Calling All Angels: What Product Managers Need to Know ... · •Hipster, Hacker, Hustler •Board...
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Calling All Angels: What Product Managers Need to Know About Investment Pitches Rosalee Gordon
Transcript of Calling All Angels: What Product Managers Need to Know ... · •Hipster, Hacker, Hustler •Board...
Calling All Angels: What Product
Managers Need to Know About
Investment Pitches
Rosalee Gordon
Rosalee Gordon
Product Management Angel Investment
InvestorDeal Screening
Director of Diversity
If you are a Product Manager …
You know more about AngelInvesting than you think.
The Business is Your Product
Product Manager CEO
“Product” Product Business
“Customer” Customer Investor
Exchange of Value Revenue $ for Product Investment $ for Shares
Objectives
• Overview of Angel Investing
• Product Manager’s contribution to successful pitch
• Pitch Session!
Outline
• Sources of investment money
• Who are Angels?
• 6 components of a pitch
• Example pitch video
• Pitch session
Sources of Investment Money (pre-VC)
• Founder
• Friends and family
• Government grants
• Bank loans
• Angel
• New … equity crowdfunding
Typical Investment Rounds: Valuation & Investment
Source: Randy Thompson, VA Angels
Who are Angels?
• Accredited investors
• Former entrepreneurs
• Interest in early stage, scalable companies
• All different
• “Smart money”
• Value authenticity and coachability
“The Ten Things Angel Investors Wish Entrepreneurs Knew About Angels”
www.rosaleegordon.com
“Required reading for anyone looking to raise Angel capital.”
- Kristina MilkePresident, VA Angels
The 6 Componentsof the Pitch
1. Problem/Solution
2. Customers
3. Technology/IP
4. Team
5. Financials/Deal
6. ExitTotal time: 10 minutes
Product Manager Contribution
Product Manager Contribution
High
1. Problem/Solution
1. Problem/Solution
• Problem or Opportunity• What problem are you solving?• Degree of customer pain/need/desire
• Value Proposition• Benefit of your solution
• Product Solution• Screen shots, pictures, diagrams (minimize text)• How better than alternatives• Key features/benefits• Stage of development and roadmap• NOT a product demo
Product Manager Contribution
High
1. Problem/Solution
2. Customers
• Size of market• Initial target market
• Market potential
• Current customers/pipeline
• Buying behavior. Sales cycle.
• Marketing, sales, and distribution strategies.
Product Manager Contribution
Medium High
2. Customers
3. Technology & IP
• Core technology
• Protection• Patents, provisional patents
• Software: high number of users (Facebook)
• Long term contract with large customers
Product Manager Contribution
Medium Low
3. Technology/IP
4. Team
• Management Team• Hipster, Hacker, Hustler
• Board of Directors• Corporate governance• Industry expertise, legal, finance
• Board of Advisors• Supplement skills of core team• Sales and marketing, technology
• Consider Diversity
Product Manager Contribution
Low
4. Team
Why is Team so important?
• Companies receive financing for three main reasons:
• Brand name CEO (Elon Musk)
• High growth sales
• Strong team
5A. Financials
• Revenue Model - How will you make money?
• Projections• Revenue• Gross margins (consider distribution)• Earnings (EBITDA)• Cash flow• Point out cash flow positive point, positive earnings point
• Assumptions• Size of addressable market• Percent of market we can obtain• Price • Cost – Product, Sales & Marketing, Overhead
• Must show potential for “hockey stick” growth for angel money.
Medium High
Product Manager Contribution
Medium High
5A. Financials
“The Business Plan and the Financial
Model must tell the same story”
Scalable vs Incremental Growth
Revenue and Earnings
5B. Deal
• Total investment required• Minimum per investor
• Use of funds and expected outcome • Hypothesis tested, plus 6-9 months to raise next round.
• Capital structure• Equity or debt
• Terms • Equity: Company valuation, % of company for $ invested.• Debt: interest rate, when payable, convertible?
Low
Product Manager Contribution
Low
5B. Deal
“Convertible debenture, 25% discount, $3 million
cap, 8% interest rate, convert next round”
How Do You Value a Pre-Revenue Company?
• Can’t use multiple of EBITDA
• Comparables
• Berkus valuation formula
$0 – 500 K Idea
$0 – 500 K Protection
$0 – 500 K Prototype
$0 – 500 K Customers
$0 – 500 K Culture/team
$2.5 Million max Plus private capital invested, plus sales in last 18 months
6. Exit Strategy
• Not afterthought, not optional.
• Return capital to investor within 5 – 7 years.
• 5X – 10X return
• Exits• Financial buyer
• Strategic buyer
• IPO, RTO (rare)
Low
Product Manager Contribution
Medium Low
6. Exit
Hearts – Minds - Wallets
Pitch Video: Pieter Boekhoff, iMirror
• 2 min pitch: https://www.youtube.com/watch?v=hIrE3J0w3sE
• 500 Startups / Deck: http://www.slideshare.net/500startups/500s-demo-day-batch-15-nobal-technologies
Welcome to Meet Up Angels
For Further Information
Rosalee Gordon
www.rosaleegordon.com
VA Angels
www.vaangels.com
VA Angels Basecamp program
