Download - Building a Business Plan for Funding
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Alexander M Orlando, DBA
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The life of 80% start-up
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Your Profile: You think “Out of the Box”
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I’M POSSIBLE
DESSERTS
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InnovaHub
The four S of Innovation Individuals that inspire through their wishes innovation
Professionals that utilize their skills and knowledge to propose innovative solutions for a prize.
Inventors or innovators that seek to to sell, license, or fund their inventions.
Entrepreneurs, organizations, and investors that are looking for new ideas, solutions, or inventions.
Seeders
Solvers
Seekers
Sellers
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1. Elevator Pitch
2. The Problem
3. Your Solution4. Market Size
5. Business Model
6. Proprietary Tech
7. Competition
8. Marketing Plan
9. Team / Hires
10. Money / Milestones
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picture your idea
an effective elevator pitch is illustrative and tangible.
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60 to a max of 90 seconds
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IMPOSSIBLE?
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3 keywords + your name
describeyour idea
to
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….. tell me more…
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MAKE YOUR IDEA
UNDERSTANDABLE
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be confident
have fun
show passion
show integrity
YOUR ATTITUDE
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keep your eyes shut while someone reads your text out loud
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Business Model(How Do You Plan to Make Money?)
• Describe Top 1-3 Revenue Sources– Prioritize by Size, Growth, and/or Potential– Cite current market activity / customer behavior as proof
• Show How You Get to Break-even (or Profitable)– Ideally, on the current round of funding you’re raising
• Common Revenue Models– Direct: ecommerce, subscription, digital goods, brands– Indirect: advertising, lead gen, affiliate / CPA
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What do VC’s want Team
• Domain expertise with core technical strength and knowledge of given market opportunity
• History of collaboration and success• A willingness to allow VC’s to help build the team
Market • Emerging and fast growing market• Bad markets make for bad companies
Business model• How will you make money, how will you sell
Technology • Defensible technology/IP that can be protected to form competitive barriers
over time
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The Executive Summary
• Stimulate and motivate the investor to learn more.
• Hook them on the first page. Most investors are inundated with business plans. Your first page must make them want to keep reading.
• Keep it simple. After reading the first page, investors often do not understand the business. If your business is truly complex, you can dive into the details later on.
• Be brief. The executive summary should be 2 to 4 pages in length.
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Why VC Is Helpful?
Friends & Family
Angels/Demons
Venture Capitalists
Capital
Advice
Connections
Low High
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Are You Ready For VC?
Great Team
Huge Market
Product in Market
Seed($50K - $1M)
X
Series A(>$1M – 5M)
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Economics of VC Firm• Management Fees (typically 2-2.5% of AUM)
– Charge a management fee to cover the costs of managing the committed capital.
• Carried Interest (typically 20-25%)– "Carried interest" is the term used to denote the profit split of proceeds to the
general partner.
• Example $100m fund – 4x return and 2 and 20%– $2m per year in management fee– (($100m x 4) - $100m) * 20% = $60m in carried interest
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What to Expect• 12-16 week process
– First meeting to close– 1st mtg diligence partner
meeting TS negotiation close• Prepare Investor Package
– Presentation– Financial Plan– Personal references– Customer references– Market references– Cap Table– Market research– Product documentation– Competitive Analysis
• Investors will seek:– 20-50% of the company– Valuation function of targeted raise,
ownership, and stage, – Preferred Equity securities, with key
terms:• BoD seat• Liquidation Preference• Anti-dilution Protection• Participation• Pro Rata rights• Protective Provisions• Vesting terms for founders and
employees
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What to Consider• Is the idea sufficiently baked?
– Optimal time is 6 months of iteration• Pick your co-founders very carefully• Test fit with VC
– Personality, values, knowledge of market• Optimize for best deal not best price• Consider the downstream effects of the financing
– High-post moneys can by Pyrrhic victories if company misfires– Angel financing can be a mixed blessing – be careful
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Approaching VC’s
• Investing is a people business, and getting a meeting is all about “who you know”
• Best way to approach a VC is some form of introduction– If you don’t know a VC, find someone who knows you
and get them to introduce you– Entrepreneur, professor, attorney… (Linkedin…)
– Sending a plan to [email protected] is a waste of time
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