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Presenting your plan to Venture Capitalists

Page history last edited by PBworks 13 years, 3 months ago

page director: Brian D. Butler

contributors:   

if you are interested in contributing see here

 

 

Table of Contents:


 

 

What kind of company gets financed?

 

 

Ones with a big vision, in a growing market, with a new approach and new technology.   Or, ones that take advantage of changes in regulations. 

 

 

 

Presenting your plan to Venture Capitalists

 

Rules

#1:  Understand the motives of the investor you’re talking to.  (for example, know the difference between Angel investors and venture capital).   If your business plan is not yet ready for Venture capital money, then maybe its better for you to look  for seed funding 

#2:  know the Venture Capital Method of Valuation back to front 

#3:  Write a good Business Plan (but dont waste too much time here!).  Make it effective, and to the point. See our guide

 

 

Where to pitch your plan: 

1.  Business plan competitions

2.  Global Directory of Funding;  

3.  know and understand the various Sources of funding for a business

 

 

five basic rules for pitching your plan :

 

1)  Be genuine. Hokey skits, unfunny jokes, and oddball scenarios have nothing on the real thing: you, your product, and your passion for bringing it to an audience. You’ve been invited to speak – at DEMO or any other event – because of your product or knowledge, not your Henny Youngman imitation. Don’t risk getting your message lost to an anecdote or prop unless those assists absolutely make your point.

 

2) dont rely too heavily on PowerPoint. There’s a place for the ubiquitous presentation software, but not on the big stage, for sure, and not as a public display of speaking notes on any occasion. In fact, that’s what PowerPoint and other presentation tools have become for most presenters: a crutch, a cheat sheet, and a distraction to the audience.

 

3)  Get right to the point:  Mean Time to Message. Skip the preamble and throat clearing. Does the audience really need to know that your company was inspired on a trek across Machu Picchu? Will your B-school pedigree be that impressive to the assembled? Get to the point. Get to the demo. That’s what the audience has come to see.

 

4)  Ask for what you want:  You’re on stage with some singular purpose in mind. What do you want the audience to take away? Frame it so they know what’s in it for them, then ask for what you want. Thanking the audience for its attention is polite. Not asking the audience to take a next step with you is a lost opportunity.

 

5)   Keep Time. Rarely will anyone in an audience wish that you talked longer. Make your point, keep to time limits, and be done. More than one DEMO god award has been lost by presenters who didn’t keep an eye on the clock.

 

 

Product Demos - do's and dont's

 

see great post here:  How To Demo Your Startup

 

 

How to Pitch:

 

  • Make it 20 mins long
  • push the big vision
  • push the differentiation
  • avoid detailed financials
  • avoid confidential information
  • Also go into the VC pitch with a friend to take notes. This will help you respond to each peson individually later after the presentation

 

 

What should / should not be included in your presentation

 

  •  Make good slideshow in power point
  • Include fincancial data on the slides
  • make sure to include slide that details how much money you want, and how that money will be spent.
  • detail the amount of % shares that this fund raising is going to buy them
  • need to make a valuation of your company
  • tell them the IRR
  • tell them the expected timeframe to payback
  • make sure to use graphs to show your startup timeframe, dates, launch, etc.
  • include graphs that shows your positioning related to competitors (cost, pricing, quality) x-y (4 quadrants).
  • imbed some sort of demo of the product
  • hire a designer to make a prototype (even if its just for the presentation).
  • speak about a very large potential market
  • ask for more money than you think is necessary
  • show how the product / service is scalable
  • find a management team with experience
  • on the overhead slides, make sure you include enough financial data. They love to look at the numbers
  • include ratios
  • tell them the EBITDA
  • include operational costs, but summarize into categories like SG&A expenses (dont list them all).
  • The last slide you leave them with should have the numbers on the screen
  • the best presentations are focused on the investor, and not on the technology
  • keep a high-level focus, and dont build the business model up from the bottom. keep it general
  • create a chart that shows where all of the revenue will come from. one table with types of revenues streams on the vertical axis (subscription, advertising, etc), and with types of customers along the y axis, and then use "x" marks to indicate where the various types of revenues will come from.
  • have a team
  • Capitalization Table
  • Working Financial model
  • Competitive analysis (Audit financials etc)
  • Industry research
  • Saying we’re like Facebook meets Bebo is a good thing - it helps them understand where you sit.

 

 

Alternatives to PowerPoint:

  • try software from http://www.flypaper.com/
  • its like a combination of flash + powerpoint, thats easy to use + free.  If you want the premium version pay to see who watches.

 

 

Elevator Pitch

  • Web channel for three-minute pitches   Vator.tv, which lets entrepreneurs pitch their "next big thing" to potential investors via short web videos. A similar venture just got started in the UK. 

 

 

 

Dealing with Lawyers:

 

see our section on patent

 

When making the contract with the VC, a word of caution:  "Lawyers are paid by the VCs. All the fees get paid at the end by the proceeds of the investment. You pay both VCs and lawyers on the exit. The only time lawyers are honest is when you interview them to hire them to close your deal. After that trust nothing that they say, because they want to close the deal to get paid by the VC." (thefunded.com)

 

 

Make lots of meetings (never just one)

 

Goal: Pitch 30 firms in 2 weeks. They with hare your presenation and trash you to other VCs if they like your idea to put other firms off.

Expect a low success ration, and expect investors to talk between themselves.

Leverage your law firm, friends, Associates, - set up meetings over the phone and face to face not email.

 

 

 

Good signs that the meeting is going well

 

Good signs are thoughtful questions,

bad signs are no-questions, as well as “maybe” or “but”,  or if you get handled by associates (and not partners at a VC firm).

 

 

Follow up after the pitch

 

Focus on interested firms and then ignore the rest. You’ll get a lot of maybe’s. Too many startups try going back to the uninterested VCs. Pointless

 

Remember...when you go into the VC pitch - take a friend to take notes. This will help you respond to each peson individually later after the presentation

 

Dilignce: Prepare your references!!

 

 

Negotiating a better deal

 

  • Negotiate
  • There is no “Industry Standard”
  • Don’t accept the the first term sheet
  • Time is on your side
  • Exlusivity and expirations are tactics
  • Key Secondary terms - Liquidation preferences: 1 times is good, 3 times is bad
  • The details matter

 

 

Be prepared to walk away:

 

  • Say no when its excessive
  • Have a plan "B" 
  • Know your BATNA  (best alternative to a negotiated agreement)

 

 

Final words of advice:

 

 

 

 

 

 

 

 

 

 

Links from KookyPlan

 

see also: venture capital trends

 

 

 

Related Pages

 

 

 

trends

 

 

Pages names with "Venture Capital"

 

More pages wtih subject "Venture Capital"

 

 

Private Equity

 

 

More related links:

 

 

 

 

 

 

 

 

Digg!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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