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Lecture 7 Business Pitch Mustafa Ergen

Today

¡  Pitch template

¡  Examples

Koc University ENGR401 - Entrepreneurship and Innovation Lecture

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A good pitch 14 Key slides, and what each should say.

Adapted from Baris Karadogan’s slides. www.karadogan.net Koc University ENGR401 - Entrepreneurship and Innovation Lecture

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1-Mission Statement

¡ One liner about the company

¡  “Amazon.com for dating”

¡  “Why should I be interested in this?”


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2-Market

¡  How big is it? How is it growing?

¡  100M singles in the US, 150M in Europe ¡  Online dating is $20/mo

¡  “Can I build a billion dollar company?”


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3-Problem

¡  How big is the customerʼ’s problem?

¡  Finding a soul mate is hard, takes time.

¡  “Can I get good gross margins?”


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4-Solution To Problem

¡ What is your unique solution?

¡ We will build an accurate matching engine.

¡  “Why hasnʼ’t anybody done this before?”


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5-Team

¡ Name ¡  Experience

¡  Built a service and got 10M subs before.

¡  “Would I bet my childrenʼ’s future on them?”


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6-Technology

¡ What is the key technology? Is it defensible?

¡  Patented accurate matching engine.

¡  “Will it take 1 or 5 years to do it?”


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7-Customers

¡ Who is paying for the product?

¡ We launched and have 200K users.

¡  “Does the value proposition hold water?”


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8-Per Customer Economics

¡ Most Important Slide…

¡  Universal across all businesses ¡  What will customers pay?

¡  What is the cost of goods?

¡  What are costs to acquire customer?

¡  What are costs to service customer?

¡  What is churn?

¡  “Whatʼ’s a customer worth?”


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9-Go To Market

¡  How do you get in front of the customer?

¡ We advertise online.

¡  “How will the channel affect the company?”


Companies have to be innovative with their business model and go-to-market strategies in addition to their technologies. In most cases, it won’t be enough to have a superior technology – you also have to have a scalable means of distributing that technology, ideally leveraging existing distribution channels or co-opting new ones from adjacent markets.

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10-Milestones

¡ When is beta, when is product ready?

¡  This round will get us to 2M users.

¡  “Where will this financing get me? Can I exit or get a step up?”


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11-Financials

¡  Income Statement, Balance Sheet, CF

¡ Our numbers realistic even if they are off by 2x.

¡  “Are these numbers credible?”


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12-Competition

¡  2x2 matrix ¡  Most important variables in the axes

¡  It will take 3 years for others to catch up.

¡  “Does this team understand their competition?”


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13-Financing History

¡  How much money raised to date? What are you raising now?

¡ Weʼ’ve been frugal and will continue to be so.

¡  “Who are these investors? Do I trust them?”


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14-Why This VC?

¡ Why do you want this investor?

¡  You can help us with xyz relationships.

¡  “Flattery will get you anywhere!”


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Rules for Slides

¡  1. In your slide deck, remember to use the faces of your employees. Do not just list a bunch of employee names. Remember that investors are investing primarily in a team of people. Make sure to feature them and reinforce it.

¡  2. Keep it simple and the less text the better.

¡  3. Make sure your slide deck communicates a story. Sure, the product and team are great, but you want to share the journey and offer the investors a ride.

¡  4. Never read your slides. The potential investor is trying to understand who you are and how well you can sell your vision. Reading from your slides removes all passion from the presentation.

¡  5. Slides should have supporting data only. Remember what you say is what counts the most; not just what is on your slides.

¡  and most importantly:

¡  6. Slides can’t look into peoples’ eyes. You can. Your eyes help sell your vision, passion, enthusiasm, and most importantly, the journey you want to share with the potential investor.


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Example Short

http://techcrunch.com/2010/11/02/365-days-10-million-3-rounds-2-companies-all-with-5-magic-slides/ Koc University ENGR401 - Entrepreneurship and Innovation Lecture

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Supporting Slides

¡  In depth background of each team member

¡ A couple existing customer case studies outlining value proposition

¡ A couple slides on customer acquisition strategy

¡ Deep technology overview

¡  Target customer profiles

¡ Market size opportunity


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Example Long


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Startup Pitch

Example Company: ZapMeals.com

“Closing the gap between your mouse and your tummy ”

10 points 1.  Mission 2.  Problem 3.  Solution 4.  Market Size 5.  Business Model

6.  Proprietary Tech 7.  Competitors 8.  Marketing Plan 9.  Team 10. Financing

Koc University ENGR401 - Entrepreneurship and

Innovation Lecture

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Company & Mission •  ZapMeals is an online meal order & delivery service

matching hungry consumers with great local food preparers. We’re “eBay for takeout orders”.

•  Our mission: ‒  help people make, deliver, & eat great fast food.

•  Our promise: ‒  we don’t make “fast food” great; we make great food fast.


Innovation Lecture

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Problem: Fast Food… Isn’t Either.

Preparers •  Is there a market for my

cooking? •  Restaurants have high

startup costs •  Delivery is tough to do

fast, warm, & well

Consumers •  Tough to find good fast

food •  What’s the best /

cheapest / fastest place to order from?

•  It’s been 30 minutes ‒ where’s my order?


Innovation Lecture

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The ZapMeals Solution •  Help part-time / small-time cooks get started in the food business; quickly & inexpensively.

•  Help consumers find great fast food; search by cuisine, price, rating, & delivery time.

•  Orders are picked up and delivered by network of independent agents; tracked online real-time via Google or Yahoo Maps.


Innovation Lecture

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Screenshots / Demo


Innovation Lecture

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Innovation Lecture

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Innovation Lecture

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Size of Market Top Down •  $511 Billion spent dining out annually

‒  Restaurant Association of America.

Bottom up: •  100M people eat out every day •  Today ̃4% of meals ordered online (=4M orders/day) •  In 5 years 25% of all meals ordered online (=25M orders/day) •  Average takeout order cost is $14 •  Available Total Market Size:

‒  $350M daily ‒  >$125B annually


Innovation Lecture

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Business Model •  Transactional:

‒  charge a 15% food prep fee (min $1) ‒  charge a 15% food delivery fee (min $1)

•  Advertising: ‒  charge small preparers by click-thru (SEM for food) ‒  charge larger preparers for premium / sponsored listings

•  Supplies, Equipment, Insurance: ‒  provide supplies, education for ZapMeals preparers ‒  free licensing to ZapMeals preparers who buy $250 eqpmt ‒  insure against food inspection issues via large group


Innovation Lecture

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Technology •  ZapMeals has developed a proprietary least-cost

routing & matching algorithm for ordering & delivery

•  Our Secret Sauce:”Search by Takeout Time” ‒  estimated food preparation time (historical) ‒  delivery distance (how far away ‒  delivery provider (on-time record) ‒  show delivery stats real-time via Y! or G Maps (+ GPS)


Innovation Lecture

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Competitors •  Online

‒  Waiter.com ‒  CampusFood.com ‒  Delivery.com ‒  Ehungry.com .. .. ‒  all of above source from restaurants *only*

•  Offline ‒  McDonald’s ‒  KFC / TacoBell ‒  Subway .. .. ‒  Your Mom J


Innovation Lecture

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Marketing Plan •  Partner with notable foodie bloggers •  Adwords Campaigns to regional metros •  Generate SEO traffic via food listing pages •  Distribution Partnership with Tastyr.com

‒  700 food preparers in SF ‒  Q3 Rollout to 3-4 West Coast urban areas

•  Order Discounts for Reviews & Referrals: ‒  “Get $3 off your order if you write a review” ‒  “Delivery is free if you refer 3 friends!”


Innovation Lecture

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Team •  Wayne Lambright, CEO & Cofounder

‒  10 years community site development / online sales ‒  5 yrs SW dev Macromedia Dreamweaver / UltraDev

•  Ivan Krasnov, CTO & Cofounder ‒  BSEE, Taganrog State Univ. of Radio engineering (TSURE) ‒  7 yrs SW dev in SEI Level 5 organization ‒  5 yrs exp managing overseas development teams


Innovation Lecture

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Financing •  Raised $250K Seed round in Jan 07

‒  Gil Penchina, CEO Wikia (ex-eBay) ‒  Jeff Clavier, SoftTech VC (Userplane, Truveo, MyBlogLog) ‒  Dave McClure (ex-PayPal, SimplyHired)

•  Seeking $1.5M Series A round ‒  $4.5M pre-money valuation ‒  targeted closing Sept 15


Innovation Lecture

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OOPS!

•  Just Kidding •  SuperNova 2007 J


Innovation Lecture

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Example Long


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Cover Slide

NAME, COMPANY EMAIL

Aidan Nulman

[email protected]

Presented to:

Contact:

Slide title

The Team

Aidan Nulman

Business Generalist

• University of Toronto (Psych) • 17 years industry experience • Loves Darkwing Duck

bnotions

Development Team

• Stuff they do • Clients of theirs • Their location • Other?

Jet Cooper

Design Team

• Stuff they do • Clients of theirs • Their location • Other?

Problem 1

New York City spends over $80,000,000/year on inefficient

public security

$$$ 60%

40%

Solution 1

HeroLink pairs superheroes with cities for cheaper and efficient

public security

$ 95%

5%

Problem 2

Superheroes can’t easily navigate their professional circles

??? ?

?

HeroLink helps superheroes better track their professional

relationships

Solution 2: Collaborative Suite

Like a LinkedIn for superheroes!

Solution 2: Collaborative Suite

Stop:

Demo-time.

Target Market

Superheroes

(5,000)

Major cities

($80,000,000 per)

Justice Leagues

(250)

HeroLink will serve the following markets:

Revenue Sources

Money comes from subscriptions and

commissions Hero League City (sub.) City (comm.)

Cost Free! $100/month Based on size 5% of deals

Features

•  Private social networking for superheroes

•  Recommendation •  Health, city

updates

• Private workspace for your league (up to 10 members)

• Subscription for city officials to see information • Deals limited to $50,000/year

• Subscription for city officials to see information • Can do deals with all heroes’ price ranges

Acquisition

•  Hero conventions •  Skywriting •  Bus banners

Individual sales to League leaders

•  Direct mail •  Affiliate program

•  Direct mail •  Affiliate program

Competition

Competition is avoiding this niche’s unique needs

YouPhonics LinkedIn Facebook City of Heroes

Connect with peers x x x Protection from KNOWN villains x x x x

Protection from ALL villains x x

League support x x x

Fanbase growth x x Connect heroes with cities who need ‘em x

Go to Market

3 phases:

Hero adoption

(0-9 months)

• Skywriting for flying heroes • Bus ads for poor heroes • Booth space at hero conventions

City platform

(3-12 months)

• Sign on 5 beta cities • Build platform to their specs

City rollout

(12-24 months)

• Publicly release city platform through city halls

• Affiliate program

• Direct mail to city halls

To Date

Progress on multiple fronts

Cities

• Letter of intent from Mayor of New York • Montreal, Toronto, and Chicago signed on as beta cities

Heroes

• 10 heroes signed on already • Includes Batman, Darkwing Duck

Technology

• YouPhonics platform built, ready for launch

• State of the art villain detection system approved by JLA

Revenue Projections

Up and to the right!

Investment Sought

HeroLink is looking to raise $250,000 - $400,000

Personnel

• 3 developers • 1 designer • Myself

Web services

• Hosting

• Bandwidth

• Email

Miscellaneous

• Office space/tech

• Legal fees

• Travel

• Marketing

• Contingency

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Closing Slide

A Good Venture Pitch

•  Hi, I’m … From ….

•  The problem we’re solving is

•  Our solution is

•  Our target market is

•  We will acquire customers by

•  We make money by

•  Our key competition is

•  We’re better because…

•  Our team is…

•  What we’ll do next is…

•  Currently, we are seeking…

•  To summarize…

“What is the VC is thinking?”

A Good Venture Pitch

¡  Hi, I’m … From ….

¡  The problem we’re solving is

¡  Our solution is

¡  Our target market is

¡  We will acquire customers by

¡  We make money by

¡  Our key competition is

¡  We’re better because…

¡  Our team is…

¡  What we’ll do next is…

¡  Currently, we are seeking…

¡  To summarize…

“What is the VC is thinking?” Koc University ENGR401 - Entrepreneurship and Innovation Lecture

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