2Every Entrepreneur Needs Investment Capital I’d like to start with this cartoon to emphasize a point.Regardless of the size of the venture or the type of venture, every venture requires capital from somewhere and someone.It might be the entrepreneurs own capital, bank financing, friends and family, or investors.It might be a tiny amount of money or it could be substantial.The cartoon suggests that regardless of the need and source, the better the entrepreneur understands the investment process the more likely they are to get funding….any type of funding even from themselves.As a coach, part of your job to ensure your client understands the dynamics of capital investment.
4Venture Investors Accelerating Commercialization Hello, and welcome to the Venture Coaching AcademyYou are the first students in the first class of the VCA.Based on your experience and feedback, we hope there will be many more to follow.My name is Randy Goldsmith.I am the designer of the coaching process and author of the venture development tools used in the VCA.The development of the tools began in 1994 when I was with the NASA TT program andthe coaching process began in 1998when we were launching more than 200 companies per year over a 4 year period of time.
51st Five Fundamental Investor Questions How big is the market pain?How good is the solution?Is there a profit opportunity?Is this the right entrepreneur?Can it be done?Every investor has their own approach to evaluating a deal. Some will want to read a business plan first. Some will want to have a one-on-one discussion first or see a ppt. Regardless of the preference, they all will be looking for answers to big questions first. These questions are:How big is the market pain?How good is the solution?Is there a profit opportunity?Is this the right entrepreneur?Can it be done?This will be the investor’s first filter. If the answers to these questions intrigue the investor, they will move on to a deeper level of discussion.
62nd Five Fundamental Investor Questions How much money do you want?What are you going to do with it?How much money will I get back?When will I get my money back?How will I get my money back?The next set of questions relate to money. After all that is the reason you are talking to an investor…. To get money! So, it is only reasonable that they would ask and you should be immediately ready to respond to these questions. Any inability to speak specifically and in depth to these questions will indicate you are not prepared for investment. Keep in mind, these questions apply not only investors and/or lenders but also to the entrepreneur themselves.How much money do you want?What are you going to do with it?How much money will I get back?When will I get my money back?How will I get my money back?
9Process & Toolkit Innovation Readiness Entrepreneur Readiness Product Business PlanReadinessVentureReadinessVentureValuationThe commercialization process can be confusing and chaotic for entrepreneurs and companies who have never traveled this path before.This tool kit is applicable for new startups as well as existing companies who are developing products or services for market.The challenge for a startup is clearly the most difficult and risky because not only is the company developing a product or service for market, but it is establishing the business model and all of the business systems and processes at the same time.The eight tools listed above apply to any company commercializing a product, and all but the Innovation Readiness tool which is primarily for existing companies apply to new venture startups.Each of these tools is designed to reflect how an investor views the entrepreneur’s readiness to assume control of the venture, the commercial potential of the product, the risk in the business venture, the quality of the business plan, and the value of the venture.RiskReadinessCapitalizationEvaluation
10You will find all of the tools available at www. Venture capital tools . ComBefore developing these web apps, these tools first administered manually in spread sheets,followed by incorporation into an electronic database format.You will receive a user name and password to this site in the next few days.This site provides a critical core component of the VCA.
11The ProcessFirst: The VCA coaching process has been used with literally 1000’s of entrepreneur.This coaching process takes a strategic approach.It assumes the entrepreneur will recruit critical management elements or align themselves with critical SP’s.This process does not focus on the tactical elements of business systems.The process is designed to accelerate the commercialization process.This Coaching Process is primarily designed to assist entrepreneurs who are perfecting a product and a business at the same time.
14VALIDATED The Ideal Deal A high performance enterprise A radical, disruptive, platform innovationExponential growth potentialSerial entrepreneurReliable financing resourcesIn the last 20 years I have worked with thousands of entrepreneurs.And I can tell you with great satisfaction that every venture is unique with unique opportunities.I must confess that with each engagement I am hoping to find the Ideal Deal.Some business plans often purport to be the Ideal Deal but it requires Validation.Validation means the entrepreneur has verified all critical assumption in the business model with outside third-party market experts.This validation applies to all technical, market, and business elements.The quality of the validation process is what separates good deals from great deals.VALIDATED
15Typical Clients All have an innovation. All want money. Few are investor ready.Some have intellectual property.Most have an innovation.All want money.Few are investor ready.Majority have intellectual property.33% will be commercially viable.
16Entrepreneur Readiness Assessment Hello, and welcome to the VCA session on coaching the entrepreneur.
21Third-party Validation University scientistIndustry subject matter expertKnowledgeable investorConsultantThird party validation is a critical factor for validation.There are a variety of subject matter experts who can speak to the commercial potential of a product or service.Normally, the coach will arrange for the entrepreneur to provide the expert with as much information as possible related to the technical features and functionality of the product or service as well as any market insight the expert might have.The expert will usually provide a one to five page report. Costs for third party validations range from free to $ The information provided is often reflected in the business plan.The report will normally generate as many questions as it does answers. These questions will justify the need for the coach to meet again with the entrepreneur in a timely manner.
22Venture Readiness The Commercialization Pathway Hello, and welcome to the discussion on venture readiness.The Venture Readiness survey is the heart of the commercialization tool kit.
23Commercialization Plan 76MilestonesCapital infusionExpensesRevenue7NO!Money54?4Whether the company is an existing company bringing an innovation to market or a startup company launching the venture and product simultaneously, a commercialization plan is essential. A poor plan poorly executed will lead to a quick venture failure.3211Time
24Commercialization Plan MilestonesCapital infusionExpensesRevenue7MoneyYes!76A good commercialization plan is the quickest way to success which is translated as product, customers, sales, and cash.543112Time
27Initial Assessment (completed ) Stage IInvestigationStage 2FeasibilityStage 3DevelopmentStage 4IntroductionStage 5GrowthStage 6MaturityTechnicalPrTechnicalAnalysisTechnicalFeasibilityEngineeringPrototypePre-productionPrototypeProductionStep 1Step 4Step 7Step 10Step 13Step 16MarketingMarket needAssessmentIt is not uncommon to see entrepreneurs and companies (particularly those that are technically or engineering focused) expend time and resources to develop the technical steps first before addressing the marketing and business steps.This usually results in unnecessary delays when the implications from marketing research and business modeling are factored into the commercialization strategy.Step 2Step 5Step 8Step 11Step 14Step 17BusinessVentureAssessmentStrategicB/planBusinessStart-upStep 3Step 6Step 9Step 12Step 15Step 18
29Commercialization Strategy VisionProductMarketingFinancingPeopleOperationsOnce there is clear evidence that the product or service has commercial potential, the entrepreneur has the will and capacity to take the venture forward,there is consensus on venture progress and a realistic assessment of the venture risk level,it is time to develop a “go to market” commercialization strategy.The purpose of the commercialization strategy is to develop the most efficiently achievable pathway to being cash flow positive.The end product of this step is the business plan.There are dozens of books and templates available to assist in this process, but what most fail to address is risk.A fundable business plan will be written with a common theme of risk mitigation.Once again the 5 risk factors play a major factor in developing a commercialization strategy which will be incorporated into a written business plan. This is a team process.It is virtually impossible to write a fundable plan without a team of experts providing input in the form of legal, marketing, financial, engineering, and production information.Ultimately the plan will be only as good as the level of validation of the information provided.Ideally, a team effort!
30Business Plan Readiness Accelerating Commercialization Hello, and welcome to the Venture Coaching session on BPR. My name is Randy Goldsmith, your instructor today.
32A Fundable Plan: more than the average plan. If you are raising capital, your plan will differ significantly from other types of plans. One of the objectives of a well developed and well written business plan is that it present everything the investor needs to know, but nothing that is not critical and directly relevant to an investment decision. The investor does not want to read extra material.Maryann’s Law: You canalways find what you’renot looking for.
33Risk Readiness Accelerating Commercialization Hello, I am Randy Goldsmith and welcome to the Venture Coaching Academy session on Risk Readiness.
34Identifying Risk: Fore warned Is Fore armed! When I think about coaching entrepreneurs, I am reminded of this cartoon and wanted to share it with you.Many people think going into business is a fairly simple process…. Hang out a sign, get a listing in the phone book, print some business cards, file with the secretary of state, and start selling or delivering your service.However, like this cartoon illustrates, the puddle may be deeper than it looks, and what you find when you fall in, is nothing like what you expected.Thus a coach can teach a client how to test the waters.Miller’s Law: You can’t tell how deepa puddle is until you step in it.