MARKET • • • • • • • • Sector / niche Segmentation Geography Distribution Legal constraints Competition Barriers to entry … 29
  • 30. Where does taht number come from… RULE # 7 VALUATION 30
  • 31. SHOW ME THE MONEY • For VCs and investors valuation comes out of many elements (strategy, focus, market, metrics, biz model, etc., etc., etc.) • Investors are (usually) in for the long term • Market (usually) wins • VCs reason BACKWARDS (exit and dilution) • Incentives needs to be aligned • CAVEAT: be certain to know what you are buying with a certain valuation 31
  • 33. We are gonna find it out anyway… RULE # 8 BE TRANSPARENT 33
  • 34. SECURITY BY OBSCURITY IS NO GOOD • Be transparent on TEAM, don’t hide missing pieces, be practical • Be transparent on COMPETITORS, which one keeps you awake at night? • Be transparent on LOCK-IN, how you avoid losing ground and user base or customers? • Be transparent on anything, there is going to be a Due Diligence if everything goes well… 34
  • 35. Feedback is good, secrets are not RULE # 9 GET CHALLENGED BEFORE PRESENTING 35
  • 36. IRIDIUM CASE • 66 low earth orbiting satellites • Allowing subscribers to make phone calls all over the world • Cost of the project over $6 bln • IPOed in June 1997 for $20 / share, in less than one year price increased to $ 72.19 / share • In November 1998 the service was launched 36
  • 37. IRIDIUM CASE (cont.) (cont.) • In May 1999 share price was just $ 3.06 • Bankruptcy in August 1999 “We’re a classic MBA case study in how not to introduce a product. First we created a marvelous technological achievement. Then we asked how to make money on it.” Iridium Interim CEO John A. Richardson, August 1999 Source http://lfp-blog.com/how-themighty-fall Hey! Did somebody tell these guys that the product is too bulky??? 37
  • 38. LESSONS LEARNED (AT HIGH COST) Always get challenged, feedback is good! DON’T FALL IN LOVE WITH YOUR PRODUCT/IDEA, OR YOU’LL SEE ONLY WHAT YOU WANT TO SEE 38
  • 40. One size doesn’t fit all RULE # 10 GET INFO ON VC BEFORE PRESENTING 40
  • 41. GET INFO ON VCs BEFORE PRESENTING • VCs will provide «smart» money for your business • But every VC has its own expertise in terms of: – – – – – – Geographies Sectors Network Markets Stages of growth … • Getting financed by a VC is like getting married, you have to choose accurately! 41
  • 42. One size doesn’t fit all RULE # 10+ DON’T BE (TOO) BULLISH 42
  • 43. THERE ARE NOT MANY GOOGLES AND FACEBOOKS OUT THERE Need of cash € 500 k Planning to sell the company at 15 x EBITDA in 4 years at € 1,2 B 43
  • 44. Feature 8 Feature 7 Feature 6 Feature 5 Feature 4 Feature 3 Feature 2 Feature 1 COMPARISONS SHOULD BE FAIR ENOUGH MyProduct 44
  • 45. Thank You! You! Investor Repellers “10” mistakes to avoid when you present to investors Andrea Baldini – Tomaso Rodriguez
  • 47. Next workshop: Finanziamento VC: capire un term sheet Pierantonio Luceri , Matteo Panfilo 28 giugno 2012 @ StartMiUp Register on EventBrite!
  • 48. Q&A
  • 49. 49
  • 51. EXAMPLE OF BAD EXECUTION • Ben-Gay is a cream to relieve pains very successful in US • When the company decided to launch the Aspirin it was a flop • It was just a naming problem… would you swallow a Ben-Gay? 51