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SEED FORUMPITCH

CONTENT & TRAINING

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Itinerary

• Methodology

• Content – the investment proposal

• Presentation skills

• Presentation style

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On Methodology

• Nothing left to chance

• More than 300 WW SF seminars conducted

• More than 350 investor conferences

• 15-25% selected presenters get funded

• Fast and effective transfer of accumulated collective knowledge in VC

• Materials and training technique developed by phd of Entrepreneurship and practitioners fund managers

• “Pressure Tank” training methodology

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Timing

• 15-30 sec. “Power Pitch”

• 3 min Large conference format

• 5-7-10 min Pitching contest

• 15-18-20 min TED talks format

• 30-45 min Road show format

• 1,5 hours Academic lecture format

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Development of pitch

1) Make standard presentation according to investors mind-set

2) Find the trigger points / value drivers

3) Practice standard presentation

4) Make your presentation special

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On Content

• Investor presentation, not Product presentation

• Correspond with Investor’s mind-set

• Communicate professional (not amateur) approach

• Communicate deep understanding of matter

• Prove your commitment & dedication

• Be focused and convincing

• Present it as a ”Super profit” case

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Content

The overall focus of the pitch should be on your corporate VALUE DRIVERS – factors that increase the value of yourcompany

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Value drivers

• Industry sector (size, growth, margin etc.)?

• Commercial competence in the team?

• Team members – previous entrepreneurial and exit experience ?

• Intellectual Property?

• Scalable business model? Disturbing technology?

• Great net profit? Legislative requirement?

• Positive balance sheet?

• Recurring revenues?

• Creating revenues already?

• First movers advantage?

• Shorter exit period than 3 years?

• Market disturbing exit strategy ?

• Comparable exits?

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Slides

7 min PowerPoint presentation of 10-14 slides:

1) WHAT IS YOUR BUSINESS?

2) WHAT’S IN IT UNIQUE?

3) WHY DOES IT MATTER NOW?

4) WHO IS YOUR TEAM?

5) WHAT IS THE MARKET?

6) WHAT ARE YOUR COMPETITIVE ADVANTAGES (MATRIX)?

7) WHAT IS YOUR BUSINESS MODEL?

8) WHAT ARE THE KEY BUDGET FIGURES?

9) WHAT IS THE CAPITAL NEED AND USE OF INVESTED FUNDS?

10) ARE THERE RISK FACTORS AND HOW DO YOU DEAL WITH THEM?

11) WHAT IS THE EXIT STRATEGY? WHEN WILL YOU EXCERCISE IT?

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This is your Power Pitch as the main teaser. It should explain your business with not more than 15 words and focus on the value drivers which are the main reasons why the investor will invest

• Visualize your product or service

• Name it’s most important characteristic

• Find sticky wording or comparison

1. What is your business

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2. What’s in it unique

State and prove uniqueness of your product, service or technology – design, quality, functionality, uniqueness of production method, application or distribution

• What is your Intellectual Property?

• What is your Patent situation - Patent pending?

• Trade mark protection?

• What is your IP-strategy?

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3. Why does it matter now

Stregth of the opportunity (right time to the market) is the most prized factor on investor’s final investment judgement

• New invention commercialization

• Market maturity

• Booming industry sector

• New application of an innovation already approved by the market

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4. Team

Answer – why does exactly this team will make it happen fast and furious? Present the main persons in your team.

• Focus on famous personalities if any

• Relevant competence, personal achievements

• Previous entrepreneurial and exit competence

• Financial and commercial competence etc.

• Name Advisory Board if any

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Investors judgement on team

Investor’s judgement of entrepreneur's (Team’s) potential:*

1) Strength of opportunity

2) Strength of entrepreneur

3) Perceived passion

4) Entrepreneur’s education, experience & style

*Carmine Gallo «Talk like TED»

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5. What is the market?

Investors prefer to know how will you acquire a large segment in a specific market niche not how large is the total market

Be specific!

• What is your market niche?

• Where is it?

• How do you get there?

• Who are the customers?

• Specific distribution strategy?

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6. Competitive advantages

Why are you better than your competitors? Maybe you could compare your company vs. your competitors in a competitive matrix? Are you problem-solver or market-maker?

• Which problem are you solving?

• What is the market need?

• Is there a Blue Ocean situation?

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7. Business Model

How are you earning money now? Are there any additional Business Models to be implemented with your product or service in the future?

• Manufacturer and wholesale

• Distributor and Retail sales model

• The Franchise model

• Subscription model (re-occurring revenue)

• Advertising model

• The Direct Sales model

• The Pay as You Go model

• The Internet Bubble model

• The Affiliate model

• The Bait and Hook (Razorblade) model

• Premium with add-ons

• Auction model

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8. Key Budget Figures

What is your financial status? Can you show historicnumbers for turnover and profit the previous 3 years? Showyour main budget numbers for turnover and profit the next3 years

kEUR 1st Year 2nd Year 3rd Year 4th Year

Revenues 255.00 520.00 900.00 1100.00

Costs 329.00 350.00 400.00 650.00

EBITDA -74.00 170.00 500.00 450.00

Investment 150.00

1st Year 2nd year 3rd Year 4th Year

Revenues 255.00 520.00 900.00 1100.00

Costs 329.00 350.00 400.00 650.00

EBITDA -74.00 170.00 500.00 450.00

-200.00

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00

kEU

R

CF Forecast

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9. Capital need

Estimate your capital need and main purposes of use of the invested funds

• Estimate capital need for 3 years in-to the future

• Separate out-side capital need from future internal CF

• Be detailed and specific on expenses

• Be real on costs, investigate market

• Don’t be too shy asking

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10. Risk factors

If you should at all include risk factors you should explain how each of them will be eliminated.

Do not include general but only special risk factors for you business.

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Every financial investor wants to know upfront how he will get out of your business at a time. You should demonstrate your understanding of that matter.

You earn money on each investors’ entry or exit!

• Is it a trade sale – Brands, LOGOS

• Second stage financial investor, buy-out fund

• Initial Public Offering (IPO)

• Do not concentrate on MBO

• Do not need to stipulate any

• Return of investment (ROI) or valuation.

11. Exit strategy

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Design

• The first - Power Pitch slide with the company Name, Logo and self-explanatory graphic of the product or service

• Last - the logo and the contact details

• Use bullets, not verbatim

• More graphics and pictures, less words

• Font size – no less than 20’

• Max 6 bullets per slide, 6 words per bullet

• Stick with one font and one sizeHans Rossling, Gapminder

iOS KeyWord

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Language

Your language could lift you or kill you and your presentation...

• Speak loud, clear and emotional

• Speak short sentences and an exact pronunciation

• 190-240 words per minute

• Don’t mambo the key words in your presentation

• Make short pauses to punch key wards

• Don’t use too technical or too scientific language, terms, and abbreviations without explanation

• Explain difficult concepts with simple and well known comparisons

• Don’t ask questions!

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Body language

Charismatic business professionals have great body language – acommanding presence that reflects comphidence, competence,and charisma

• Audiences love «open» and patronizing gestures

• Complex thinkers use complex gestures and those provide comphidence in the speaker!

• Hands in pockets – uninterested, bored, uncommitted, nervous

• Mannerisms communicate lack of competence and control!!

• Don’t move to much, don’t stand too stiff!!

• Have a ritual, fight your nervousness!!

• Train and train and exercise (with VIDEO) relentlessly!!!

Steve Jobs presenting Apple new products

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Style

People are making judgements about you all the time –based largely on how you walk, talk, gesture and look

• Concentrate the attention on yourself

• Keep & Bare the attention!!!

• Do not look at the screen, don’t even point at it!!!

• Don’t turn your back to the audience

• Keep an eye-contact & communicate with the audience!

• Work with the audience!!

• Dress smart, professional and conservative

• Smile, but do not joke before you are VERY comphident presenter and know the audience VERY WELL!

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Attention curve

Interest Trigger points

Do NOT let the listener go back to his e-mails!

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Aristotel’s RHETHORIK theory

Aristotel – the founding father of communications theory

• Establish credibility (personal achievements)

• Provide novelty (logics, data, statistics)

• Appeal to emotionality

Make it memorable - WOW us!

TED talks:

ETHOS 10%

LOGOS 25%

PATHOS 65%

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WOW factor

WOW moment is when you deliver a shocking, novel, impressive, or surprising moment that is so moving and memorable, it grabs the listeners attention and is remembered long after the presentation

• Deliver emotionally charged event

• Surprise the audience

• Drive home your main point

St. Bartholomew Flayed in Milan CathedralBill Gates at TED Talks 2009

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Make it special

• Be charismatic• Positive emotions of charismatic people (passion, enthusiasm, excitement,

optimism) are contagious, lifting the moods of the participants in the audience

• Be passionate• Passionate business leaders are more creative, set higher goals, exhibit

greater persistance, and record better company results

• Be persveisive• Story-telling is the ultimste tool of persveisiveness. Personal story telling will

connect you with you audience.

• Be yourself• Only thinks you believe-in by yourself will you convince in the others in the

audience

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Seed Forum limitations

• Bright slide back-ground

• No movies, no animations

• Max 7 minutes, 12-14 slides

• Total size: 8-10 megabits

• Format: ppt or pptx (not pps, ppsx, pdf, open office etc.)

• Windows , not iOS

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Power Pitch training

• Who are you?

• What’s your business?

• Why should I invest in you?

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“I HAVE AN IDEA!”Shall we get some money for it?

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Ideas worth investing in

Innovate for a new

Improve the existing

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Funding in Latvia

• Innovative Growth Companies

• Conventional Life-style businesses

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What is innovation?

• The process of translating an idea or invention into a good or service that creates value or for which customers will pay

• New ideas, new methods, new scientific and technological products or services

• Developed on the cross-section of branches, experiences, industries or professions

• Application of scientific method

• Invention Innovation Diffusion

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Improvements of existing:

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Innovations in Baltic states

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I HAVE AN IDEA...

• Do NOT test your ideas with your own money!!! Test your ideas with your Bose’s money!

• Prepare for start-up

• “Buy low, sell high, collect early and pay late..”

Dick Levin

Associate Dean

School of Business Administration

University of North Carolina

Systematic approach:1. R&D, Technology, IP (idea)2. Supply3. Production4. Sales, marketing5. Administration, HRM

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Start-up environment: culture & components

• It takes guts!!! + time, energy, hard work and money...

• Mission orientation, persistency – “I have to get it done!”

• Culture of risk-acceptance: most of the start-ups fail!

• Venture capital, BAN’s and innovation community

• State support system (LIDA, LGA), legislation (tax relief, crowd-funding)

• Basic business education along with professional knowledge

• Specialized training Process

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FUNDRAISING CONCEPTS

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Why companies need outside funding?

• Global competition, global (open?) markets

• Technology advances VERY fast

• Individual players vs. Business eco-systems

• Individual Competences, business acceleration, market entries - could be bought by money!!!

From start-up IPO

1976 1982From start-up IPO

2004 2012

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Funding escalator

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Funding Escalator

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Startup Funding Escalator

andCorporate Growth

Strategy

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INVESTORS vs COMPANIES

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Investors

Industrial Investors vs Financial Investors

• Company in the same business branch looking for:

Markets

Customers

Cost reduction factors

New Technologies

Business Angels, “Smart money”

Long term private fin investors

Family offices (“oligarch money”)

Corporate Ventures

Risk Capital Funds (PSF, SF, VC)

Mezzanine Funds, Buy-out-Funds

Private Equity Funds, Hedge Funds

Their business expansion vs Your business expansion

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Financial Investors mind-set

• Buy low, sell high, earn on the margin

• Strong business opportunity

• How To reduce the risk

• Team, team, team

• Focus, focus, focus

• High quality deal-flow: investor-ready companies

• Syndicate investments, networking with other investors

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Investment Process

Innledende

diskusjoner

Initial contact Term Sheet Due DiligenceNegotiations

on documen-

tation

Initial

discussions

Investor

approval 2

Investor

approval 1

Investor

”go ahead”

General review of:

– The company

– Business plan

– Financial statements

/ budget

– Discussions with

management

Main terms and

conditions of the

investment

– Legal

– Technical

– Environment

– Market

– Transactions

Agreement

– Shareholders

Agreement

– Loan Agreement

– Employment

agreements

Closing

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Why Exit?

• Investors want to collect return

• Funds are sold and closed down

• Entrepreneurs cash in

• Entrepreneurs love the art of the start

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Exit Routes for Financial Investor

• Secondary Buy Out (SBO) – according to Corporate Growth Strategy

• Trade Sale (to Strategic Investor)• M&A

• Management Buy Out (MBO)

• Buy out fund

• Initial Public Offering (IPO) • Secondary markets

• Full listing

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INVESTMENT CONCEPTS

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Companies

Businesses by Growth Potential

• Life-stile businesses

• Gradual Growth companies

• Fast Growth Companies (Growth Companies)

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Life-stile businesses

• Restaurants

• Small shops

• Creative industries

• Family-owned companies

• Franchises (for sale...)

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Life-stile businesses

• Set up and run by the Founders (families)

• Limited scalability

• Limited growth possibility beyond certain income level

• Limited access to out-side funding

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Life-stile businesses

• Financing:

• FFF (founders, friends and family);

• Soft money (grants, state & municipal programs)• “Altum”: SME & start-up lending

• LIDA, Business Incubators, Incubation grants

• Int. Grants (Horizont 2020, Interreg, EU Soc. Fund)

• Bank Loans (pers. Guar.+ collat.+ proven record)

• Long term private investors?

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Gradual Growth companies

• Traditional Production and Services companies

• Transportation companies

• Agricultural companies

• Companies with • Geographical

• Political

• Administrative

• Traditional

• ...limits for growth

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Life-stile businesses

• Gradual growth perspectives

• Access to out-side funding based on proved earnings history

• Mortgage and/or collateral required

• Modest valuations

• Interest from Industrial Investors (with disturbing business agenda)

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Gradual Growth companies

• Financing:

• FFF (founders, friends and family);

• Soft money (grants, state & municipal programs)• HIPO Bank (LV state): “Altum” program, start-up lending

• LIAA, Business Incubators (LV state): Incubation grants

• Int. Grants (EU 7th Framework, Interreg, EU Soc. Fund)

• Bank Loans (pers. Guar.+ collat.+ proven record)

• Long term private investors

• Long Term Industrial Investors

• Mezzanine Funds (after proven income history)

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Growth Companies

• Innovative products and services

• Technology companies or technologically advanced companies

• Traditional companies with global cross-border growth ambitions

• Scalable business concepts with highly profitable re-investment opportunities

• Disturbing technologies and services

• Strong management teams

• Serial entrepreneurs

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Growth Companies

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• Funding:

• All the previous funding sources...

• Access to International Capital Markets:• Intentional Angel Investors

• Int. Seed and Venture Capital Funds

• Intern. Business Accelerators and

• Business Education programs (Seed Forum)

• Multiple exit possibilities

• Listing possibilities at later stage of development

Growth Companies

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INVESTMENT CONCEPTS

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Serial Entrepreneurs

- Venture Capitalists and Business Angels love Serial Entrepreneurs

- Serial Entrepreneurs understand the corporate growth strategy and investment process and could professionally exercise it

- Serial Entrepreneurs usually become Private Financial Investors

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“Hockey Stick” for Risk Investors

“Hockey stick” – a time for Risk Investors:

- Private Financial Investors

- Venture Capital Funds

- Seed Capital Funds

- Growth Funds

- Mezzanine Funds

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Startups - Born globals

• Risk capital financing is the new trend in internationalization

• Start-ups go international much earlier than before

”THE WORLD IS THE HOME MARKET"

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Gints Vīns

+371 295 77777

Gints.Vins@gmail.com