5The four S of Innovation 4 types of innovatorsSeedersSolversIndividuals that inspire through their wishes innovationProfessionals that utilize their skills and knowledge to propose innovative solutions for a prize.SellersSeekersInventors 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.
7What You Need To Know About Raising Venture Capital
8What Makes A Company Successful? TeamIdeaFinanceHow you finance your company matters!
9Is VC Right For Your Startup? HighWeak Barriers: Venture CapitalVenture Capital Build a Giant CoStrong Barriers: BootstrapScalability of BusinessBootstrap Own 80% of a Small CoNot ViableLowLowHighCapital Required to Achieve Breakeven Cash Flow
10Why VC Is Helpful? Friends & Family Angels Venture Capitalists Capital LowFriends & FamilyAngelsVenture CapitalistsCapitalAdviceConnectionsHigh
11X Are You Ready For VC? Great Team Huge Market Product in Market Seed ($50K - $1M)XSeries A (>$1M – 5M)
12How Do You Get The Meeting? Most EffectiveDirect IntroductionMutual ContactLinkedInColdSpamLeast Effective
13What is the objective of the first meeting? To get the second meeting.
14How Can You Guide The Meeting? Typical Non-Linear MeetingSet The Tone Up FrontProduct?Product: Technology that solves…Addressable Market: $2.5BCompetitive: Significant technology barrierTeam: 35 years relevant experienceMarket?Competition?Team?
15How Can You Maintain Momentum? Industry NewsMilestonesInternal Materials
3810 Erogenous VC Zones 1. Elevator Pitch 2. The Problem Teaser ImageGoes Here1. Elevator Pitch2. The Problem3. Your Solution4. Market Size5. Business Model6. Proprietary Tech7. Competition8. Marketing Plan9. Team / Hires10. Money / MilestonesMoney ShotGoes Here
39Business Model (How Do You Plan to Make Money?) Describe Top 1-3 Revenue SourcesPrioritize by Size, Growth, and/or PotentialCite current market activity / customer behavior as proofShow How You Get to Break-even (or Profitable)Ideally, on the current round of funding you’re raisingCommon Revenue ModelsDirect: ecommerce, subscription, digital goods, brandsIndirect: advertising, lead gen, affiliate / CPA
40Proprietary Tech / Expertise (What is your Unfair Advantage?) VCs *really* like unfair advantagebig market leadexperienced teamex-Google PhDscore / “breakthrough” tech“defensible” IP / patents“exclusive” partnershipgreat sales/marketing
41Competition (+ why they all suck, why you’re different, yellow, better) List all top competitors(especially top ones; we’ll find them anyway)Say how you’re better, or at least differentIf not better or different -> “NICHE TO WIN”position(-ing) matters2-axis graph is trite, but still usefulsee next page for exampleuseful comparisons / differentiation:simple vs complexvalue vs cheap (tougher to prove tho)cheap vs expensive (but careful you don’t race to bottom)consumer vs enterpriseopen vs proprietary (in this case, open usually better… but not always)
42Economics 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 fund4x return and 2 and 20%$2m per year in management fee(($100m x 4) - $100m) * 20% = $60m in carried interest
43What do VC’s wantThis depends on stage – let’s focus on early stage since that is what we do.TeamDomain expertise with core technical strength and knowledge of given market opportunityHistory of collaboration and successA willingness to allow VC’s to help build the teamMarketEmerging and fast growing marketBad markets make for bad companiesBusiness modelHow will you make money, how will you sellTechnologyDefensible technology/IP that can be protected to form competitive barriers over time
44What Should Founders Expect: Reduce Prob. of Failure Codified best practicesFP&A/budgeting, KPI, templates, back office infraAccelerationShorten cycle time for hiring, partnering, selling, PR, capital raisingObjectivity and InsightSanity check, check and balance
45Suggested Playbook Be committed…. Hire a great Valley lawyer Figure out what stage and sector you areIdentify 4-5 firms that focus on this stageIdentify which partner you think is most relevantGet an introduction to that partnerPrepare a 1-2 page overview to send him/herPrepare a slide presentation to give in a minute timeframe if they ask you to presentOnly goal of the first meeting is to get a second meeting.
46What to Expect 12-16 week process Prepare Investor Package First meeting to close1st mtg diligence partner meeting TS negotiation closePrepare Investor PackagePresentationFinancial PlanPersonal referencesCustomer referencesMarket referencesCap TableMarket researchProduct documentationCompetitive AnalysisInvestors will seek:20-50% of the companyValuation function of targeted raise, ownership, and stage,Preferred Equity securities, with key terms:BoD seatLiquidation PreferenceAnti-dilution ProtectionParticipationPro Rata rightsProtective ProvisionsVesting terms for founders and employees
47What to Consider Is the idea sufficiently baked? Optimal time is 6 months of iterationPick your co-founders very carefullyTest fit with VCPersonality, values, knowledge of marketOptimize for best deal not best priceConsider the downstream effects of the financingHigh-post moneys can by Pyrrhic victories if company misfiresAngel financing can be a mixed blessing – be careful
48Approaching VC’sInvesting is a people business, and getting a meeting is all about “who you know”Best way to approach a VC is some form of introductionIf you don’t know a VC, find someone who knows you who does and get them to introduce youEntrepreneur, professor, attorney…Sending a plan to is a waste of time
49Tips Don’t take rejection personally, the odds are against you. Every VC is “interested” – force them to do work to test their level of interest.Don’t waste time trying to change the mind of someone who says “no”.Don’t shop to multiple partners in a firm if the first rejects you.Don’t ignore the junior partners – they can really help.There are lots of VC firms, focus on a firm that has some connection to you.
71Decisions That Drive Product Success ??The team has generated dozens of names which have been narrowed to 18NameWhat is the right attitude?What is the right emphasis?Tagline??What product line offerings combine to maximize appeal and support the concept?Functional VarietyWhat is the right sentiment? Driven by convenience or throughout the day dosing?Consumer InsightBetter-For-You Mints??What product form best supports the concept? Traditional or new? Simple or special?Product FormWhat is best articulation and focus of the benefit? Convenience? Better than mints?, Boost when needed?Umbrella Benefit?Custom pack - or will a standard form do? Which package type best fits the positioning?Packaging7171
73The Content Matrix 73 Tagline 2 A fresh perspective on wellness v1 better breath | better bodyv2breath protection | body fortificationv3Fortified confidencev4Fresh breath and beyondv5Fresh breath never felt so goodv6Live tastefully wellv7Mints that make a differencev8The better-for-you mintv9The mint with morev10Tagline2Consumer Insight3Umbrella Benefits4Functional Variety (show 3)5Product Form6Packaging77373
74The Content Matrix 74 Consumer Insight 3 I am happy to see that grocery products and restaurants are paying more attention to healthier ingredients. It gives me more options to lead a healthier lifestyle.v1I have a busy life. I wish there was a more convenient way to supplement my diet with a nutritional boost - when I need it, wherever I am.v2I like to think that I lead a healthy life. I'm sure I could benefit from getting more key nutrients in my diet, but who has the time to figure out a regimen, let alone follow one?v3I'm too busy to be a health nut. But, given easy options like drinking diet cola instead of regular, I'm likely to choose the healthier option.v4Little by little I am making small choices to lead a healthier life, like taking the stairs at the mall instead of the escalator. I believe these small choices can add up.v5They say small meals and healthy snacking throughout the day is better for your body. Then why do I take supplements only once a day?v6Consumer Insight3Umbrella Benefits4Functional Variety (show 3)5Product Form6Packaging77474
75The Content Matrix 75 Umbrella Benefits 4 [name] are the most convenient way to get the fortified nutrients you want for specific wellness benefits.v1[name] deliver targeted nutrients to your body for specific wellness benefits throughout the day.v2[name] freshen your breath while delivering nutrients to help strengthen your body's systems when you need the support.v3[name] help support your body's critical systems while naturally freshening your breath.v4Unlike typical candy mints, [name] is fortified with targeted nutrients. It’s another smart choice you can make that leads to a healthier lifestyle.v5Why eat regular mints when you can get fresh breath PLUS wellness benefits from the fortified ingredients of [name]?v6Umbrella Benefits4Functional Variety (show 3)5Product Form6Packaging77575
76The Content Matrix 76 Functional Variety (show 3) 5 Antiox - a balanced blend of 7 key antioxidantsv1Bones - Calcium, Vitamin D, and Soyv2Calm - B Vitamins, Omega-3, St. John's Wortv3Cardio - Vitamin E, Omega-3, Cranberry Extractv4Dental - Green Tea, Calcium, and Xylitolv5Digestion - Peppermint Oil, Ginger, and Chicory Rootv6Digestion - Probiotics and Prebiotic Fiberv7Energy - Vitamin B and Taurinev8Immunity - Vitamin C, Zinc, and Ginsengv9Skinny - Green Tea and Chromiumv10Smarts - Gingko Biloba, Ginseng, Omega-3v11Vitality - Vitamins A, B, C, D, and Ev12Functional Variety (show 3)5Product Form6Packaging77676