How to Create A Killer Business Plan and Financing Pitch

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How to Create A Killer Business Plan and
Financing Pitch
Christine Comaford Managing Director
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Bio

• Engineer, entrepreneur, venture catalyst
• 5x entrepreneur, 2 IPOs, 3 MA, 100 million
  raised in last 5 years
• Venture Catalyst specializing in Enterprise
  software Internet enabling technologies
• 1 other partner Kimball Atwood

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Did You Know?

• Most business plans are never read by a VC
  partner?

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Did You Know?

• VC investments in Internet firms by 1H99 were
  over 6 billion -- nearly 2x of 1998 TOTAL!
• Source IDC

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Did You Know?

• The 1 reason a startups valuation is cut is an
  incomplete executive team

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7 Steps to A Compelling Business Plan Financing
Pitch
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Know the Risks to Address

• Financial
• Market
• Technology
• Team

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6 Things You Must Have

• Stable, working business models
• Good business plan
• Competent management
• Great vision
• Big markets
• Good team

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Business Model Components

• Markets Customers
• Profile and Segmentation
• Key Pain Points
• Size of the Problem in Dollars
• Location of those Dollars
• Competition
• Products Services
• Product Definition
• Value Proposition
• Total Cost Analysis
• Add-on Product Strategy

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Business Model Components (contd)

• Marketing Distribution
• Marketing Strategy
• Sales Process
• Implementation Process
• Strategic Alliances
• Financial Engine
• Pricing Model
• Revenue Model
• Cost Structure

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1 - State Credibility

• Exec team
• Pedigree (education, past startups)
• Publicity (published pieces, notoriety, awards)
• Connections (technology advisor to White House,
  etc)
• Well-known board members, advisors (who are
  betting on this company)

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Who You Need On Your Team

• Visionaries (assorted positions)
• Leaders (CEO, Managers)
• Implementers (Sales, Marketing, Technology)
• Infrastructure Builders/Supporters (Operations)

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2 - Be Clear

• Have 3 key points to deliver
• Show and tell your story (use words AND
  pictures)
• Repeat the 3 key points at least 3 times
• Only tell stories that enhance your points

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3 - Be Concise and Complete

• Why is this a great idea?
• How will it be executed?
• How will risk be minimized, return maximized?
• What are the sustainable barriers to entry?
• 20 page plan (3-5 page exec sum with 1 page
  financials)

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Complete Means

• Pain/Solution
• Opportunity/Market Size/Market Analysis
• Competitors today and tomorrow
• Product/Service Definition Futures
• Marketing Plan/Sales Strategy/Strategic
  Alliances
• The Team staff and extended
• Financials (create a dynamic model)

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4 - Be Compelling

• This is a HUGE opportunity, were the best to
  seize it, here are 3-5 specific reasons why
• You think this opportunity is HUGE today? Check
  it out in 2-4 years!
• There is major PAIN, we remove it -- no doubt
• We have the team, technology, right market,
  just add water

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5 - Give Them a Reason to Believe

• Create the excitement (greed), then
• Convey the long term vision (wow! Look at all
  the additional markets we can get into!), then...
• Spell out the short term practicalities (hey --
  these guys look like they could actually make
  this happen!)

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6 - Give Them the Right Info

• What is your elevator pitch? In other words if
  you had to tell someone about your company on a
  short elevator ride, what would you say?
• What product or service is sold?
• Who is it sold to?
• How much does it cost (average sales price)?

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Right Info Contd

• How big is the target market?
• What percentage of that market do you need to
  penetrate to reach 30 million in sales?
• What is your key competition?
• What is your KEY differentiation from the
  competition?

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Right Info Contd

• How long would this differentiation last?
• Do you have customers? How many?
• Revenue? How much?
• Strategic Alliances? With whom?
• Is your technology complete? If not, when?

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7 - Present Properly

• Practice and know it cold
• Have backup slides for key areas (such as market
  segmentation, financials)
• Be ready with a reference list (for all key
  execs, both personal and customer references)

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How Long Should a Pitch Be?

• A VC pitch should be 20 minutes long (goal book
  next meeting)
• A customer pitch should be 30 minutes long
  (goal convince them to bring the decision maker
  in)
• A recruiting pitch should be 30 minutes (goal
  check them out,sell the vision, decide next step)

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Rx for Not Naturally Born Speakers

• Best speech coaches
• Silicon Valley Steve Mandel 408 475 8202
• Boston Cheever Communications 781 639 1516

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Great Entrepreneurial Resources

• Read Burn Rate - Michael Wolff
• Read High Tech Startup - John Nesheim
• Check out www.vfinance.com, www.startupweb.com
• www.artemisventures.com resources section has
  growing library of goodies

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Entrepreneurial Resources
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Do You Have These?

• Right market
• Right product/service
• Right timing
• Right info
• Right priority
• Right connections
• Right team

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Thank You
Q A/Lab Time
Christine Comaford General Partner and Managing
Director
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Good Idea? Bad Idea?

• Your startup is HOT! You do 3 VC pitches and
  also get some fabulous press. 10 more VCs call
  you, and you book meetings with them.

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Good Idea? Bad Idea?

• You get 2 term sheets for a 3mil investment both
  from 2 high value VC syndicates. One is for a
  6mil pre money valuation and 1 board seat. The
  other is for an 8mil pre and 3 board seats.
  There are a total of 5 board seats. You choose
  the 6mil pre.

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Good Idea? Bad Idea?

• Your startups product/service is nearly ready
  for beta. You can take 1mil to get through the
  beta, sign on a few customers, and make a few key
  hires, OR you can take 3mil to do even more.
  With the 1mil youll need to start fundraising
  again in 3 months, with the 3mil youll start
  fundraising in 12 months. You take the 1mil.

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Good Idea? Bad Idea?

• You have a skeletal exec team -- operations and
  technology only. Youll hire a CEO, sales,
  marketing and business development once youre
  funded. You set aside 15 of your pre-financing
  stock for the option pool.