building your venture capital pitch

Building Your Venture Capital Pitch

Stephen N. Davis

“Partnering With Clients to Drive

Sustainable Profitable Growth”

2000 - 2011 © CXO Advisory Group

Guidelines

Goal of the first meeting is to get the second meeting • Increase receptivity and find your champion

Focus • Value proposition – not technology • No more than 12 – 15 slides

Personalize the story • To fit the potential VC partner’s investment criteria and focus

Efficient use of time – You have 15 minutes YOU are the real story

• Don’t hide behind slides – don’t just read them • Don’t overload slides with text • Recommend black text on white background

Order of slides will depend on your situation • Order for most compelling story

CEO or Founder gives the presentation


The Slide Titles

Title Slide

Overview

The Problem – What’s the Pain?

The Solution – Your Value Proposition

Technology – Your Secret Sauce

Opportunity and Market

Competitive Landscape

Go to Market Strategy

Financial Overview

Funding Needs and Uses

The Management Team

Current Status

Summary


Title Slide - Content

Name of your firm

Date

Appropriate graphics (logo, etc.)


During the title slide…

Begin by introducing yourself and the team

• Names and titles only

• Save team detail for later

Recommended:

• Hook ‘em - Start with a 1 to 2 compelling minute story

• Make it compelling and memorable

• Tie the story to your overall message

PRACTICE, PRACTICE, PRACTICE!!!


Overview

This is where you use your elevator pitch. • Elevator pitch is one of your most important elements

• This is the essence of your business

• You have 10 to 20 seconds to grab their attention

• Then 20 to 40 seconds to expand the Business Value Proposition

• Most entrepreneurs don’t spend enough time developing their pitch

• Two to five high level bullets

• Go into more detail later

• Refer to key points to keep attention for the rest of the presentation

You’ve got to get their attention here or your lost


The Elevator Pitch

Forces you to focus

Cover these Points

• What market are you in?

• The customer pain you are solving?

• What is the size of the opportunity?

• Why you’ll win?

• Market validation

Show passion and enthusiasm

• You’re NOT Speedy Gonzales

30 to 60 seconds

Don’t use jargon

Use powerful analogies to help them “get it”

Make sure your mother can understand it in less than 15 seconds


It Takes a Long Time to Write Something Short

24 hours minimum – 4 months maximum • 8 hours to develop prioritized list

• Problems you’re solving • What you’re offering • What makes you different from competition

• Why you’ll win • 4 hours to write first draft • 4 hours testing your first draft with key individuals, advisors, etc. and

incorporating feedback • 6 hours testing revised draft on larger group • 2 hours to revise and incorporate feedback

But this isn’t the end You’ll eventually have multiple elevator pitches for various

audiences • Investors, different customer types, strategic partners, etc.


Example

We provide a flexible, interactive and personalized system for delivery of medical

test results from a dedicated, comprehensive content library.

We streamline the reporting of clinical lab test results from the physician to the patient in language that patient’s can

easily understand.


The Problem: What’s the Pain?

Compelling problem(s) you address

• What’s the pain and who is suffering?

• revenues, costs, time, market reach

• Emphasize the inability of existing methods, procedures,

competitors to satisfy need

Include validating quotes from

• Customers or Analysts to validate pain

Problem must suggest a large market

• Suggest market opportunity size

• ie: specific cost of problem to the market


The Solution – Your Value Proposition

Describe your business, product or service in terms of compelling benefits

• “Must-haves” not “nice-to-haves”

• Cost saving, time savings, personnel savings, process improvements, etc.

• Illustrate your solution graphically if possible – Make it simple

Include quotes from customers using product • Validate business value proposition

Add a slide or two, if necessary to show solution and where it fits

• Focus on the value proposition

• Explain the technology

• Don’t go overboard on technology


Technology – Your Secret Sauce

Concentrate on essential value proposition!!

Best to use graphics • Before and after diagrams often work well

Translate key points from business to technical domain • Show how it fits into customer operation

Patent Status


Opportunity and Market

Market details • Define ideal target customer

• Who decides? Who pays?

• Use specific example if possible

• Size and growth rate for five years

• Validated sources

• Focus on your segment(s) of the target market

• Market challenges

Does it justify a $50M to $100M+ run rate opportunity in five years?

Demonstrate defensible % of market share • How will you get there? Can you get there?

• Typical sales cycle that will justify ramp up


Competitive Landscape

Discuss current and potential competitors

• Focus on top 3 competitors and why you will win

• Demonstrate knowledge of market and operational landscape

• “no competition” an unacceptable answer

• SWOT table works well here

Differentiate yourself

• Use customer-centric attributes and dimensions

• Reinforce your unique competitive advantages

• Differentiators that would compel customers to buy from you

• Relationships, intellectual property, new insights, domain expertise

Customer Quotes

• What do they say about your competitors?

• Why would they rather buy from you?

• What do they say about your competitive advantage?


Go to Market Strategy

Who are the key players? • Profile the customer • Discuss critical sales and strategic partner relationships

• In place or in process

Revenue Model • How and what do customers buy?

• Discuss high level pricing • Describe what the customer will get –Typical sale

Marketing and sales plan • Explain sales cycle and how you acquire customers • Compare and contrast to other firms • Sales channel strategy – who will sell? • Cost to acquire customer and sales channel partners

Current customers and sales pipeline • Customer quotes can provide external validation


Financial Overview (in thousands)

2005 2006 2007 2008 2009

Revenues ($K) $500 $2,325 $7,000 $24,000 $60,000

Expenses ($K) $2,250 $5,000 $10,000 $22,000 $49,000

EBITDA ($K) ($1,750) ($2,675) ($3,000) $2,000 $11,000

Breakeven Q3 2008

Customers 1 5 35 150 275

Be prepared to discuss and key financial assumptions

• Should be forecast based on receiving funding

• Revenue analysis – market ramp up, pipeline

• Bottom up better than top down

• Expenses

Have detailed proforma backup


Funding Needs and Uses

This is where you tell them • How much you need • What you will use the funds for

Example: Series A: $5,000,000 • Hire CEO, VP Sales & Marketing, CFO – Fill gaps in management team • Launch product into the market • Bring on additional sales, marketing & engineering resources • Develop initial key referral accounts • Expand number of field test sites • Develop initial OEM channels • Continued Engineering • Build support organization • Additional patent protection

Example: Series B: $5 Million in 12 to 18 months • Expand marketing & sales nationwide • Promote company & its products for maximum visibility • Start development of international markets • Introduce follow on products


The Management Team

Purpose to build confidence

• On one slide only

• That team can build and manage the business

• Previous relevant accomplishments that can grow the business

• Expose skill experience gap

• Discuss your hiring plan to fill key slots

Provide list of key advisors or members on BOD

• Only if they add substantial weight or credibility

• Can be on separate slide

If you’re not qualified to be CEO

• Be honest with yourself

• Turn it into positive

• State that you want to bring someone in with when funding is completed


Current Status

How much money have you previously raised

• Sources of funding

What have you already accomplished with other

investors’ money?

• Key milestones

• Product completion, first sales, patent pending

• Key customers, Strategic relationships

• Logos and testimonials

Timeline format can be useful

Show you are in position for some key future milestones

• What are they?


Your Summary

Your call to action

Summarize your strongest points

• Why you’re different & why you’ll win

• Memorable sound bites

Anticipate exit strategy question

Ask for feedback

• Will highlight there concerns

• Show where you need to improve Pitch or rebuild story

Ask about the process

Ask about next step(s)

• Determine conditions for second meeting

• If possible, set up follow-up meeting

If no interest then

• Ask for referral to other funding sources who’s profile you fit


Questions

Stephen Davis

Phone: (508) 528-7571 Email: [email protected] Website: www.cxoadvisorygroup.com Linkedin: www.linkedin.com/in/stephendavis Twitter: twitter.com/stephendaviscxo

Interim COO/VP Sales & Marketing |

Business Consultant | Sales Channel and

Business Development Expert | Author &

Speaker

Contact Information:




Driving Profitable Growth

We help companies optimize business development and marketing; accelerate sales; and seize the most attractive growth opportunities.


The CXO Advisory Group

CXO Advisory Group is a strategic operations advisory

and management firm comprised of proven C-level

executives with both breadth and depth of experience.

CXO Advisory Group Team members have achieved

success in positions ranging from: President/CEO to

COO, and VPs of Sales, Marketing, Corporate

Development and Human Resources.

Has proven success in business development and in

building US sales and distribution channels


How Can CXO Help You?

Business Strategy Services

• Audit business practices and organization

• Evaluate product and pricing strategies

• Evaluate effectiveness of sales channel

• Assess effectiveness of existing sales and marketing

programs

Market Entry Program

• Analyze competitive landscape

• Market launch strategy and plan

• Channel strategy and programs

• Establish sales channels

• Generate sales and manage relationships

• Identify and develop strategic partnerships



Sales Channel Management

• Review and revise sales channel strategies

• Channel partner identification, prospecting and recruitment

• Eliminate channel conflict

• Channel contract development and negotiation

Interim Management Resources

• Interim CEO, COO, CMO, CSO

• Interim VP of Sales and Marketing

• Consultant on staff

• Launch team coaches



Venture Advisory Services

• Fine tune operations, business strategy and market entry

• Assist with due diligence

• Strategic business assessment of portfolio companies


Driving Profitable Growth

Stephen Davis Interim COO/VP Sales & Marketing |

Business Consultant | Sales Channel and

Business Development Expert | Author &

Speaker

Contact Information:



Phone: (508) 528-7571 Email: [email protected] Website: www.cxoadvisorygroup.com Linkedin: www.linkedin.com/in/stephendavis Twitter: twitter.com/stephendaviscxo

building your venture capital pitch

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