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How to write your business plan - Rob Moffat, Balderton Capital

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How to write your business plan - Rob Moffat, Balderton Capital

  1. 1. How to write a business plan Campus EDU 31 May 2013
  2. 2. • Invest $0.1 - 10M in tech companies with $B potential • Invest across Europe, help businesses go international • Have invested in >100 companies over last 10 years 2 Balderton Capital – what we do
  3. 3. We back great entrepreneurs & disruptive companies 3 Europe’s leading vacation rental marketplace Top 2 global music publisher from zero: Prince, McCartney 1 Million loan applications per month 1M products sold per month
  4. 4. Me 4 1996 2000 2004 2007 2009
  5. 5. You 5 Written a business plan? Have an idea? Working on a business right now? Looked at their business plan this week?
  6. 6. • Pitch deck • Excel • Business plan • For you • For your co-founders / employees 6 Scope for today
  7. 7. 7 We’re not writing a dissertation…
  8. 8. 9 Contents of a (software/internet) business plan • The problem • Your solution • Competition, and why you win • Size of the opportunity • Unit economics • The necessaries: Product, Team, Capital • Milestones
  9. 9. 1 0 Contents of a (software/internet) business plan • The problem • Your solution • Competition, and why you win • Size of the opportunity • Unit economics • The necessaries: Product, Team, Capital • Milestones
  10. 10. 11 What is a problem? • Unmet need • Unmet want • Too expensive • Too time-consuming How many other people really care about this problem?
  11. 11. 12 What was the problem?
  12. 12. 13 Solution without a problem…
  13. 13. 14 Contents of a (software/internet) business plan • The problem • Your solution • Competition, and why you win • Size of the opportunity • Unit economics • The necessaries: Product, Team, Capital • Milestones
  14. 14. 15 Your solution For… (target customer) who… (statement of the need or opportunity), we are a… (product type) that… (key benefit). Unlike… (main competitor), our product… (how we are different).
  15. 15. 16 Which company? For young travellers Who need somewhere cheap to stay, We are a marketplace for accommodation That gives you a better room for half the price. Unlike hotels or hostels Our product gives you the personality of the city
  16. 16. 17 Two acronyms BHAG MVP Big Hairy Audacious Goal Minimum Viable Product
  17. 17. 18 Which company? BHAG MVP The social network Online student directory
  18. 18. 19 Why now?
  19. 19. 20 Contents of a (software/internet) business plan • The problem • Your solution • Competition, and why you win • Size of the opportunity • Unit economics • The necessaries: Product, Team, Capital • Milestones
  20. 20. 21 “We have no competitors” #1 reason for a VC to ditch your business plan?
  21. 21. 22 Know your competition Where are the weaknesses? What are they good at? Common mistake: Compare where you will be in two years with where they are today
  22. 22. 23 Disruptive innovation Film cameras -> Digital -> Smartphones TV -> Youtube Servers -> Cloud MSFT Office -> Google Docs
  23. 23. 24 Good & bad competitive advantages • Disruptive innovation • Speed • Unique technology / IP / data • Exclusive partnerships • Substantially lower cost • Quality of your team Good Bad • Features • Better service • Lower margins • Better for client but not for users
  24. 24. 25 How will you sustain your advantage?
  25. 25. 26 How will you sustain your advantage? • Network effects • Virtuous circles • More/better data • Brand • Depth of tech expertise
  26. 26. 27 Contents of a (software/internet) business plan • The problem • Your solution • Competition, and why you win • Size of the opportunity • Unit economics • The necessaries: Product, Team, Capital • Milestones
  27. 27. 28 #2 reason for a VC to ditch your business plan? “Our market opportunity is $100B”
  28. 28. 29 Bottom up market sizing Number of potential users of your product % who are willing/able to pay Your annual revenue per user x x
  29. 29. 30 Example: Lovefilm Number of potential users of your product % who are willing/able to pay Your annual revenue per user x x 24 M UK households 40% ? Sky TV penetration (as a proxy) £120 £1.1BAddressable market =
  30. 30. 31 Contents of a (software/internet) business plan • The problem • Your solution • Competition, and why you win • Size of the opportunity • Unit economics • The necessaries: Product, Team, Capital • Milestones
  31. 31. 32 Unit economics = can you make money? Contribution per order Revenue per order Variable Cost per order= - Cost Per Acquisition (CPA) Cost per lead % of leads that convert= ÷ Customer Lifetime value (CLV) Contribution per order Average # orders per customer before they leave = x Lifetime value (LTV) Making money Cost Per Acquisition (CPA) >=
  32. 32. 33 Unit economics = can you make money? Contribution per order Revenue per order= - Cost Per Acquisition (CPA) Cost per lead % of leads that convert= ÷ Customer Lifetime value (CLV) Contribution per order= x Lifetime value (LTV) Making money Cost Per Acquisition (CPA) >= Variable Cost per order Average # orders per customer before they leave
  33. 33. 34 Contents of a (software/internet) business plan • The problem • Your solution • Competition, and why you win • Size of the opportunity • Unit economics • The necessaries: Product, Team, Capital • Milestones
  34. 34. 35 The necessaries: Product, Team, Capital Product • Minimum Viable Product • Make use of third party tech • ‘Mechanical turk’? Team • Skills that you need • Raw talent vs. experience? • Want VC investment? You need a CTO Capital • Running costs for 18 months, plus 25% • Sufficient runway to prove the product? • Use client work to help build product?
  35. 35. 36 Contents of a (software/internet) business plan • The problem • Your solution • Competition, and why you win • Size of the opportunity • Unit economics • The necessaries: Product, Team, Capital • Milestones
  36. 36. 37 Milestones
  37. 37. 38 Milestones Prove the hard stuff first Postpone big costs Prioritize constantly
  38. 38. 39 First milestone Test the plan!
  39. 39. 40 Some ways to test a business plan • Talk to … • Potential clients / partners / similar companies • Smart 3rd parties (including investors) • Dummy ad campaigns to test messaging & CPC • Landing page & waiting list • Kickstarter • Minimum viable product • Work at your competitors
  40. 40. 41 Read this book
  41. 41. 42 Your turn 1. Write a simple business plan for your business/idea • If you don’t have an idea, pick your favourite startup 2. Get your neighbour to critique it 15 mins 10 mins
  42. 42. 43 Reminder: Contents of a business plan • The problem • Your solution • Competition, and why you win • Size of the opportunity • Unit economics • The necessaries: Product, Team, Capital • Milestones
  43. 43. 44 Discussion Which was the weakest part of your plan? What is the area that most needs more testing?
  44. 44. 45 Advice • Re:work: Guess not a plan – keep short & revisit often • Be clear on what problem you are solving. It’s best to do one thing really, really well • Cost is a disease • People don’t like giving ‘negative feedback’. Push them to find the weak points, and listen • Be optimistic (but not blindly so)
  45. 45. Questions? rmoffat@balderton.com @robmoff
  46. 46. Further reading http://blog.guykawasaki.com/2012/01/how-to-create- an-enchanting-business-plan-officeandguyk.html http://37signals.com/rework http://theleanstartup.com/ http://www.avc.com/a_vc/mba-mondays/ http://www.slideshare.net/dmc500hats/startup- metrics-for-pirates-long-version http://www.seedcamp.com/resources/the-product- market-fit-cycle http://ycombinator.com/lib.html http://www.forbes.com/sites/bruceupbin/2012/08/30/the-dangerous- seduction-of-the-lifetime-value-ltv-formula/
  47. 47. Your business plan The problem Competition / why you win Size of the opportunity Your solution Unit economics Necessaries: Product, Team, Capital Milestones

Notas del editor

  • 2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5
  • 2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5
  • 2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5
  • 2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5

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