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Presentation Guidelines How to present your company as an investment opportunity Making the few points that count
© Tech Coast Angels 2005 2 Tech Coast Angel’s Six-Step Process 1.Submit Application – Register and complete Business Plan Summary form on TCA website 2.Pre-Screening Assessment – Meet with small team of TCA members; present business plan. TCA members provide same-day assessment: accepted for formal screening, or not 3.Formal Screening – Present to 20-30 TCA members at meetings in LA, OC, SD –Entrepreneur’s objective – Generate enough interest to advance to due-diligence… at least one person willing to “lead” and at least 20 other “interested” angels –Investors’ objective – Identify promising opportunities: strong management team with a clear, compelling and credible business plan –We recommend no more than 15 slides 4.Due-Diligence – Starts after successful formal screening; ends with funding 5.Dinner Presentations – Present “tuned” business plan to TCA membership. Firm up funding interest 6.Funding – Close on equity placement Submit Application Pre-Screening Assessment Formal Screening Dinner Presentations Funding Due-Diligence Process Focus of this document
© Tech Coast Angels 2005 3 1.Cover Page - Business Positioning statement 2.What do you do? – describe succinctly 3.What pain do you relieve? - and the value proposition to the customers 4.Who will buy your products / services? – describe the market 5.Who does it at your company? - list the team + credentials + previous endeavors 6.How better than others do you do it? - your company vs. the competition. How will you sustain your advantage? 7.How do you sell it? - direct, channel, etc. 8.What is your time-table and what have you already done? What will each step cost? - Milestones 9.How will you grow the company beyond launch? Financial Projections + skills 10.How much money do you need? - prior investments, this round, future rounds 11.What is the value proposition for the investors?- the X factor, the planned "exit“ 12.What are the risks? 13.Optional: when is the due-diligence meeting and when do you plan to close the round? The Essence of the Presentation
© Tech Coast Angels 2005 4 1.Cover… Business Positioning The cover slide should position the company so TCA members have a framework for listening… Company name (and graphics, if appropriate) One-sentence “what we do” statement (positioning or elevator pitch) Presenter’s name(s) For example: PICtage A service for professional photographers that increases sales and cuts costs through online: Proofing and viewing Print-order fulfillment Presenter: Jason Kiefer, CEO Payment Protection Systems Devices dealers install in cars to assure that poor credit risks pay their loans on time: Reminds customer payment is due, controls ignition when delinquent Cuts dealer’s collection / repossession costs by 80% or more Presenters: Mike Simon – President, CEO Ashley Herndon-VP Sales and Marketing
© Tech Coast Angels 2005 5 Summarize briefly what your company does, emphasizing the unique qualities of your product line, but without much comparison to the competition just yet. Explain where your product fits within the whole solution to the customers’ needs. Identify whether or not your customers will see your products as being the main component of the solution or just a portion of it. Typical TCA Questions.. 2.What do you do?
© Tech Coast Angels 2005 6 Briefly describe “the pain” which exists in the market. Give a couple of examples, and relate to what “unfair advantage” you have for relieving this pain. Important points to cover: 1.How do you know that there is real “pain”? 2.Further explain your understanding of the needs in the market. Dwell on this point! 3.What is / will be the ROI of the customers? How fast will they recoup their investment? (the “value proposition”) 4.How will you protect your product from becoming a commodity? 3.What “pain” do you relieve? Typical TCA QuestionsTypical TCA Questions…
© Tech Coast Angels 2005 7 4.Market…The Customers Define the characteristics of the companies or consumers that need a solution Quantify – number of prospects that have the need Explain how the market is growing and why Identify the important 2 – 3 segments of the market; for each… Estimated market size (customers & potential sales) What distinguishes the key segments from the broad market and from each other How urgently customers need or want the solution Typical TCA QuestionsTypical TCA Questions…
© Tech Coast Angels 2005 8 5.Management Qualifications… Background, Startup Experience Focus on the management team, in particular: CEO – Prior entrepreneurial experience in similar businesses CTO – Proven know-how in your core technologies CMO – Proven knowledge of the target markets; strong relationships with channel partners &/or key industrial customers CFO – Prior IPO or acquisition experience Identify who is full-time and who is part-time or on the sidelines awaiting funding… Identify BOD and BOA members, highlighting any strategic members’ value-added Typical TCA Questions…Typical TCA Questions… (problems with the link)
© Tech Coast Angels 2005 9 6.Competitive Position… Competitors & Barriers Address three barriers to adoption: Big Dogs – What are huge, well-known companies that have existing products and well-established relationships with your target customers doing? How will they react to your initiatives? Inertia – What will it take to get customers to change what they are using / doing today? Innovators – What companies might leapfrog your solution with equal or better solutions? Explain how you propose to win against the best of these In particular, describe your strongest barriers to competition… i.e.: if you are successful, how do you plan to block better-known or better-funded competitors from moving in and taking over. Typical TCA Questions…
© Tech Coast Angels 2005 10 7.Marketing / Sales / Support Briefly explain the expected selling cycle. Describe how you propose to reach your targeted customers – focusing on the initial segments Marketing – To raise customers’ awareness of your product and stimulate their interest in buying Sales – To give buyers (buying decision-makers) a convenient way to find out the details and place an order Support – To help customers understand your product before buying, during installation and in use If you rely on indirect channels, explain: Your approach to reaching them Whose responsibility it is to raise awareness and generate demand among end- customers Who provides pre-and post-sales support Describe special sales incentive programs (if any) Typical TCA Questions…
© Tech Coast Angels 2005 11 8.Milestones - Past and Future, Business And Financial Provide a milestone chart similar to the one below, and describe the use of the funds: 1.Company formed 2.$250K seed round 3.Product prototype 4.Field tests 5.$2M angel round 6.1 st production ship 7.Positive cashflow 8.$7M VC round 9.$75M annualized revenue 10.IPO/Acquisition 2002200320042005 Typical TCA Questions…
© Tech Coast Angels 2005 12 9.Growth Beyond Launch Describe the 3-5 year goals of the business Identify the several most important steps needed to reach that goal Specifically say what you need to do to achieve positive cash-flow and how long it will take to get there Identify specific steps to IPO or acquisition readiness Place the key steps and milestones on a Gantt chart Explain the development status… how much work remains before the product / service achieves full functionality Show your intended schedule for major product development on a time-line (Gantt chart) covering the next 18 – 24 months Identify major development risks or challenges Provide estimated levels of effort &/or costs for each product Summarize future products’ fit with market needs Typical TCA Questions…
© Tech Coast Angels 2005 13 9a.Financial Projections Provide a P&L similar to this one: Be prepared to explain “dramatic” numbers, such as: “Instant” market penetration & dispersion “Hockey stick” growth Unprecedented margins Long periods of negative cashflow (“goodness” is positive cashflow in 6 – 12 months) Typical Questions…
© Tech Coast Angels 2005 14 10.Funding Sought… Amount, Valuations, Use Provide a capitalization table similar to this: Identify the major uses of funds for each round prior to IPO or acquisition… this round, prior rounds and next round(s) Describe the size and composition of your current “burn-rate” The Tech Coast Angels’ “sweet spot” for investing is a pre-money valuation of $1.5M - $3.0M. Expect tough questioning in proportion to any valuation higher than this range Typical Questions…
© Tech Coast Angels 2005 15 11.Liquidity – When and How Much If an IPO is in the cards… Cite recent examples of successful comparable offerings, their offering valuation and their current market cap Explain why you believe the opportunity will remain when your company is “ready” If you anticipate being acquired… Identify the two or three most likely buyers Explain why they would be interested If possible, describe recent acquisitions of comparable companies and the deal value Describe any relationships you already have with potential acquirers, investment banks or VCs that might facilitate your liquidity plans The Value Proposition for the Investors Calculate, taking into account additional future investments, what the X factor is going to be for the current round of investments Typical Questions…
© Tech Coast Angels 2005 16 12.The Risks Investors need to know what keeps you up at night (other than changing diapers…): -Quality issues? -Adoption rate? -Costs? -Cash-flows? -Manufacturing problems? -Personnel training and retention? -The competition? -Etc. Be open and straight forward. Investors are looking for “win- win” situations.
© Tech Coast Angels 2005 17 Appendix A - Typical TCA questions: “Market: the Need of the Customers” Common TCA Member Questions… What specific problem or need do customers have? Why is the problem important? For whom? That is, who, specifically is the customer? How do we know the market exists? What independent evidence can you cite, such as independent market research? How large is the specific (narrowly defined) market for your product? What growth is expected in this market? Are the market size estimates realistic? For industrial product companies… What 2-3 industries comprise the most important prospects in Year-1? In Year-3? What are the job titles of the buyers (decision-makers) in these prospects? For consumer product companies… What are the demographics of the 2-3 most important customer segments in Year-1? Year-3?
© Tech Coast Angels 2005 18 Appendix A - Typical TCA questions: Solution…Your Product or Service Common TCA Member Questions… What, specifically, are the company’s products? What do the products do? Why would the customer buy these products? What makes the products unique or special? In general, how are they better than other products or alternative methods of solving the problem? How much better are they than other solutions? Can we demonstrate that they are cost effective? What, if any, proprietary technologies are used to make them? Any proprietary process? Are there patents? If so, what, specifically, do they protect? Why will they be of value to the company? What special issues relate to manufacturing the product(s)? Any special materials or processes? What special equipment or facilities are required? What investment is required to set up manufacturing? For what capacity? How do you know you can manufacture the product at a cost that will yield acceptable gross margins?
© Tech Coast Angels 2005 19 Appendix A - Typical TCA questions: Competitive Position…Competitors & Barriers Common TCA Member Questions… How else can the customer solve the problem your products solve? What are the alternatives? How does your product compare to each? Why is it better? In what ways is it worse? Who are the vendors of these other solutions? How do they compete with each other? Where will you fit into the industry? Why will you be able to compete effectively against them for the next ten years? Why are you confident that no new entrant will come along with a better solution and blow you away? Why do you think you can dominate your market niche?
© Tech Coast Angels 2005 20 Appendix A - Typical TCA questions: How will you sell it? Common TCA Member Questions… What channels of distribution will you use to deliver your products to your customers? How will these channels be established? By whom? When? What expertise does your company have to execute the marketing / sales program? How are you going to stand out among all the established competitors? How can you boil down the advantages of your sophisticated technology so prospects will understand it, quickly and easily?
© Tech Coast Angels 2005 21 Appendix A - Typical TCA questions: Business Strategy…Growth Beyond Launch Common TCA Member Questions… How has it been funded to date? What kind of gross margins will the company have? What level of operating profit can the business generate? Do you have (or plan) any corporate partnerships in place? What are the significant risks your business faces? What needs to be done to finish your first product(s)? What’s your next act? Do you rely on outside contractors? How much do you license from others? What expertise do you have at developing this kind of product? What development challenges are most important or difficult to overcome? How do you intend to do so?
© Tech Coast Angels 2005 22 Appendix A - Typical TCA questions: Financial Projections Common TCA Member Questions… What kind of revenues can the business produce, on an annual basis, over the next five years? Profits? What investment is required to carry the company to the next major level of valuation? When do you expect the next rounds to take place? What specific tasks need to be accomplished to do that? How long will it take? (Try to identify a “next level” that can be achieved in less than 18 months.) What investment will be required beyond that? To the extent possible, explain key assumptions behind your forecast. And make sure the forecast relates in a logical way to the market forecasts you described previously. How will the investor get his money back? Through an IPO? Acquisition? When?
© Tech Coast Angels 2005 23 Appendix A - Typical TCA questions: Funding Sought…Amount, Valuations, Use Common TCA Member Questions… How much hard-money (cash) have the founders put in? How much cash have Directors and Advisory Board members invested? What equity is available to recruit key executives? How did you arrive at your pre-money valuation for this round? What comparables are you using for your proposed IPO/exit round?
© Tech Coast Angels 2005 24 Appendix A - Typical TCA questions: Management Qualifications… Background, Startup Experience Common TCA Member Questions… What is your background and previous experience? Where did the idea for the company come from? How did you get involved with the company? Who is presently involved in managing the company? What are their credentials? Why will they be able to build a successful company? If not all management spots are filled, what is the plan for filling them? What kind of people are we seeking? To fill what roles? If you do not expect to be the CEO that builds the business to $10 or 20 million, what kind of person would you bring in? When? Who is on your board of directors? How does the board function?
© Tech Coast Angels 2005 25 Appendix A - Typical TCA questions: Milestones…Business And Financial Common TCA Member Questions… What is your track record at hitting schedules on similar efforts? Are you fully-staffed for the work indicated in the schedule? How are you going to get your partners to meet your schedule? What makes you think you can achieve this schedule when “X” failed? What contingencies have you built into the schedule? The budget?
© Tech Coast Angels 2005 26 Appendix A - Typical TCA questions: Exit Strategy…Liquidity – When and How Common TCA Member Questions… Why won’t one of your established competitors step in and leapfrog you? How long do you think you can maintain your lead, thus preserving your company’s value? Why would this be an exciting business opportunity for an acquirer? Why would it an exciting IPO opportunity? What are the three most serious risks the company faces? * NOTE: If you aren’t sure how to value the company in the future, use 1 x annual sales in Year-2 and 15 or 20 x net profits in Year-3 as reasonable estimates.
© Tech Coast Angels 2005 27 Old slide – discard?: Solution…Your Product or Service Clearly explain your product(s)… what it is that customers will be buying. Explain where your product fits within the whole solution to the customer’s need, as customers see it. For example: Services, technologies or platforms (“enablers”) required to make your product effective System, behavior or procedure conversions required to realize the key benefits Identify your product’s value-added (what portion of the whole solution you provide)… and whether customers will see your product as being the main component of the solution Describe the benefits delivered, justifying the cost of the whole solution vs. the expected benefits. See Appendix - Slide 24
Appendix B An Approach To Understanding The Intersection Between Dispersion, Value-Added and Benefits Delivered
© Tech Coast Angels 2005 29 Characteristics... Practical, pragmatic Need proof Conservative… adopt technology as a tool Questions... Who and where are they? How many are there Why will they buy your product? Customers’ “Needs” – Pre-Chasm and Post-Chasm Characteristics... Technology, per se, interests them Visionaries Gatekeepers, endorsers Questions... Who and where are they? How many are there? Why will they buy your product? Your first salesYour vehicle to liquidity
© Tech Coast Angels 2005 30 How TCA Assesses Market Opportunity Value Added From the end-customer’s viewpoint, how much of the “Whole Solution” does YOUR product deliver? What else must the customer buy or do to realize the expected benefits? What alliances will you need to complete the solution? Benefits Delivered Business market… How much can your product increase revenues or lower costs? Consumer market… How much happier, healthier or richer will it make the customer? Value Added 100% 0% Benefits Delivered Candy VitaminPainkillerCure Plug & play Ho-hum benefit Re-target Refresh Add sizzle or… Sell the IP Plug & play Major benefit Get funding Build the business Go to market Incomplete Ho-hum benefit Shelve it Reexamine next year or… Sell the IP Incomplete Major benefit Add features Refocus Partner up Overall: Are there enough potential customers to make a business thrive?
© Tech Coast Angels 2005 31 Whole-Solution Value-Added vs. Perceived Customer Benefits R&D Proprietary Technology Proprietary Process Manufacturing Capability Market Presence Distribution Sales Installation Service Support Service Other… Marketing Know-How What percent of the “Whole Solution” does YOUR solution provide? What are the principal benefits and how urgently do customers need them? Lower Costs New Revenue Source Higher Margins Increased Customer Retention Larger Market Other Better Health Lower Costs Great Prestige Fun To Use Saves Time Other Typical Business Benefits Typical Consumer Benefits Value Added 100% 0% Benefits Delivered Candy Vitamin Painkiller Cure Plug & play Ho-hum benefit Plug & play Major benefit Incomplete Ho-hum benefit Incomplete Major benefit
© Tech Coast Angels 2005 32 More about Value-Added R&D? Product technologies Customer processes, needs, technologies Proprietary Technology? Protected or exclusively licensed That plays a core role in delivering the solution’s major benefit(s) How does it do that? How might a competitor duplicate benefits without infringing? Proprietary Process? Protected or exclusively licensed That plays a core role in delivering the solution’s major benefit(s) How does it do that? How might a competitor duplicate benefits without infringing? Manufacturing Capability? Able to meet ramp-up schedule Adequate quality and cost Market Presence? Brand awareness and value Product positioning Marketing Know-How? Relevant to target customers For similar products or services Distribution? Access to preferred POSs Relationships with market-makers Sales? Access to initial customers Salesforce that knows and gets face-time with targeted customers Salesforce mind-share Installation Service? Ability to make sure customers get product up and running Support Service? Ability to answer questions Ability to keep customers satisfied What pieces of the value-added stream do you own, control, perform?
© Tech Coast Angels 2005 33 “Embedded Value” The combination of “value-added” and “benefits delivered” roughly translates to “embedded value” The more you contribute to delivering the whole solution, the more potential your company has to become embedded in your customers’ business or life The more valuable your solution is to your customers, the more likely they are to continue to use you (or seek to acquire you) Examples of the concept: Microsoft: with MS-DOS, Windows and IE built-in, they are embedded in PC products Amazon: becoming more-fully-integrated “store” with more lines to be a “one-stop” shop for e- customers Yahoo: tough to see where they are more than an easily-substituted site E-Bay: moving to become standard channel for remaindered (unsold) goods Common TCA Member Questions… How important is your product, really, to the customer? Is your product just a tool that could be replaced with another tool without affecting the customers’ suppliers or customers? Will your product become embedded in what your customers deliver to their customers? How easy would life be for your customers if they were to uninstall your product? Value Added 100% 0% Benefits Delivered Candy Vitamin Painkiller Cure Plug & play Ho-hum benefit Plug & play Major benefit Incomplete Ho-hum benefit Incomplete Major benefit Extent Of Embedded Value
How to present a business concept CONTENTProductPotentialPositioningPeopleProfitSTYLE.
1 The Template Use this template to both prototype and talk about your venture. This is the general outline most investors are expecting to see so stray.
Company Name Sample Template Presenter Name
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