Download - Handout are you investor pitch ready
7/8/2015
1
Investor Ready?Pitch Perfect?
Naeem ZafarProfessor of the Practice, Brown University, UC
Berkeley@naeem
Agenda
• Being “investor-ready”
• Pitching to investors
• Negotiating with investors/VCs
Entrepreneurship All rights reserved © Naeem Zafar 2
7/8/2015
2
Personal Background
• Faculty member at Univ of California Berkeley, Center of Entrepreneurship & Technology & Brown University
• C0-founder & CEO of BitzerMobile.com Acquired by Oracle • Founder Startup-Advisor.com – advisory to entrepreneurs• Experience at one large multinational & 6 startups• One IPO (Initial Public Offering)• Current founder/CEO of TeleSense.net • Raised over $70M in multiple ways (VC, asset sale, debt, angel)• Traveled to 76 countries, lived in 3• Brown University Electrical engineering, Univ of Minnesota• Lectured in Brazil, China, Japan, Algeria, France, UK, India,
Pakistan, Turkey, Colombia, Singapore, Netherland …• Advised or mentored over 1,000 entrepreneurs
All rights reserved © Naeem Zafar3Startup Workshop
www.startup-advisor.com All rights reserved © Naeem Zafar
4
www.FiveMountainPress.com
7/8/2015
3
Personal History
6/3/2012 © Naeem Zafar 5
First Internship
• Honey Research facility in Minneapolis MN
• Learning professional environment
• Created system to test chips
6/3/2012 © Naeem Zafar 6
7/8/2015
4
Starting First Company
• XCAT founded in 1985 by 4 engineers
• VP of engineering
• Designed a simulation accelerator in total stealth mode
• No market/customer discovery no success!
• Sold company for a song after 3 years
6/3/2012 © Naeem Zafar 7
Hardware Emulation
• New industry created
• 400 people, $150M sales
6/3/2012 © Naeem Zafar 8
7/8/2015
5
Fingerprint Sensor Company
6/3/2012 © Naeem Zafar 9
Investor Ready
• Have idea
• Initial team
• Market research with users & customers
• Financial model
• A pitch!
Entrepreneurship All rights reserved © Naeem Zafar 10
7/8/2015
6
Building a Financial Model
• Helps you estimate how much to raise
• Allows to react to new data with what-if analysis
• No VC will fund you without it
• You can create one in ½ a day!
Entrepreneurship All rights reserved © Naeem Zafar 11
12
Why Do Financial Modeling?
• To answer the most important & fundamental question:
Does this make sense?
• You need to know more than anyone
• Tweak basic assumptions until it does!
ENGN 101 S03 All rights reserved © Naeem Zafar
7/8/2015
7
Building a Financial Model
• Financial model is clarity about your business
• It is built from common sense
– Sources of revenue
– Sources of expenses
– Net income
ENGN 101 S03 All rights reserved © Naeem Zafar 13
The Art of Presentation
14Entrepreneurship All rights reserved © Naeem Zafar
7/8/2015
8
Listen to a TED Talk
• Ted talk: http://www.ted.com/talks/david_s_rose_on_pitching_to_vcs?language=en#t-3838
Entrepreneurship All rights reserved © Naeem Zafar 15
You Are The Message!
• It is not about PowerPoint
• You are the message
• Use aids as needed
• Have your message ready & crisp
16Entrepreneurship All rights reserved © Naeem Zafar
7/8/2015
9
Pitching
• Explain yourself in first minute (slide zero™)– Explain the relevance of what you do
– Tell a story
– What should I listen to you
– Why are you here?
• Answering questions
• Jumping around slides – don’t!
17Entrepreneurship All rights reserved © Naeem Zafar
Pitching
• People listen to 7% of words that you say
• They listen to 52% of your body language
• Connect with your audience
– Make it relevant to them
– Be clear (first in your own head)
–Pause & let the message sink in!
All rights reserved © Naeem Zafar 18Entrepreneurship
7/8/2015
10
You & Your Passion
• Be attentive, energetic, in front!
• Know your message!
– Do not read your own slides
• Engage with your audience
• Your most magical tool: “the pause”
22Entrepreneurship All rights reserved © Naeem Zafar
Say It With Conviction!
23Entrepreneurship All rights reserved © Naeem Zafar
7/8/2015
11
10/20/30 Rule
• Ten slides
• Twenty minutes
• Thirty size font
• You want to communicate “enough”, not everything!
• Purpose of the pitch to stimulate interest, not to close the deal
24Entrepreneurship All rights reserved © Naeem Zafar
What do VC hear?
• What you pitch– Unmet need
– Market size
– Solution
– …….
– Team
– …….
– Financial assumptions
– Financial projections
25
• What they hear– Is there money to be
made?
– Are these the people who will make me money?
– How much money can we make?
Entrepreneurship All rights reserved © Naeem Zafar
7/8/2015
12
Company Name
Name Title & Contact info
Tag Line
Investor Pitch
Audience can read the info but this is where you explain what you guys do: This is what I call Slide Zero
1: Team
• Who are you?
– Make yourself relevant
– Include advisors, consultants if they make you look larger & impressive
• OK to show up with a less than perfect team
– All teams have holes
– Important issue is that you know that there are holes that you are willing to fill
27Entrepreneurship All rights reserved © Naeem Zafar
7/8/2015
13
2: Unmet Need
• What pain are you alleviating– Get everyone nodding their head in agreement
• Describe a problem people connect with
– Tell us how you validated your assumptions
• Customer examples, use actual names from market research
• Use-case is good way to explain problem
28Entrepreneurship All rights reserved © Naeem Zafar
3: Target Market & Segmentation
• What is your target market
• Which sliver will you own first & why
• Market size
• Market dynamics
– Regulation, new technology, new players
29Entrepreneurship All rights reserved © Naeem Zafar
7/8/2015
14
4: Solution
• How you alleviate this pain
• Make sure that audience clearly understand
– What you sell
– What is the value proposition
– Not a place for in-depth technical description – just a gist of “how”
• Avoid text but use diagrams, schematics, mockup, demo here
30Entrepreneurship All rights reserved © Naeem Zafar
5: Market Dynamics & Competition
• Complete view of competitive landscape– What alternatives people have today
• Never dismiss your competition– Investors, customers, employees all want to know why
you are better, not why competition is bad
• Never say that you have no competition
All rights reserved © Naeem Zafar 31Entrepreneurship
7/8/2015
15
6: Unfair Advantage
• Why now? why us?
• Technology, secret sauce or magic behind product
• Special alliances, relationship that makes it possible to for you to do this, now
32Entrepreneurship All rights reserved © Naeem Zafar
Positioning
• How are you different from incumbants
• Using familiar players to help position yourself
33Entrepreneurship All rights reserved © Naeem Zafar
7/8/2015
16
7: Business Model
• How you make money
–who pays you
–what channels
–what gross margins
• What do you sell?– Subscription
– Widgets
– Affiliate fees?
All rights reserved © Naeem Zafar 34Entrepreneurship
8: Go-to-Market & Sales Strategy
• How will you reach your first 10 customers
• Marketing leverage points
• What alliances needed or in place
• Convince audience that you have an effective go-to-market strategy
All rights reserved © Naeem Zafar 35Entrepreneurship
7/8/2015
17
9: Financial Projection & Key Metrics
• What are key metrics & assumptions
– customers, installations, licenses etc.
• 5-year financial projection take into account extended sales cycle
– Show the spreadsheet please
• Your “ask”
All rights reserved © Naeem Zafar 36Entrepreneurship
10: Status & Timeline
• Current status
– Accomplishments to date (last ~6 months)
– Timeline (major milestones over next ~18 months)
– how the money will be used
• Can be used to show key metrics
– Employee growth
– Customer or geographies growth
– Profit point etc.
37Entrepreneurship All rights reserved © Naeem Zafar
7/8/2015
18
Q2-’16Q4-’15 Q1-’16 2H-’171H-’17 1H’18
Z-Timeline
betas
e.g. 10 referenceable
accountsOr
Reach profitability etc.
Alpha customer
acquisition
Series B $7M
Start company
e.g. 1st
Prototype
Milestone #5
2H’18
Series A $4M
Milestone #3
Milestone #2
Milestone #4
e.g. 1st
alliance signed
Seed $100K
Q3-’16 Q4-’16
Product development
Prod Launch
Employee count 4 6 11 18 22 29 39 54Entrepreneurship All rights reserved © Naeem Zafar 38