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Pitching your Startup

terrran
September 26, 2012

Pitching your Startup

Presentation by Alex Zapesochny and Sasha Latypova (founders. iCardiac) given to Rochester Tech Startups

terrran

September 26, 2012
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Transcript

  1. page 2 Agenda Introductions Helpful Links Lessons Learned in Pitching

    Start-Ups Key Considerations for Building a Viable Business
  2. page 4 Great Resources Abound on the Topic o SlideShare

    presentations: http://www.slideshare.net/jbeninato/raising-capital-closing-the-deal http://www.slideshare.net/bobdahlberg/insiders-view-on-how-to-raise-vc-capital http://www.slideshare.net/venturehacks/anatomy-of-a-unfundable-startup o Quora answers: http://www.quora.com/When-is-the-best-time-to-pitch-investors http:// www.quora.com/Venture-and-Investor-Pitches/What-materials-or-software-should-I-use-to-pitch-a-VC
  3. page 5 Pitching Your Start-Up – The Basics o Getting

    Through the Door No unsolicited submissions – find a connection Remember “power of weak bonds” (lawyers, entrepreneurs, university staff, family, friends and others) o Your business must address all necessary elements of a fundable company – avoid deviations o Who is the founding/management team? May be most important Does the business team have track record of success? Does the team contain “serial entrepreneurs”? Generic business background may not be enough Ø Manager or too-senior-executive from large company Ø No industry or technical experience Does the scientific/technical team have deep credibility? Are all the key people committed to company?
  4. page 6 Pitching Your Start-Up – The Basics o What

    is the technology? What advantage does it provide over current technology? Is there an order of magnitude improvement? o Is there clean and defensible Intellectual Property? If no patents, consider at least a provisional o What is the problem you are solving? (i.e. the Market) Is the problem really significant? Is the market growing? Are there factors creating momentum or critical mass in this market? Can you validate (through research and references) the problem and the value of your solution? o What are the financial elements of your market? How much are customers paying for current alternative to your product? How much value does your product create?
  5. page 7 Pitching Your Start-Up – The Basics o Is

    there a clear and achievable commercialization path? How long until first revenues? How long until significant market penetration? o Comprehensive understanding of competitive position What are the barriers to entry? Why are you better positioned than everyone else? o Financials and Projections Build a detailed financial model (both revenue and cost sides) Show that you’ve really thought the business through Be able to justify and defend all assumptions (don’t lose credibility) o Exit strategy More than just saying “we’ll be sold or go public” Have data on recent M&A activity or comparable public companies Is the exit soon enough to meet needs of VCs?
  6. page 8 Pitching Your Start-Up – It is Similar to

    Dating o Do not seem too eager or too available o Your best position is to plausibly show why you do not need their money to start or grow the business o Best approach is to parallel track funding activities But, remember that many VCs talk to each other If possible, get uncorrelated VC/investor in the loop o VCs don’t invest until the very last minute they have to • If you claim a key milestone will soon occur, VCs will wait for it to occur o Create justified sense of urgency to close investment o Be realistic about process of VC funding Even when smooth, it takes five to nine months At each round of financing, expect to sell 25-40% of the company
  7. page 9 Pitching Your Start-Up – Other Considerations o Don’t

    raise too little money Don’t drip feed your business Raise enough (plus a safety cushion) to achieve significant valuation-enhancing milestones to position for next round Plus, time is your enemy, so don’t be delayed by financing woes o Valuation partially a function of how much you are raising Another reason to raise more o Special issues with university spinouts Is the science too theoretical or not soon commercializable? Are all needed scientists committed to company? What about IP rights? And future IP rights from university?
  8. page 10 Top 4 Lessons Learned for Building a Viable

    Business 4. Do not use linear strategy in building your business: - Linear strategies are for VC presentations, they don’t know any better; - Iterate as quickly and cheaply as you can. 3. Build the most conservative financial model, then add 3-5 years to every revenue assumption you are making: - Most of your strategies will be wrong, and you need enough cash to find the one that will prove correct; - Always negotiate costs, even the “non-negotiable” ones. 2. Build the best team you can get – hiring mistakes can be fatal. 1. Success is largely random. There is no predictable pattern to a successful business, keep iterating…