TheInvestorPresentation

TheculminationoftheNewVentureChallenge(NVC)isa15minutepresentationtoagroupofdistinguishedinvestors.Fifteenminutesisaveryshorttimetodistillanentirebusinessplananddescribeallthekeyaspectsofyourbusiness.Leavethedetailsforyourwrittenbusinessplan.Thepresentationshouldfocusonthemostimportantpartsofyourbusiness.Becarefulnottospendtoomuchtimedescribingtheproductorservice.Theinvestorsaremoreinterestedinthebusinessmodelandhowyouwillmakemoney.Beclear,conciseandcompelling!

Thepurposeofthistutorialistoprovideyouwithanoutlineforyourpresentationthatwillinsurethatyoucoverthemostrelevantpointsin15minutes.ThetutorialwillalsoprovidefilmclipsofpastNVCpresentationsasexamplesofhowtoconveyyourstorywithpassionandconciseinformation.

Pleasenote:Thisisasuggestedoutline.Giventhenatureofyourbusinessandtherelativestrengthsandweaknessesofyourbusiness,youmaychoosetochangetheorderofthefollowingkeyelements.

Keyelementsofaninvestorpresentation:

1. TheOpening2. ProblemandSolution3. Market4. Competition5. SalesStrategy6. BusinessModel7. Management8. FundingRequest/ExitStrategy9. Closing

Thistutorialwillalsopresentinformationon:

QuestionandAnswersession/AppendixSlides PresentationTechniquesandTips

1. TheOpening

Theopeningofyourpresentationisveryimportant.Peoplemakeadecisioninthefirst30secondsaboutwhetherthey'regoingtolistentoyou.MalcolmGladwellinBlinkdiscusseshowonesmindtakesabouttwosecondstojumptoaseriesofconclusions.Gladwellbelievesthoseinstantconclusionsthatwereachareverypowerfulandreallyimportant.Sobemindfulasyouapproachthefrontoftheclassandbegintomakeeyecontactwiththeaudience.Evenintheseveryfirstmomentsofyourpresentationyouaremakingsomesortofimpressionwiththejudges.

Goalsforyouropening:

Gettheirattention(positivereaction) Givethemareasontolistenfurther Establishcredibility Buildrapport

TypesofOpenings:

a) TheElevatorPitchProvideaquickoverviewofwhatthecompanydoes,howitisdifferentandhowitwillmakemoney.Useananalogytoquicklyconveywhatthebusinessdoesandhowitispositionedinthemarketplace.Example:GreenBuildwillbetoHomeDepotasWholeFoodsistoSafeway.

b) TellaStoryTellastory,apersonalanecdotetodescribeasituationwhereyourproduct/servicecanbeused.Makesurethatyouraudiencecanidentifywiththissituation.Thistypeofopeningdrawsyouraudienceintothestoryofthebusiness.Youcaneasilybuildrapportwithyouraudience.Makesureyourstoryishardhittingandverysuccinct.

c) BuildCredibility:InvestorsforgetthatstudentsoftencometoaMBAprogramwithconsiderableexperience.Ifyouhaverelevantentrepreneurialstartupexperience,takeafewsecondsatthebeginningofthepresentationtointroducetheteamandstateinonesentenceyourexperience.Youwillhavemoretimelateroninthepresentationtoelaborateonthemanagementteam,soatthebeginning,justbuildcredibility.

2. TheProblemandtheSolution

Whatisthecurrentproblem?Andhowdoesyourbusinesssolvethisproblem?

Thesetwoquestionsmustbeaddressedattheveryoutsetofthepresentation.Forsomebusinessesthiscanbequicklyaddressedwithanexample.Formoretechnicalbusinesses,thiscanbeachallenge.Youhavetoassumethattherewillbesomejudges/investorswhodonotunderstandyourtechnologyoryourindustry.Consequently,youwillneedtodescribetheproblemandyourproduct/serviceinaverycomprehensiblemanner.Analogiescanbeusedverywellinthissituation.

Trytoaddresshowpainfulthisproblemis.Themorepainful,themorelikelyyouwillhavecustomerstobuyyourproductorservice.Quantifythepainputadollarvalueonit.

Havingidentifiedtheproblem,nowyoucanpresentthesolution.Determinehowmuchinformationyouraudienceactuallyneedstounderstandyoursolution.Inmanycasestheydonotneedtoknowthedetailsofhowatechnology,productorserviceworks.Throughtheuseofagraphic,picture,anecdoteorsimpleexplanation,succinctlyprovideenoughinformationforyour

audiencetounderstandthebasicprinciplesofyourproductorserviceandhowitsolvestheproblem.

3. TheMarketOpportunity

Nomatterhowgreatyourproductandserviceis,youdonothaveaviablebusinessunlessyouhaveasizablecustomerbaseormarket.Investorswanttoinsurethatyouhavetargetedthemostlucrativemarketsegmentandthatthemarketisbigenoughtoallowforsignificantgrowthandafavorablereturnontheirinvestment.Herearethetopicsthatshouldbeaddressedinthemarketopportunitysectionofyourpresentation.

1. IndustryDynamicsSuccinctlydiscussthefollowingquestionstoprovideanoverviewofthetrendsinthisindustry.

Isthismarketgrowing? Atwhatrate? Whatfactorsareaffectingthisindustry?Technology,regulations,globalization,

consolidation?(Cautiondontdiscusstheveryhighlevelbroadtrendsthatdontaddvalue.Mostinvestorsgetirritatediftheyfeellikeyouareeducatingthemonamarket.Tellthemsomethingtheydontknowthatisveryrelevanttoyourbusiness.)

2. MarketSizeTherearetwonumbersthatshouldbeaddressedtodeterminemarketsize.

a)TheBigPictureNumberThisnumberdescribesthesizeofthisindustrycurrentlyand/orinthenearfuture.Thisnumbershouldgrabtheinvestorsattentionandindicatetothemthatthereishugeopportunitywithinthisindustry.Userevenuenumbers.

Example:Thisindustrywillgrowto$6billionin2010.

b) AddressableMarketItisunlikelythatyourbusinesswilltargetcustomersthroughouttheentireindustry.Consequently,itisimportanttosegmentthemarkettoshowthesetofcustomerswhowillmostlikelybuyyourproductorserviceyouraddressablemarket.Inapresentation,oftenaslideisincludedthatshowsthistopdownmarketsizing.[ViewPowerPointslide#1]

Avoidstatingthatthemarketforyourproductorserviceishugeandifyoujustcapturex%,youwillbea$Xbillioncompany.Suchastatementdoesnotshowtheinvestorsthatyoutrulyunderstandyourtargetmarketorhowyouintendtocapturethatx%.

MarketingandSalesStrategy

Nowthatyouhaveidentifiedyourcustomer,howareyougoingtoselltothem?Willyoubeusinganinhousesalesforce,resellers,theinternet?Whatchannel(s)isoraremostappropriateforthisbusiness?Howdoyouknowthis?Whatdoesyourcompetitionuse?

Outlineyourmarketingstrategyandtheuseoftradeshows,collateralmaterial,directmail,PR,salesincentives,etc.Thisinformationwillprovidetheassumptionsbehindyourmarketingcosts.

Doesyourproductneedsupportandservice?Doyouneedtohelpyourcustomerunderstandyourproductbeforebuying,duringinstallationandinuse?Whowillprovidepreandpostsalesupport?

4.Competition

Avoidthesestatements!Wehavenocompetition.Wehavethefirstmoveradvantage

Ifyoudonothaveanycompetitionitmeansthatyoudonthaveanycustomers,youhavenotdoneenoughresearchoryouwillhavecompetitionsoon.

Inmanycases,themostcriticalcompetitioniscurrentbehavior.Whatdopeopleusenow?Willtheychangeandadoptyourproductorservice?Also,beawareofsubstitutes.Howelsecanthecustomersolvetheproblemyourproduct/serviceaddresses?

Analyzeyourcompetitionwithrespecttokeyfeaturesandbenefitsofyourproduct/service.Howdoesyourcompetitionrateacrossthesefactors?Includethosebusinessesthatarenotonlyindirectcompetitionwithyourbusiness,butalsoothercompaniesalongthesupplychainthatcouldbeyourcompetitioninthefuture.Inaddition,rememberthatsomeofthecompetitioncouldturnintopartnersoracquireyourbusinessinthefuture.Discussthesepossibilitiesaswell.[ViewPowerPointslides#2and#3]

5.BarrierstoEntry

Whatareyourbarriers to entrythatwillkeepothersfromduplicatingyoursolution?Whatdoyouhavethatisproprietary?Barrierstoentrycanincludeintellectualproperty,customercontacts,timealreadysunkintodevelopment,etc.

6.BusinessModel

Thissectionisoneofthemostimportantsectionsofyourpresentation.Howareyougoingtomakemoney?Howwillyougenerateenoughprofittointerestaninvestor?

1) Revenue:Thereareseveralquestionsthatmustbeaddressedinordertoconvinceinvestorsthatyouwillgeneratesignificantrevenue:

a) Pricing:Howdoyoupriceyourproduct/service?Howdoesthiscomparetoyourcompetitionortoothersubstitutesinthemarketplace?Example:Ifyouareasoftwarecompany,youmighthaveapriceforcustomizationandinstallation,anannualsubscriptionorlicensingfeebasedonthenumberofusers,andanotherfee

forupdatesandmaintenance.Areyourcustomersalreadyfamiliarwiththispricingscheme?Haveyoutestedthemarkettoseeifcustomerswouldpaythisprice?

b) SalesCycle:Howlongdoesittaketoconvertaleadtoasale?Ifyouunderestimatethelengthoftimetocompleteasale,youcouldrunoutofmoneyveryquickly.

c) RevenueAssumptions:Baseyourassumptionsonbottomsupmarketsizing.Inotherwords,lookatyourtargetmarketandprovideassumptionsonhowmanysalesyoucanactuallymake.Example:Youaretargeting10clientsinYear2andfrompasthistory,youknowyoucanconvert40%ofyourleadstosales.Themorespecificyourrevenueassumptions,themorebelievabletheyaretothejudges/investors.

d) Scale:Howwillthisbusinessmakemoneyovertime?Willthegrossmarginscontinuallyincreaseovertime?Howwillthebusinessexpandgeographically?

2) ExpensesShowoneslidethatshowstheuniteconomicsofonetransaction.[ViewPowerPointslide#4].Iftheproductrequiresfurtherdevelopment,youmaywishtoshowaproductdevelopmenttimelineandthecoststhatwilloccuratdifferentpointsintime.

3) ProjectionsNowthatyouhaveprovidedtheassumptionsforyourrevenuemodel,youcanpresentthefinancialprojectionsforthenextfewyears.Itisrecommendedthatyouillustratetheprojectionsgraphicallyinthepresentation.Showtheprojectedrevenue,expensesandnetincome.Linegraphsofthesethreeelementswillindicatethegapincashflowandthebreakevenpoint.Youcanincludemoredetailedfinancialsintheappendixincasethereisaquestionregardingyourprojections.[ViewPowerPointslide#5].

Ifyouhavedifferentstreamsofrevenuethatvaryovertime,youmaywishtopresentthisrevenuegrowthinadifferentway.[ViewPowerPointslide#6].

7.FundingRequest

Yourfinancialprojectionsshouldillustratethegapincashflowandthereforeapproximatetheamountoffundingyourequire.Itisprudenttoaskformoremoneythanisindicatedsinceformostbusinessesthisamountisalwaysunderestimated.Youshouldalsomentionthatyouareaskingforafirstroundoffinancingthatshouldtakeyoutoaparticularbenchmarkandthatyouknowyouwillrequireadditionalroundsoffinancinglater.

Prepareaslidethatshowstheuseoffundsandthesourceoffunds.Thetotalsforboththesetablesshouldbeequal.Intheuseoffunds,itisbestnottoaggregatethesalaryfigure.Instead,assumethatsalaryamountsarecontainedwithinthebudgetsallocatedformarketing,technologydevelopment,etc.Intheuseoffundstable,theinvestorswillwanttoseehowmuchthemanagementteamhasinvestedtodateinthebusiness.

8.ExitStrategy

Theinvestorsultimatelywanttoknowhowtheywillobtainsubstantialreturnontheirinvestmentiftheyinvestinthecompany.Ifyoucan,providecomparablesofsimilarcompaniesthathavebeensoldordoneanIPO.

9.ManagementTeam

Youhavefinishedpresentingwhatyouwanttoaccomplish,nowyoumustconvincethejudges/investorsthatyouhavethemanagementteamthathastherightexpertiseandexperiencetoexecutesuccessfully.

Toooften,presentationsspendtoomuchtimeondescribingalltheaccomplishmentsoftheirmanagementteamandtheirboardofdirectorsand/oradvisors.Itisimperativethatyoufocusonthoseachievementsorexperiencesthatrelatedirectlytothebusiness.Thereisalsoatendencytoplacetoomuchtextonthemanagementslideaspeopletrytorecreatefullresumesontheslide.Onceagainhighlightkeypastpositionsandnotetheircurrentpositioninthebusiness.Verballyyoucanhighlightthekeyachievements.

CreateoneslideforthemanagementteamandoneslidefortheBoardofDirectors/Advisors.ItisappropriatetodiscussaholeinyourmanagementteamoronyourBoardthatyouhopetofillwiththeassistanceofyournewinvestors.

10.Closing

Theclosingisoneofthemostimportantpartsofyourpresentation.Thisisthepartwhereyoucancreatealastingimpressionwiththejudges/investors.Startwithaveryquicksummaryofyouraccomplishmentstodateand/orthekeyfactsthatyouwanttheinvestorstoremember.Showyourstrengthandpassionandconvincetheinvestors/judgesthatyourcompanyprovidesanopportunityforreturnsthattheycannotaffordtomiss.

11.QuestionandAnswerSession

ThereisalimitedamountoftimefortheQ&Asessionafteryourpresentation.Itisimportanttousethistimewisely.Thelastthingyouwanttodoistobelaboroneissue.Haveonepersonontheteamansweraquestionsuccinctlyandtothepoint.Forsomeanswersabriefcommentcanbeaddedonbyateammembertoshowthatyouareworkingasateam.Thenmoveontothenextquestion.

Anticipatequestionsandprepareforthem.Someappendixslidesyoumightconsiderpreparinginclude:

1) RisksandMitigation.Thejudges/investorsoftenaskaboutpossibleriskstothebusiness.Prepareaslidethatliststhekeyrisksforyourbusinessandhowyouwillmitigatethem.

2) FinancialStatementsandProjections:Havethedetailsofyourfinancialsonaslidesoyouarereadytoansweraparticularfinancialquestion.

3) Technology:Duringyourpresentationyouwilltalkaboutyourtechnologyonahighlevel.Ifyouhaveinvestorsthataresavvyaboutyourtechnology,youcanpreparesomeslidesthatprovidemoreindepthdescriptionaboutyourproductorservice.

Theinvestorsalsorealizethatthebusinessisstillindevelopment.Acknowledgethatthereareholesinthemanagementteam,resources,sublicensestoadditionaltechnology,etc.

12.PresentationTechniquesandTips

Youmusthavepresenceandshowpassion!

Showyouarecommittedandengagedinyourface,voice,gesturesandyourstance.

Theimpactofatypicalpresentationis55%visual(howyoulook),38%vocal(howyoutalk),andonly7%verbal(whatyousay).Inotherwords,youdon'tdeliverpresentations,youperformthem.

a) VerbalKeepsentencesshortandtothepoint.Youneedtosoundintelligent,powerful,polished,articulate,andconfident.Intoday'scompetitivemarketthesequalitiesarenotoptional,theyareessential.Atechniqueforbeingmoreprofoundistouseshort,simpledeclarativesentencesandtocutoutuselesswords. Usesimplelanguage.Avoidacronymsandjargon Useactiveverbs Usecolorfulimagesandusefulanalogies Practicepausingtogivetheaudiencetimetoabsorbwhattheyjusthaveheard Voice/verbalenergizing Slowdown Varypace

VoiceTools

o Pitchhighorlowo Tonesomber,enthusiastico Inflectionhowoftenyouchangeyourpitchorvolumeofawordforemphasis

lendscolorandinterestinyourvoiceo Articulationclearpronunciationhelpseffectivecommunication

b) Bodylanguage:WheredoIputmyhands?

Dos

Usenaturalmovementsyouwoulduseinconversation Varyyourhandgestures Standinfrontoforonthesideofthepodium,closertoyouraudience Move

StandtallandconfidentDonts

Dontforceasmile Dontrockbackandforth Dontletarmsdroopatyourside Dontcrossyourarmsinfrontofyourchest Dontjigglecoinsinyourpocket

c)Eyecontact

Dos

Lookonepersonsquareintheeyeandholdthatcontactforatleastfiveseconds,oronecompletethought."It'salmostlikehavingminiconversationswithspecificmembersoftheaudience."

Donts

Dontstareaboveeveryonesheads Dontpickononefriendlyface Don'ttrytomakeeyecontactbybecomingasprinklersystemthatscanstheaudience

fromlefttorightandbackagain.d)Slides

Dos

AvisualaidshouldAid. Useslidestosupportandenhance,notduplicateordominate. Useslidestodramatizeandclarify Becreative Uselightlettersondarkbackground,orviceversa Uselargefonts Projectyourslidesonascreentotestthecolorandreadabilityoftheslide

Donts

Donthavetoomuchtext Maketheslidescomplicatedandthereforedistracting Dontmaketheslidebackgroundtoobusy Dontreadslides

e)Prepare

Prepare,prepare,prepare

WinstonChurchillsaidthathewouldprepare6to8hoursfora45minutepresentation

Practicewithyourgroupandthenpresentinfrontofpeoplewhodonotknowyourbusiness.Practicewithyourmentors.

Knowyouraudience.Dosomeduediligenceontheinvestors/judges.Knowwhattypesofbusinessesthattheyhaveinvestedinthepastandwhichonesweresuccessfulandwhichoneswerenot.