dlm propose

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Step 1

Write in an engaging, enthusiastic, confident tone. The business plan can be compared to a

marketing brochure. Your goal is to get the investors as excited as you are about the future

prospects for your venture. Its not just a recitation of facts and figures. Its an expression of your

vision for future success.

Step 2

Emphasize growth potential. Investors want to back companies that can achieve considerable size in

a three- to five-year period. Show them why your market is rapidly developing, or already large, and

why your venture will be able to capture market share at an accelerated pace.

Step 3

Explain how your technology works in simple, straightforward terms. Dont try to impress them with

your technical knowledge or assume the reader of the plan has the technical background you do.

Investors see business plans for many dynamic technologies over the course of a year. Their major

concern is whether the technology can make money.

Step 4

Present a compelling case for why the customer needs your product and will pay money for it. Dont

make the mistake of talking about how amazing your product or technology is, while forgetting that

it's all about the customer. The solution you are providing the customer must not only be good, it

must be important--addressing a problem that the customer has an urgent need to solve, right now.

Step 5

Demonstrate you can sustain your competitive advantage. The most difficult part of writing a

business plan is articulating what you will do to maintain your position in the market as time goes by

and new competitive threats appear--which they invariably will. Approach this by showing what you

will do to ensure your product or service offering is so superior that your customers would have little

incentive to buy from anyone else.

Step 6

Make the investor believe in your management team. Build credibility with investors by showingpast successes your team members have had that will translate into success in your new venture.

Show what types of skills and experience are required to succeed in this type of business--and how

you have gone about assembling your team with these specific requirements in mind.

Before you send the plan to investors, ask two or three trusted associates to read it and let you

know if they find any areas that are confusing or need further explanation.

Keep the plan to a reasonable length, 20 pages of narrative and 10 pages of financial projections.

Present optimistic, but not outlandish, financial projections. The assumptions behind the numbers

are what matters most. Make sure you can explain why you believe your assumptions are realistic. If


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the investor sees the logic you used in the projections, and agrees with it, your chances of obtaining

funding are greater.

1. Spell out your proposition. You need to excite investors from page one of your plan, so an

attention-grabbing executive summary is vital. In just a page or two this needs to summarise your

entire plan, capturing your unique proposition in a clear, focused and enticing way.

2. Include detailed financial information. Potential investors will understandably be fixated with your

finances. Ensure you include financial information for the last three years where available, as well as

projections for at least the next three. Show detailed profit and loss, cashflow and balance sheet

information, but provide summaries too. Explain any major expenditure, as well as any discrepancies

and missing figures.

3. Lay out your goals. Be clear about the amount of funding you need and why you need it, detailing

exactly where it will be spent. Outline your short and long-term growth strategy for achieving your

goals.

4. Introduce the team. However good your strategy, investors want to know you have the personnel

to execute it. Include any relevant experience you and other members of your executive team

possess.

5. Demonstrate market knowledge. Show how your product or service fits into the market, who your

potential customers are, why they should be interested in your offering and how you intend to

target them. Back up your knowledge and predictions with solid market research.

6. Spell out the benefits for them. Investors want to know what is in it for them. They will need to be

convinced that your business is a viable proposition and they will get their money back with interest.

Different investors will want to know different things, so tailor your plan accordingly. For example, a

bank will be interested in how you intend to repay a loan or overdraft, while a venture capitalist will

want to know about their exit point and expected return.

7. Highlight your own risk. Investors like to see a concrete demonstration of a business owner's

confidence. Detail your own investment in the business, as well as that of friends and family. State

whether you are using your own assets as guarantees against other loans for the business.

8. Be honest and realistic. For example, investors will quickly see through attempts to downplay or

ignore the competition. However, recognition of it demonstrates market understanding. Likewise,


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over-ambitious financial forecasts will be quickly spotted. Remember, too, that any attempts to

conceal may have legal implications.

9. Be professional. Ensure your language is clear and jargon-free, and your plan does not include anyspelling errors. Present your information in logical sections, well signposted for ease of reading. Bear

in mind that tables, pie charts and graphs can impress as well as elucidate, but a variety of fonts and

colours rarely do either. Find a trusted person such as a business adviser or accountant to read

through your plan and offer constructive feedback.

10. Review and double check. Keep your business plan up to date by regularly reviewing it. Before

presenting it to a prospective investor, always ensure your projections remain correct and the

figures add up.

How to present your business plan to investors Presentation Transcript

1. How to present a business plan toinvestorsPrajakt Rautco-founder The Hatch for startups

2. Why do angel investors invest in startups? Expectation of making a profit Interest in supporting

aspiring entrepreneurs Therefore, your focus should be to convince investors that your startup is a

good investment opportunity

3. How much return on investment do angelinvestors seek? 5 - 10x of their investment in astartup. because, out of 10 startups they invest in 5-6 will fail, 2-3 may barely return capital, and

1 or 2 may be successful Therefore, unless you can convince them that your startups will create

value, angel investors will not be interested For angel investors, profitability is not THE KEY criteria,

because they are not keen on a dividend play they are playing for higher valuation

4. How to present a business plan toinvestors

5. You till typically get about 20 - 30minutes for your presentationKeep half the time for

presentation and half for Q&AShow the dish. Dont detail the recipe. the objective ofthe first

presentation should not be to share details but toexcite the investor to meet you again fordetailsDont state the obvious focus on things that mostpeople are not likely to know e.g. when

presenting abouta solar energy business, data on how renewable energyis important is not

necessary

6. Focus on the business around the conceptor product or service- What are you going to do

concept- How are you going to make moneybusiness case- The size of the opportunitypotential-

How are you going to do itimplementation plan- How much money do you needto attract the

next set of investors

7. What should you include in your presentation? Concept overview and why it is relevant i.e.

opportunity / need Team What is the size of the opportunity Business model Competitive


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landscape Operations plan overview Risk factors Funding needs and use of funds Exit

potential

8. What do investors look for?

9. Investors look for competent and committed teams- Passion and deep interest in the domain-Deep understanding of the dynamics of the business around the conceptwho will buy, why will

they buy, challenges, etc.

10. Investors look for plans with practical milestonesBut large aspirations

11. Investors look for teams with focus in the initialphaseEven when entrepreneurs have identified

multiple opportunitieswith the concept

12. Investors look for a strong implementation planAccording to Gartner, the market will be USD

20 bn in 2020 isnot a reason to investHow you will build the first 1000 customers is.

13. Investors seek teams that have a clearly identifiedimmediate goals and tasksWhat do you need

to do to launch?What are you going to test?

14. Investors seek a plan that clearly outline how muchfunding is required, where it will be used

and what itcan achieveYou should seek from angels only as much as you require to go tillyou can

attract VCsIn rare cases will angel funding be sufficient to take the startup toprofitability

15. Finally, investors look for teams they can trustBe honest about risks & challenges, be open

about limitations andweaknessesWhen you tell them where you need help, will they be able

toprovide inputs

16. In SummaryInvestors invest in a business case around products/services thataddress large

marketsInvestors invest in high-quality teams with large aspirations andwho have a clear

understanding of what it will take to achieve thepotentialInvestors invest in clearly defined plans

with practical milestonesMake the investor go back feeling What a great concept. I thinkthe market

is large and the team will deliver.

8 mistakes entrepreneurs make when pitching to investors

One of my grown children called me the other day to ask if I knew of anyone who could help review

a business plan for a startup technology company. Rather than offer a referral to someone else, Ithought it would be easier to provide some fatherly advice and craft the following list of 8 mistakes

that entrepreneurs often make when pitching to investors. During the last 15 years living and

working in Silicon Valley, I have been a partner in a technology venture capital fund and most

recently an angel investor. Before that I was finance and M&A lawyer for 20 years. So I thought my

fatherly advice would be well received. Imagine my surprise when I received this email the

following day: Dad, I asked you to introduce me to someone who knows something about startups,

not give me advice!

Rather than waste my carefully considered advice, I offer it instead to you:


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1. The Elevator Pitch Is Longer Than One MinuteIf your elevator pitch is longer than one

minute, you will have a very difficult time raising money because you will not have enough time to

make a compelling investment case. This opportunity will likely arise in an elevator, at a cocktail

party, or ever so carefully wedged between small talk with friends and their acquaintances. So you

must make the pitch short and to the point, and make sure it showcases your knowledge.The only

way to accomplish all of the above is to have a well-crafted pitch that takes no longer than a minute

to deliver in an unhurried but practiced manner. Any longer and the potential investor will

most likely have moved on either physically or mentally. Needless to say, this is not easy. You must

be able to condense all of the information in your PowerPoint presentation (see 2 below) and

business plan (see 3 below) into a brief summary.

2. The PowerPoint Presentation (aka the Deck) Is Too Long.Professional investors, such as

venture capitalists and serious angel investors, do not have long attention spans. The reason is not

necessarily that they have attention deficit disorders but that they need to consider, evaluate, and

choose among so many startup investment proposals that 30 minutes of uninterrupted time is all

you can reasonably expect to have to present your proposal.If you have been successful in the

elevator pitch, you must be able to present a slide presentation in about 15 minutes, then leave time

to answer questions within another 15 minutes (see 8 below). Although you may be granted more

time, you must also prepare for the possibility of less time, so you need to ensure you get your main

business points across before the investor conveniently excuses himself due to a prior

commitment. Bottom line: 15 minutes of presentation means no more than 12 to 15 slides.

3. Not Having a Factually Supported, Well-Written Executive Summary.At the end of the day,

the key to raising money is to have a carefully thought-out summary of the investment proposal (aka

the executive summary or, the longer form, business plan).When raising money, you need to

interest VCs or angel investors with the elevator speech and PowerPoint presentation, but you only

close on the money after the investor reviews, questions, and buys in to your entire business plan.

So you must spend a significant amount of time drafting a coherent and persuasive executive

summary or business plan that sets forth, among other things: the problem that the startup will be

solving; the size of the market the startup will be addressing; a sustainable competitive advantage;

the expected revenues and costs of the startup that are supported by realistic and detailed

assumptions and projections; a description of the startups management team; the exit for the

investors (see 4 below).The best elevator speech in the world will not result in any money unless you

can deliver an analytical and believable business plan explaining how an investment in the startup

will make its investors rich.While there are a few experienced entrepreneurs out there who can dothis in an evening, you should plan to spend weeks, if not months, perfecting a business plan

otherwise the time spent on the elevator speech and PowerPoint will have been wasted.

4. Overlooking a Realistic Exit Strategy for Investors..An entrepreneurs thinking process is often

to make the world a better place, create a long-term business that will keep him or her engaged and

richly employed, and bequeath a legacy that will take care of the entrepreneurs children and their

children. In contrast, the investors thinking process is usually How do I make a lot of money in a

short to moderate time frame (3 to 7 years)? Guess whose thinking process controls whether the

entrepreneur closes on an investment?Therefore, you must ensure your PowerPoint presentation

and business plan address how the investor will make money (aka the exit) from investing in yourbusiness proposal. Many entrepreneurs never address this basic need of investors. To avoid this


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oversight, you must be prepared to answer an investors questions about how the investment will be

monetized through, among other things, licensing agreements with larger companies or a strategic

sale of itself to a larger company, not just an IPO scenario in which you see yourself becoming CEO of

a Fortune 500 company (something that almost never happens).

5. Asking for a Non-Disclosure Agreement..Almost all entrepreneurs are convinced their

business idea will result in enormous wealth and, therefore, is at risk of being stolen by an

unscrupulous investor. So their first thought is to have the potential investor sign a bulletproof

non-disclosure agreement (NDA). But for many professional investors, such a request is a non-

starter, meaning there is no longer any reason to see the 12-slide PowerPoint or incredibly detailed

business plan.Unless the entrepreneur has a business idea on the order of Son of Google, most

professional investors, including both VCs and serious angel investors, will not sign an NDA because

they know that there is a strong likelihood that they will have seen the idea before and will likely see

it many more times in the future. Consequently, they cannot sign a document that will surely lead

them to a lawsuit in the future from either this particular entrepreneur or another one.

6. Submitting Investment Proposals Over the Transom..Raising money is all about building

credibility with investors. No investor wants to invest in a deal that nobody else is interested in

pursuing. Investors are very herd-like and often need the validation of others investing with them

before they will pull the trigger.Given the herd mentality of investors, you should never attempt to

raise money by purchasing or collating a mailing list of VC firms or angel investor groups and then

just mailing a proposal in the hopes someone will contact you to set up a meeting.This is not to say

that there are not many entrepreneurs who, in fact, do mass mailings. My point is that such an

approach is likely to be D.O.A. Venture capitalists and serious angel investors are often deluged with

unsolicited proposals, which sit in slush piles waiting to be opened. The only real reason they might

be opened is because a friend or professional acquaintance has alerted the investor that the

proposal deserves a read. In other words, someone has acted as a reference or provided a

recommendation, preferably before the proposal has been delivered. Only then do you have a

serious chance at receiving that special phone call.

7. Discussing Valuation Too Early On in the NegotiationsThe courtship ritual of most couples

does not start with a discussion of how much each person will be worth seven years from their first

date, and how it will be divided between them if and when they part. And neither should an

investment presentation begin with a similar discussion.The reason an entrepreneur often seeks an

investment from VCs and experienced angel investors is to get a reliable indication of the value of

their startup, which is what experienced investors do for a living. So there is no real point in

preempting the process by insulting the VC or angel investor with an unwarranted starting point for

a valuation.As some would say, you should just let nature takes it course and wait for the investor

to begin the discussion of valuation and pricing with a term sheet. Any other approach risks an early

termination of negotiations.

8. Failure to Listen..You need to leave your pride at the door when making an investment

presentation and be open to the investors suggestions. The fundraising process can be grueling

because experienced investors tend to ask numerous questions that likely have been posed to you

before, questions that test your business model and technology platform so all parties might realize

the best way of structuring an investment.Most of the time, the questions are offered in the spirit of


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openness to justify the investment of such a large sum of money. But rather than viewing the

questioning process as an exploration of alternatives by an investor who is obviously interested in

the startup (otherwise why else would the investor have met with the entrepreneur in the first

place?), some people reactively resist suggestions to consider changes to their business model or

technology platform. Such a reaction is likely to cause a thoughtful investor to move on. You should

instead take the time to consider the investors questions and suggestions, and view the process as

useful insight into his or her thinking.I end with number 8 because such a failure to listen was the

chief mistake made by my own child. But I guess my own mistake was forgetting that children never

listen to their parents either.For more great small business articles such as The Top 25 Home-Based

Business Ideas and Keeping Your Business Ideas Confidential, visit AllBusiness.com and AllBusiness

Experts. For local business information on 15 million businesses, be sure to check

Why you shouldnt send your business plan to an investor

Most entrepreneurs think they can get funding simply by sending out their business plan.

Unfortunately, this rarely works. Over the past 15 years, my company, Growthink, has developed

thousands of business plans for entrepreneurs seeking funding.But I always tell people not to send

the plans to investors. The trick is not simply sending out a plan. It is finding the best way to leverage

it.

Here's why:

Your Business Plan Can't Answer All the Questions

Regardless of how good your business plan is, it will never be perfect. For instance, it can never

answer every question an investor might have. If it did, it would be 100 or more pages long, in which

case, no one would read it.

Likewise, any written document, including your business plan, is subject to interpretation. As a

result, based on the experiences of the investor, he may incorrectly assess your opportunities or

challenges.

That's why, ideally, your first written correspondence with a potential investor should only include

an overview or brief information about your company. Put it in the form of an email or a one-page

Executive Summary. Include within it bullets about what your company does and why it's uniquely

qualified to succeed. Such a document gives the investor an overview of your venture and allows

him to determine if it's something he's interested in pursuing.

Get Investors to First Invest Time

After giving investors an overview of your company, your next goal is to secure a meeting. Realize

that investors have two scarce resources: their time and their money. Start by getting them to invest

their time in learning about you and your company. Importantly, how they feel about you personally

is often equally significant to how they feel about your company's success prospects.


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So, secure the meeting, bond with the investor, and use the time to determine and answer all of his

questions. You can generally answer questions far better in person than including them in your plan,

as you can adjust based on follow-up questions and/or the investor's body language and tone.

When to Send Your Business Plan

After you meet with the investors and they are legitimately interested in funding your business, they

will often request your business plan. This is when you give it to them. The business plan, at this

point, is more of a formality. It allows them to confirm that you have fully thought through your

business and will use their money wisely.

Even though your plan is more of a formality here, it's still critically important to create. Not only

does it give the investor the final confidence needed to fund you. But in developing your business

plan, you develop:

1. the compelling overview information to initially share with investors

2. a comprehensive understanding of your company

3. the materials for your in-person meetings and presentations

4. answers to all the questions they might ask you during the process

Approach raising funding from investors as you would any other marketing endeavors. Think of it the

way people sell cars. It starts with a commercial or brochure to gain customer interest. This is like

your overview email or one-page Executive Summary. Next, prospective customers are offered a test

drive. This is similar to your in-person meeting and presentation. And finally, if the prospective

automobile customer has questions, they might be given the full manual to understand more fully

how the automobile operates. This is similar to your business plan.

Having a well-written and compelling business plan is a critical when raising capital. But knowinghow to use it is equally important.

How to present a business plan to an investor

Every entrepreneur has to present a business plan to outsiders at some point if he or she is seeking a

loan or investment in the company. Obtaining venture capital funding, angel investment, or even

bank loans for a business is increasingly difficult in a tough economy. You don't want a poor pitch to

impede you ability to score financing for your business. In fact, it's imperative to have a pitch and


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presentation that showcases your idea, your potential, your market and your ability to provide

investors with a return on their investment.

The business pitch is different than the business plan. But you need to have your plan drafted beforeyou can fine-tune your pitch. "People misunderstand that the pitch is a different medium than the

plan," says Tim Berry, president and founder of

Palo Alto Software, maker of Business Plan Pro software, who blogs at bplans.com. "They

misunderstand that somehow plan is going to sell the business. The plan is the screenplay for the

business. You have to have it before you can put together your pitch. The pitch is a summary of the

plan."

The following pages will cover how to prepare your pitch, how to choose potential investors, and

some basics for delivering the best presentation possible.

Prepare Your Pitch and Presentation

A business pitch consists of an effort to convince others that your idea for a business is a good one.

The pitch involves summing up your business plan -- going over your product/service offerings, your

market, your leadership, and why you will succeed. Informally, you may have done this a thousandtimes already. "It can be as simple as your reality check in a one-person business, or agreeing with a

spouse or significant other, your team members or your boss," Berry says.

The more formal process of pitching and presenting is usually before an audience of venture

capitalists, angel investors, or bank loan officers in an effort to secure a loan or investment in your

company. Usually, an entrepreneur starts off by asking for a certain amount of money, and the value

proposition for the investor -- such as what percentage of equity in the business that investment

would buy. Most of the time, an entrepreneur would make a formal presentation -- often with aslideshow -- to help illustrate a pitch. The formal presentation is typically followed by a question and

answer session. Investors often mull over the details and, if they make an offer, will perform due

diligence on the financials before turning over any funds.

Know Your Business Plan. The first rule of thumb is to write a business plan and to know that plan

inside and out before pitching and presenting to outside investors. The written business plan is often

the way to get in the door with investors. If they like your plan, they may invite you to pitch and

present. You may get only one chance to present to this group. Don't blow it by seeming ill-informed

or being unable to answer questions.


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"It's crazy to think you can jump into this process without having thought through the details that

come up in a business plan," Berry says. "You're not going to cover those details in many encounters

with investors, but you need to know your plan backwards and forwards, inside out before you start,

whether you show it to investors in early meetings or not. There is no room for filling in the details

later. You are supposed to have them ready to go from the first encounter."

Venture capitalists, for example, may have 100 or so business plans piled on their desk at any given

time. They only listen to formal pitches and presentations from a handful. Your business plan needs

to include the necessary components -- the business concept, market, management team, financial

projections, marketing plan, etc. You should have a hand in drafting the plan if you are the presenter

so that you are intimately familiar with all the details. The goal of the business plan is to convince

investors that you are worth the risk of investment.

Your pitch and presentation need to build on that theme."It really has to pop them," says Linda

Pinson, author of Automate Your Business Plan for Windows and Anatomy of a Business Plan, who

runs a publishing and software business Out of Your Mind and Into the Marketplace. Pinson also was

selected by the U.S. Small Business Administration to write its government business plan publication.

"It's got to say to that VC 'What's in this for me?' It's got to have an overview of what you're asking

and what you're trading for it. Is this a business that looks like it will have fast and sustainable

growth and get the returns to the investor that he or she is looking for?"

Determine How Much Funding to Request. The reason an entrepreneur makes a pitch is most often

to request funding. But just how much to ask for is often key.

"Match your financing goals to reality," Berry says. "Don't think you're going to get millions in

venture capital unless you have a good track record with previous startups, a very strong potential

business, and a realistic exit strategy. If you're looking for a few hundred thousand dollars, look into

angel investors, seed money investors and/or seed money funds. Understand which investors want

high-growth and high-risk strategies, and which will accept lower growth and lower risk."

Many of the decisions by investors are based more than financials. "A lot is based on the personal

confidence they have in you. It's not just numbers on a piece of paper," Pinson says. "Today is a very

difficult time for investment capital." One way to prove to investors that you are investment-worthy

is to show that you are investing in the business, too, by putting up your own capital and being

willing to trade some equity for their financing.


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Prepare Your Message. A pitch needs to be prepared in a variety of formats to take advantage of not

only the formal pitch and presentation meeting but the informal chance meeting in an airplane or

elevator. Here are a few types of pitches:

E-mail message and elevator pitch. Every entrepreneur should have a short, concise speech ready

whether they step onto an elevator or prepare to travel on an airplane. You never know who is going

to be sharing the ride with you. "It's the 60-second or two- or three-minute pitch where one person

in a seat tells the other person about their business," Berry says. The key words to keep in mind

while crafting this message are: quick, powerful, and condensed. You won't have the investor's

attention for long so condense this message. Berry suggests a one-page e-mail and/or a 60-second

elevator speech are sufficient.

Summary memo. This is a lengthier treatment of your elevator pitch. It consists of a 2-5 page

memo summarizing the need or want you fill as a business offering, your target market,

differentiation, growth prospects, management team, and your financing plan, Berry says. It's

important to emphasize how much money you need from investors, how much of your company

ownership you're prepared to give in exchange, and how you're going to turn that back into money

for them, including when and how much, he says.

Pitch presentation. This is your more formal pitch presentation that you make to investors. Cover

the same elements included in your summary memo and in the executive summary of your business

plan. Plan on 20 minutes maximum with no more than 10 slides, and use pictures and diagrams, not

bullet points, Berry says. "Don't ever read bullet points in a presentation.

How to Choose Potential Investors

Research Potential Partners. Potential investors can range from family members and friends to

venture capitalists or angel investors. "You should choose an investor as carefully as you choose a

spouse," Berry says. "Look for investors who will be good long-term partners. They have to be

comfortable with you and you with them." That's because you are going to be spending a lot of time

with your investors if they become financial partners in your business. There are meetings, reports,

and reviews. They may also seek new management if you don't do a good job meeting your goals.

"If you want partners who will just give you money and leave you alone, search for investors who do

that -- and good luck with that," Berry says. "Very few people write checks to businesses and then

forget about them."

In today's economy, you have to explore many different avenues before you secure financing. On

one hand, venture capitalists frown upon businesses that blanket potential investors with their

business plans. "Do not under any circumstances shower potential investors with mass print or

electronic mailings," Berry says. "They'll know you did, and it won't work. Instead, focus on a few,

well-researched targets." On the other hand, if you only approach one or two potential investors,

you may have to wait a long time before hearing back. "You're probably pretty quickly going to see


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that most of them are going to say, 'No, this won't work today. Our funding is not there for this

now," Pinson says.

Here are some tips on finding the right investors to approach:

Who you target is very important. Pinson advises that you research which investors tend to knowyour industry well and invest in companies in your industry. She says you may want to start by

approaching those investors with your plan.

It's not always good to go it alone. "It's good to find intermediaries," Pinson says. Sometimes

intermediaries can help you connect with the right investors. Join the chamber of commerce, talk to

business professors, and search the Web. The U.S. Small Business Administration (SBA) sponsors

about 1,000 Small Business Development Centers (SBDCs) around the country, most often hosted by

universities, colleges, or state economic development agencies. SBDCs are designed to help

entrepreneurs start, finance and run their businesses. Their counselors may know potential investors

and may be able to introduce you.

Seek compatibility. You should want investors who will become partners in building the business

as well as funding it. Do your research and ask the right questions. "Do they know people who can

help you? Are they familiar with your business area? Do they share your long-term goals for growth

and eventual exit?" says Berry. "Are they good partners? Do the people in companies they've

invested in regret it?"

Dig Deeper: Five Tips for Selecting an Investment Partner

Pitch and Presentation Tips

It's important to be versatile and to be able to deliver your pitch in a variety of different media.

These days, a growing number of businesses take to YouTube to deliver their business pitch. Some

angel investors like Berry have taken to reviewing some of the YouTube pitches before scheduling a

face-to-face meeting with an entrepreneur. "It's a new world," Berry says. "That lets me see the

people as they talk about their business and how they manage communication. It gives you more

access to information faster."

Berry's new pitch website suggests entrepreneurs adhere to the following five steps to deliver the

perfect pitch:

Be specific and concise. Know what you want to say. Know your business plan. Pick out what

matters most.

Sell yourself. This is the "why me" section. Talk about your skills, background, vision and why you

can make it work.

Sell your offering. Berry calls this the "heart" of the pitch. What need does your business fill?

Why is anyone going to buy your product or service?

Close the deal. This is where you put your salesman's cap on. Make sure to make a strong finish.


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Nail your delivery. Practice makes perfect. So practice your pitch and presentation in front of

family, friends, business associates, etc. and get feedback on how to improve it.

You also need to avoid some key pitfalls.

Don't memorize the presentation. "Know it like the back of your hand and be able to give it

fluidly, using different words each time," Berry says.

Avoid PowerPoint faux pas. The formal pitch is usually accompanied by a presentation, most

often a slideshow, which you should also hand out to attendees at the pitch presentation. "Avoid

bad PowerPoint like the plague," Berry advises.

Keep in mind what's in it for investors. "Describe what benefits youoffer to specific investors and

how that will make your investors money," Berry advises.

Stay Flexible. In the text books, the standard process is that you make an elevator speech that

produces a request to see your business plan, followed by an opportunity to pitch, which ends with

investors offering you funding. However, Berry says, "The real world is not nearly as orderly as this

would imply." Follow up with the investor but remember that the relationship is only going to work

if it is mutually advantageous. If they want to invest, make sure you work with an attorney you really

trust.

In the end, you should think of the pitch and present process as a filter. "If nobody wants to invest in

your business, yes, you might be the true visionary in a world of lesser beings, but -- no disrespect

intended -- it's much more likely that the world is delivering you an important message," Berry says.

"Maybe you need to revise your plan, go back to the drawing board and improve it. On the other

hand, maybe this idea has fatal flaws and isn't going to work, and your failure to raise money has

saved you a lot of heartache."

Impress investors in 12 steps

What Investors Really Want from Entrepreneurs.

If you're trying to raise investment funds for an early-stage venture, one of the best opportunities is

an in-person meeting with venture capitalists or angel investors. In preparation, you should develop

a 20- to 30-minute slide presentation to address their most pressing questions and concerns.


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To get you started, I've developed a list of 12 key questions you need to answer. I recommend

devoting one slide to each question, for a presentation of 12 slides. Assuming it will take about two

minutes to explain each slide, your entire presentation should take 24 minutes, which is right in the

ideal range (BusinessWeek.com, 6/4/07).

I suggest you answer each question with three to six bullet points or phrases. If you can't capture the

necessary details in bullet points or phrases, save them for the oral explanation you will provide for

each slide. Jot down notes for each slide that will serve as the basis of your discussion. Your

presentation should be more than a simple recitation of the points on each slide.

1. What is the opportunity? In other words: What is the problem you are fixing? Many Internet

businessessuch as online car markets or travel agenciesaim to fix an inefficient and cumbersome

market via a more open and speedy system. If it's a new problem or opportunity, investors will

invariably wonder why no one has tried to fix this problem before? Or, if someone has tried, why

didn't it work?

You also need to convince potential backers that there are huge premiums for solving the problem.

Resist the urge to dwell on marketing studies showing annual growth of 50% for the next 200

yearsinvestors have come to despise themand instead provide data on the size of today's

market, with various estimates of potential market growth. If the marketing data are suspect or

incomplete, say so.

2. What gives you special advantages in solving the problem? Investors want to understand the

competitive advantages your business brings to the marketplace. The ideal competitive advantage

from their viewpoint is something proprietarysay, a patent on a new drug or important chemical

or manufacturing process. A patent provides a form of government protection against imitators.

Other proprietary advantages can come from trademarks and copyrights, though these are less

desirable because they tend to be less protective for small companies. (A young company's

trademark typically isn't well-known, and thus is less important in the marketplace than well-established corporate trademarks.) So be careful about overemphasizing trademarks or copyrights.

Another special advantage may be the experience of your management team. Simply having "a head

start on the competition" isn't usually considered significantunless you can create what are known

as "barriers to entry," which make it difficult for new competitors to imitate your offering. For

example, exclusive licensing agreements with corporate partners may help you create barriers to

entry, and if so are worthy of mention.


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3. What makes your team especially qualified to develop this business? Another way of asking this

question: What makes this a business only you can do, or why is this business right for you?

Investors are extremely skeptical about a team's ability to succeed, so it's best to anticipate their

skepticism, and try to answer questions before they are asked.

The best answer provides evidence of past performancenot just that you started another

company, but how that company fared. Many entrepreneurs gloss over this because the outcome

wasn't clear-cut. I believe it's important to be as forthright as possible here: Explain that a previous

corporate management stint was cut short because of downsizing, for example, or that another

startup a team member helped launch was sold before achieving its full potential.

4. What is the model? This used to be posed as, What is the strategy? The word "model" became

popular with the advent of the Internet, when entrepreneurs spoke about "the advertising model"

or "the membership model" or "the retail model." It's your scheme, or approach, to conducting

business and generating recurring revenues.

It has become another area of skepticism for investors because a number of models popular during

the dot-com craze have fallen out of favorparticularly the advertising model. Advertising on the

Internet (BusinessWeek, 11/12/07) hasn't turned out to be in the same league as TV or print

advertising, though that is showing signs of changing.

Be sure to explain your model carefully and why you expect it to succeed.

5. What makes it scalable? This refers to your ability to ramp volume up quickly with minimal new

hires. Scalability is another term that became popular during the dot-com boom because the

Internet was believed to provide huge opportunities for scalability. For some businesses, such as

online auctions and travel, the Internet has been a great mechanism for achieving scalability. For

other businesses, like food and toys, the Internet didn't deliver on the promise.

6. How do you know you'll have customers? This is the question entrepreneurs typically answer

most inadequately during presentations. A market study from Forrester isn't the right answer. For

whatever reason, too many entrepreneurs use external market studies to justify their potential

businesses, and neglect all they've done to identify customers and prospects.Investors want to know

about your own surveys (BusinessWeek.com, 11/19/07) or test-marketing initiatives. They'll be on

the edges of their seats awaiting your evidence, and the harder the evidence, the better. The closer

you are to achieving real sales, the better.


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7. How do you connect to customers? This follow-up question concerns your methods of selling to

and maintaining ties with customers. Are you going through retail channels, direct mail, the Web, or

some combination thereof? And if you have customers, do you have standard practices for staying in

contact?

Even more important: What evidence do you have of repeat sales? Repeat sales can suggest that

most desirable of revenue models: the annuity sale, whereby customers buy repeatedly on a long-

term basis.

This is a slide you should think long and hard about. Muster all the evidence you can to demonstrate

which channels work best and what you have learned about customer behavior.

8. Do you have a rainmaker? Investors will want to know whether you have a super salesperson on

board. Being able to point to one or two people with proven sales ability will give comfort to

investors. They know that selling is a very special talent, and they respect it. They also know that too

many young companies, technology companies in particular, don't have that talent on boardand it

makes them uncomfortable.

9. What have you learned from the competition? Note that I haven't asked whether you have

competition or to identify your competitors. That's because investors assume every business has

competitors, and claims to the contrary will worry potential investors.To answer this question, think

about your competitors, what they do well, and what they don't do well. Pointing out competitors'

strengths you would like to emulate will please investors. The more specific you can be, the better.

For example: "One thing that impresses us about Competitor A is its rigorous follow-up with new

customers, inquiring into their likes and dislikes. We would like to go one better by responding

immediately to customer dislikes."

10. What are the risk factors? Every business entails risks, and as in the previous slide,

acknowledging those risks will impress investors. This isn't an area you need to dwell on, as you

should in some of the market and customer matters. But you should be matter-of-fact about the

risksthat your model hasn't been well tested in your particular industry, for example, or that the

competition six months from now is likely to be much greater than it is now.


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11. What are the margins? Here you should provide a synopsis of your financial projections. The

emphasis, though, is on your marginsprofits before administrative expenses and taxes. These

should be highhopefully over 40%but not unrealistically so.

You should also anticipate the question of how your margins will change once the competition heats

up.

12. How realistic is the exit strategy? Your exit strategy is your plan for enabling investors to take

their profits from the company within five years. Young companies most often cite one of two exit

strategies: they plan to be acquired or to go public. Those approaches are fine, so long as they make

sense. For example, you might say you are looking to an acquisition rather than an initial public

offering (BusinessWeek.com, 3/27/07) because your business is in a niche market, and thus would

be most attractive to a large company seeking to enter that market.

Tayloring business plans for investors

Tailoring business plans for investors Presentation Transcript

1. Tailoring Business Plans For InvestorsPresented by David Scholtz30th June 2011

2. Tailoring Business Plans For Investors What is the Point of a Business Plan? The Information

memorandum Structure Process The Financial business plan Top Down or Bottom up 5 Dosand 5 Donts 2

3. What is the Point of a Business Plan?A Business Plan is a written document that describes

abusiness by Objectives, Strategies, Market and Financial forecastsMore specifically it needs

to: Tell the story of the business and the vision Take the investor on your journey Translate your

passion into excitement for the investor Demonstrate the strategic value you create in your

market Speak for you when you cannot 3

4. IM StructureBusiness Plans for investors are like a tapestry a standard structure that tells

your story Executive summary Company description Market analysis Strategy andimplementation Management team Financial planYou can tell the story best when you can answer

theWhy, What, When, Who and How Why This, Why Us & Why Now? 4

5. Pitch ArchitecturePitch Architecture that works for pitches, presentationsand Business Plans

Fractal architecture that you can build out as required What do you do? How are you the same

and how are you different? What is your credibility (experience, insight, technological)? What is

the market problem? What is your solution? What are you known for? How do you leave

people feeling? 5

6. IM ProcessProposition,Vision & Mission Your product and serviceWhat do you enable? What is

the problem and solution?How do you make a difference? Who is your specific client?What is


18/19

compelling you? What makes you credible? Your market, competitors and ecosystem What is the

current fix? Who else is doing this and how are you different? How do you enable the ecosystem? 6

7. IM Process Personality of the business What do you want to be known for? What is the voice of

the business? What is the personality of your customer?Go-to-market strategy You and your

teamHow do you grow the business? What makes your team unique?What is your unfair advantage?

Have you got a track record?Are you changing user behaviour? How do your passions build success?

7

8. Financial Business PlanFinancial plans tell their own story Is it aligned with the IMs story? Do

the numbers talk to your confidence in execution? Have you built scenarios? What are the

assumptions based on (presumptions or grounded?) Are you expecting to change user

behaviour?Top Down versus Bottom Up Top Down is market driven, can you really drive a

market? Bottom Up opens new opportunities and options Investors automatically discount, have

you already discounted? The detail and the assumptions say a lot about you 8

9. 5 Dos and 5 DontsDos1. Map out the sections before writing them2. Define your perfect

user/customer/client & segmentation3. Always ask yourself if each section answers the Why, What,

When, Who and How4. Keep the plan to under 30 pages5. Use external examples and data only

where relevantDonts1. Start with the big market opportunity before the proposition2. Make it

bigger than it is just to please an investors 20x3. Assume the investor knows your market4. Say if we

can get only a small percentage of a big market we can be huge5. Say you have no competitors 9

10. Thank youe: [email protected] w: www.ariadnecapital.com t:

www.twitter.com/dordje b: www.davidscholtz.com

Tailoring business plans for investors Presentation Transcript

1. Tailoring Business Plans For InvestorsPresented by David Scholtz30th June 2011

2. Tailoring Business Plans For Investors What is the Point of a Business Plan? The Information

memorandum Structure Process The Financial business plan Top Down or Bottom up 5 Dos

and 5 Donts 2

3. What is the Point of a Business Plan?A Business Plan is a written document that describes

abusiness by Objectives, Strategies, Market and Financial forecastsMore specifically it needs

to: Tell the story ofthe business and the vision Take the investor on your journey Translate your

passion into excitement for the investor Demonstrate the strategic value you create in your

market Speak for you when you cannot 3

4. IM StructureBusiness Plans for investors are like a tapestry a standard structure that tells

your story Executive summary Company description Market analysis Strategy and

implementation Management team Financial planYou can tell the story best when you can answer

theWhy, What, When, Who and How Why This, Why Us & Why Now? 4


19/19

5. Pitch ArchitecturePitch Architecture that works for pitches, presentationsand Business Plans

Fractal architecture that you can build out as required What do you do? How are you the same

and how are you different? What is your credibility (experience, insight, technological)? What is

the market problem? What is your solution? What are you known for? How do you leave

people feeling? 5

6. IM ProcessProposition,Vision & Mission Your product and serviceWhat do you enable? What is

the problem and solution?How do you make a difference? Who is your specific client?What is

compelling you? What makes you credible? Your market, competitors and ecosystem What is the

current fix? Who else is doing this and how are you different? How do you enable the ecosystem? 6

7. IM Process Personality of the business What do you want to be known for? What is the voice of

the business? What is the personality of your customer?Go-to-market strategy You and your

teamHow do you grow the business? What makes your team unique?What is your unfair advantage?

Have you got a track record?Are you changing user behaviour? How do your passions build success?

7

8. Financial Business PlanFinancial plans tell their own story Is it aligned with the IMs story? Do

the numbers talk to your confidence in execution? Have you built scenarios? What are the

assumptions based on (presumptions or grounded?) Are you expecting to change user

behaviour?Top Down versus Bottom Up Top Down is market driven, can you really drive a

market? Bottom Up opens new opportunities and options Investors automatically discount, have

you already discounted? The detail and the assumptions say a lot about you 8

9. 5 Dos and 5 DontsDos1. Map out the sections before writing them2. Define your perfect

user/customer/client & segmentation3. Always ask yourself if each section answers the Why, What,When, Who and How4. Keep the plan to under 30 pages5. Use external examples and data only

where relevantDonts1. Start with the big market opportunity before the proposition2. Make it

bigger than it is just to please an investors 20x3. Assume the investor knows your market4. Say if we

can get only a small percentage of a big market we can be huge5. Say you have no competitors 9

10. Thank youe: [email protected] w: www.ariadnecapital.com t:

www.twitter.com/dordje b: www.davidscholtz.com

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