the art of tackling investors

The Art of Tackling Investors

by Robert Barzelay

STEP 1

PREPARE

© www.GlobalStrategists.com 2 Robert Barzelay

Investor Presenta0on •  Prepare your investor presenta?on. •  Use Post-‐It notes for your planning. •  Do NOT use PowerPoint or Keynote (yet). •  Outline your thoughts and plans, and s?ck them on the wall.

•  Produce a 1-‐2 page execu?ve summary and a 200-‐250 words teaser.

•  Create presenta?ons of different lengths: of 1, 5, 10, 15, 30 and 45 minutes.


The Team KNOW YOURSELVES •  Your Skills Knowledge & Exper?se •  Your Story Background & Experience

•  Have any (or all) of you ever done this before? Individually? Together?


Market & Compe00ve Intelligence KNOW YOUR MARKETS •  Targets WHO and WHERE are your customers? •  Pain What do your customers NEED? •  Desire What do your customers WANT? •  Money Are customers willing or able to PAY? •  Compe00on WHO and WHERE are they?


Your Product KNOW YOUR PRODUCT •  Features Nice, but least important •  Advantages Versus compe??on + current prac?ce •  Benefits You sell benefits, not features •  Price Can you make a healthy profit? •  Uniqueness Must-‐Have or Nice-‐To-‐Have?


Your Evidence •  Needs Research •  Proof of Market •  Proof of Concept •  Market Issues (regulatory, economies, poli?cs, etc.) •  User Feedback & Results •  SWOT Analysis:

–  Your Company –  Your Compe??on –  The Market Environment

•  Product Valida?on © www.GlobalStrategists.com 8 Robert Barzelay

Your Plans •  Your Objec0ves What do you want to achieve?

•  Your Financials How much will it cost to make & sell your product? How much money will you make?

•  Your Strategies How will you achieve the above? © www.GlobalStrategists.com 9 Robert Barzelay

The Way you Present is as important as What you Present

© www.GlobalStrategists.com 10

STEP 2

LOOK FOR YOUR IDEAL INVESTORS


Matchmaking •  Do lots of research and soul searching. •  Your strategies and financial needs need to match the strategies and expecta?ons of your financiers.

•  Evaluate investors the same way you would evaluate poten?al clients.

•  Do not just accept any investor – even not if you are financially in dire straits.


© www.GlobalStrategists.com Robert Barzelay 13

Most investors will not sign an NDA. Live with it !!

Mentors, referrers and advisors

•  Use them to open doors and to get introduced to poten?al investors.

•  Some, but not all, ask for a retainer, a consul?ng fee and/or shares.

•  Others like to get involved in your business venture, even make a (modest) investment themselves.

•  Make sure that they do more than just pass on a name or business card.


Machers, Schmoozers, Crooks, and Dubious Middlemen

Watch out for the greedy and malicious !!


STEP 3

BE READY BE PREPARED


Your Introduc0on •  What do you do? •  What problem(s) do you solve? •  What is unique about your product? •  How big is the market opportunity?

–  bo#om-‐up, NOT top-‐down

•  How big can your company get?


Your Target Markets •  What and where are your target markets? •  How did you calculate your sales poten?als? •  From where did you get details about this market’s industry growth rate?

•  How did you determine that your product has a high growth poten?al?


The Team Passion – Dedica0on -‐ Commitment

•  Who are the founders and key team members? •  What relevant experience does the team have? •  What key addi?ons to the team are needed, and when? •  Why is the team uniquely capable to execute the company’s business plan?

•  How many employees do you have? •  What mo?vates the founders?


Product •  Why would users care? •  What are the major product milestones & KPIs? •  What are its key benefits & USPs? •  What have you learned from early versions? •  Would you add features to your product? •  If so, what will be the addi?onal benefits? •  Give a demonstra?on of the product.


Compe00on •  Who are your compe?tors? •  What gives you a compe??ve advantage? •  What advantages does your compe??on have over you? •  What are the barriers to entry for newcomers? •  How did you find out about your compe?tors?


Marke0ng •  How do you plan to market your product? •  What are your offline & online MarCom strategies? •  How long does it typically take between the ini?al customer contact and the closing of a sale?

•  What is the cost of a customer acquisi?on? •  What is the projected life?me value of a customer?


Trac0on •  What trac?on do you have already?

–  Trials & Tests –  Demonstra?ons –  Sales

•  How did you get this early trac?on? •  How can this early trac?on be accelerated and translated into (more) sales?


Risks •  What do you see are the main risks to your business? •  Do you have any IP risks? •  Do you have any regulatory risks? •  Do you foresee any financial risks? •  Are there any product liability risks? •  Are there any staffing risks (hiring/resigning)?


The Exit •  What is the likely exit – IPO or M&A? •  Or are you contempla?ng a management buyout? •  How will the valua?on of an exit be determined?


Intellectual Property •  What key IP do you have: patents (applied/pending/issued), trade secrets, copyrights, trademarks?

•  What comfort do you have that your IP does not infringe the rights of third par?es?

•  How was your IP developed? •  Would any (prior) team member or employee have a poten?al claim to your IP?


The Financials •  What are your 3-‐year projec?ons? •  What are the key assump?ons? •  How much equity and debt has the company raised; what is the capitaliza?on structure?

•  What future equity or debt financing will be necessary?


More Financials •  How much of a stock op?on pool is being set aside for employees?

•  When will the company reach breakeven? •  How much will you burn un?l becoming profitable? •  What are the factors that limit faster growth? •  What are the key metrics that the management team focuses on?


The Funds •  How much money do you need? •  What do you think is the pre-‐money valua?on? •  On what basis has this been calculated? •  Will exis?ng investors par?cipate in this round? •  What is the planned use of proceeds? •  How much money would you need in a next round?


Valua0on •  The biggest baple in all funding nego?a?ons:

–  Those that seek money overvalue –  Those that invest money undervalue

•  As entrepreneur you have to: – Make investors clearly understand your business –  Create trust so they will entrust you with their money –  Convince them of the profit poten?als –  Take the lead in your business


Valua0on Methods None are absolutely right. All are based on guess?mates. •  The VC Method: hpp://bit.ly/TTO7IL •  The Berkus Method: hpp://bit.ly/HfeJLj •  The Risk Factor Summa?on Method: hpp://bit.ly/WzxeEU •  The Scorecard Method: hpp://bit.ly/eCYabw There is no perfect methodology for establishing the pre-‐money valua?on of pre-‐revenue seed/startup ventures.


Challenging Ques0ons •  Who believes in you? Can I get in touch with them? •  Which entrepreneurs do you admire? Why? •  How do you know how much money you need? •  Could you build your business with less? •  Tell us about a typical customer that uses, or poten?ally will use your product.


More Challenging Ques0ons •  How do you track trends in your market? •  What will your market look like in 5 years from now as a result of using your product?

•  Have you ever been fired from a job? Why? •  What mistakes have you made in your career? •  What have you learned in your life?


Interes0ng Read hpp://bit.ly/12PlIpF hpp://bit.ly/p7qcn hpp://b.qr.ae/arn1u4 hpp://zd.net/Weahoa hpp://bit.ly/dlbnIo


Rehearse ! Rehearse ! Rehearse ! Rehearse ! Rehearse ! Rehearse !


[email protected] http://www.GlobalStrategists.com

the art of tackling investors

Investor Relations

art of tackling investors

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