Alexander M. Orlando, DBA HOW FOUNDERS MEET FUNDERS Alexander M. Orlando, DBA

ABOUT ME

The life of many start-up

The four S of Innovation 4 types of innovators Seeders Solvers Individuals that inspire through their wishes innovation Professionals that utilize their skills and knowledge to propose innovative solutions for a prize. Sellers Seekers Inventors 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.

The 4 Personality Styles Amiable Analytical Extroverted Pragmatics

What You Need To Know About Raising Venture Capital

What Makes A Company Successful? Team Idea Finance How you finance your company matters!

Is VC Right For Your Startup? High Weak Barriers: Venture Capital Venture Capital Build a Giant Co Strong Barriers: Bootstrap Scalability of Business Bootstrap Own 80% of a Small Co Not Viable Low Low High Capital Required to Achieve Breakeven Cash Flow

Why VC Is Helpful? Friends & Family Angels Venture Capitalists Capital Low Friends & Family Angels Venture Capitalists Capital Advice Connections High

X Are You Ready For VC? Great Team Huge Market Product in Market Seed ($50K - $1M) X Series A (>$1M – 5M)

How Do You Get The Meeting? Most Effective Direct Introduction Mutual Contact LinkedIn Cold Email Spam Least Effective

What is the objective of the first meeting? To get the second meeting.

How Can You Guide The Meeting? Typical Non-Linear Meeting Set The Tone Up Front Product? Product: Technology that solves… Addressable Market: $2.5B Competitive: Significant technology barrier Team: 35 years relevant experience Market? Competition? Team?

How Can You Maintain Momentum? Industry News Milestones Internal Materials

question can you do an elevator pitch? your idea…

a stage…

and an audience…

to be inspired…

90 seconds

IMPOSSIBLE?

3 keywords and your name to describe your idea

introduce yourself and...

…your background

start with something catchy a rhetorical question, a picture, a story, an example or any exciting information.

picture your idea an effective elevator pitch is illustrative and tangible.

introduction 15sec problem 30sec vision 30sec requirements 15sec

MAKE YOUR IDEA UNDERSTANDABLE

be concise An effective elevator pitch contains as few words as possible and does not go into too much unnecessary detail.

YOUR ATTITUDE be confident have fun show passion show integrity

your pitch should be clear rather than being filled with … MBA-speak acronyms ten-dollar words

APPEARANCE dress as usual and feel yourself comfortable

Technique

keep your eyes shut while someone reads your text out loud

Your guide

10 Erogenous VC Zones 1. Elevator Pitch 2. The Problem Teaser Image Goes Here 1. Elevator Pitch 2. The Problem 3. Your Solution 4. Market Size 5. Business Model 6. Proprietary Tech 7. Competition 8. Marketing Plan 9. Team / Hires 10. Money / Milestones Money Shot Goes Here

Business Model (How Do You Plan to Make Money?) Describe Top 1-3 Revenue Sources Prioritize by Size, Growth, and/or Potential Cite current market activity / customer behavior as proof Show How You Get to Break-even (or Profitable) Ideally, on the current round of funding you’re raising Common Revenue Models Direct: ecommerce, subscription, digital goods, brands Indirect: advertising, lead gen, affiliate / CPA

Proprietary Tech / Expertise (What is your Unfair Advantage?) VCs *really* like unfair advantage big market lead experienced team ex-Google PhDs core / “breakthrough” tech “defensible” IP / patents “exclusive” partnership great sales/marketing

Competition (+ 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 different If not better or different -> “NICHE TO WIN” position(-ing) matters 2-axis graph is trite, but still useful see next page for example useful comparisons / differentiation: simple vs complex value vs cheap (tougher to prove tho) cheap vs expensive (but careful you don’t race to bottom) consumer vs enterprise open vs proprietary (in this case, open usually better… but not always)

Economics 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 fund 4x return and 2 and 20% $2m per year in management fee (($100m x 4) - $100m) * 20% = $60m in carried interest

What do VC’s want This depends on stage – let’s focus on early stage since that is what we do. Team Domain expertise with core technical strength and knowledge of given market opportunity History of collaboration and success A willingness to allow VC’s to help build the team Market Emerging and fast growing market Bad markets make for bad companies Business model How will you make money, how will you sell Technology Defensible technology/IP that can be protected to form competitive barriers over time

What Should Founders Expect: Reduce Prob. of Failure Codified best practices FP&A/budgeting, KPI, templates, back office infra Acceleration Shorten cycle time for hiring, partnering, selling, PR, capital raising Objectivity and Insight Sanity check, check and balance

Suggested Playbook Be committed…. Hire a great Valley lawyer Figure out what stage and sector you are Identify 4-5 firms that focus on this stage Identify which partner you think is most relevant Get an introduction to that partner Prepare a 1-2 page overview to send him/her Prepare a 10-15 slide presentation to give in a 30-45 minute timeframe if they ask you to present Only goal of the first meeting is to get a second meeting.

What to Expect 12-16 week process Prepare Investor Package First meeting to close 1st mtg  diligence  partner meeting  TS negotiation  close Prepare Investor Package Presentation Financial Plan Personal references Customer references Market references Cap Table Market research Product documentation Competitive Analysis Investors will seek: 20-50% of the company Valuation function of targeted raise, ownership, and stage, Preferred Equity securities, with key terms: BoD seat Liquidation Preference Anti-dilution Protection Participation Pro Rata rights Protective Provisions Vesting terms for founders and employees

What to Consider Is the idea sufficiently baked? Optimal time is 6 months of iteration Pick your co-founders very carefully Test fit with VC Personality, values, knowledge of market Optimize for best deal not best price Consider the downstream effects of the financing High-post moneys can by Pyrrhic victories if company misfires Angel financing can be a mixed blessing – be careful

Approaching VC’s Investing is a people business, and getting a meeting is all about “who you know” Best way to approach a VC is some form of introduction If you don’t know a VC, find someone who knows you who does and get them to introduce you Entrepreneur, professor, attorney… Sending a plan to info@vcfirmname.com is a waste of time

Tips 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.

Decisions That Drive Product Success ? ? The team has generated dozens of names which have been narrowed to 18 Name What is the right attitude? What is the right emphasis? Tagline ? ? What product line offerings combine to maximize appeal and support the concept? Functional Variety What is the right sentiment? Driven by convenience or throughout the day dosing? Consumer Insight Better-For-You Mints ? ? What product form best supports the concept? Traditional or new? Simple or special? Product Form What 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? Packaging 71 71

The Content Matrix The Content Matrix 72 Name 1 Consumer Insight 3 Tagline 2 Umbrella Benefits 4 Functional Variety (show 3) 5 Product Form 6 Packaging 7 The Content Matrix The Content Matrix Harmonies ImproveMints Life Mints Mints+Plus OptiMints ReplenishMints Mint*Wells NutriMints ReinforceMints TuneUps AchieveMints v1 AdvanceMints v2 BetterMints v3 Boosters v4 emBodyMints v5 EmpowerMints v6 EnhanceMints v7 FitMints v8 v9 v10 v11 v12 v13 v14 v15 v16 v17 v18 Name Tagline Functional Variety Consumer Insight Product Form Umbrella Benefit Name 1 Packaging Tagline 2 Consumer Insight 3 Umbrella Benefits 4 Functional Variety (show 3) 5 Product Form 6 Packaging 7 72 72

The Content Matrix 73 Tagline 2 A fresh perspective on wellness v1 better breath | better body v2 breath protection | body fortification v3 Fortified confidence v4 Fresh breath and beyond v5 Fresh breath never felt so good v6 Live tastefully well v7 Mints that make a difference v8 The better-for-you mint v9 The mint with more v10 Tagline 2 Consumer Insight 3 Umbrella Benefits 4 Functional Variety (show 3) 5 Product Form 6 Packaging 7 73 73

The 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. v1 I 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. v2 I 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? v3 I'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. v4 Little 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. v5 They say small meals and healthy snacking throughout the day is better for your body. Then why do I take supplements only once a day? v6 Consumer Insight 3 Umbrella Benefits 4 Functional Variety (show 3) 5 Product Form 6 Packaging 7 74 74

The 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. v4 Unlike typical candy mints, [name] is fortified with targeted nutrients. It’s another smart choice you can make that leads to a healthier lifestyle. v5 Why eat regular mints when you can get fresh breath PLUS wellness benefits from the fortified ingredients of [name]? v6 Umbrella Benefits 4 Functional Variety (show 3) 5 Product Form 6 Packaging 7 75 75

The Content Matrix 76 Functional Variety (show 3) 5 Antiox - a balanced blend of 7 key antioxidants v1 Bones - Calcium, Vitamin D, and Soy v2 Calm - B Vitamins, Omega-3, St. John's Wort v3 Cardio - Vitamin E, Omega-3, Cranberry Extract v4 Dental - Green Tea, Calcium, and Xylitol v5 Digestion - Peppermint Oil, Ginger, and Chicory Root v6 Digestion - Probiotics and Prebiotic Fiber v7 Energy - Vitamin B and Taurine v8 Immunity - Vitamin C, Zinc, and Ginseng v9 Skinny - Green Tea and Chromium v10 Smarts - Gingko Biloba, Ginseng, Omega-3 v11 Vitality - Vitamins A, B, C, D, and E v12 Functional Variety (show 3) 5 Product Form 6 Packaging 7 76 76

The Content Matrix 77 Product Form 6 Cubes v1 Dented Discs v2 Discs v3 Drops v4 Flat Tacs v5 Gel Caps v6 Gel-Filled Drops v7 Geometric Shape v8 Pillows v9 Squares v10 Product Form 6 Packaging 7 77 77

The Content Matrix 78 Package Form 7 Sliding Tin v1 Hinged Tin v2 Small Hinged Tin v3 Blister Pack v4 Plastic Tube v5 Paper / Foil Roll v6 Plastic Shaker v7 Paper Flip-top Box v8 Plastic Compact v9 Square Plastic Tube v10 Packaging 7 78 78

(7.8 million concept alternatives) The Content Matrix 79 79

The Content Matrix (7.8 million concept alternatives) 80 80

The Content Matrix (7.8 million concept alternatives) 81 81

Top Concepts 82 Top Concept 1 Why Not? Top Concept 2 Nutrition Place TC1 Image Here 2.32 x 3.25 Place TC2 Image Here 2.32 x 3.25 Top Concept 3 Easy Help Top Concept 4 Smart Choice Place TC3 Image Here 2.32 x 3.25 Place TC4 Image Here 2.32 x 3.25 82 82

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