1. PITCHING INVESTORS
Helsinki , May 9, 2012
BILL PAYNE
Finnvera / StartupSauna
www.fiban.org/billpayne

2. Bill Payne is an active angel investor, board member, and advisor to entrepreneurs.
He assisted in founding four angel groups: the Frontier Angel Fund (2005), Tech
Coast Angels (San Diego – 2000), Vegas Valley Angels (2003) and Aztec Venture
Network (1999).
For three decades, Bill Payne has successfully founded or invested in over 50 start-
up companies. He served as an Entrepreneur-in-Residence to the Kauffman
Foundation for twelve years. While there, he directed the development of the
Power of Angel Investing education series for entrepreneurs and angel investors.
He has served as lead instructor for over 100 seminars in seven countries.
In 2009, Bill was named the Hans Severiens Award winner as the “outstanding angel
investor in America.”

3. AGENDA
Business plans for startup entrepreneurs
Business plan contents
Pitching Investors – PowerPoint Presentations
Copyright © BillPayne.com 2012

4. Classic Companies
Life Style Businesses
• Single store retail is typical
• Most service businesses are lifestyle
• Personal income is objective not building equity
(Value of business)
• Job creation become steady state
High Impact Businesses
• Product companies (seldom service companies)
• Growth is key (jobs and revenue)
• Building Equity
• High personal income is not the goal

5. Product and Capital Lifecycle
Idea Innovation Prototype Introduction Growth Maturity
Proof of Pre-Seed Seed & Early Later
concept Start-up
Government Sources
PROFIT
Friends & Family Venture Capital
Self
Angel Investors & IPO, Bank
Seed Stage VCs First s
Revenues
VALLEY OF DEATH
TIME

6. Typical Investment Size
 Friends and Family
o $1000 to $10,000
o Seldom larger than $100,000
 Angel investors and Seed Stage VCs
o Typically $150,000 to $1 million
o Seldom larger than $1.5 million
 Classic venture capital investors
o Typically greater than $2-4 million, depending on location

7. Angel Rating System
Management team 30%
Size of opportunity 25%
Product & technology 15%
Competitive Environment 10%
Sales channels, marketing 10%
Need for more funding 5%
Other 5%

8. Business Plans
for Startup Entrepreneurs

9. What is a Business Plan
 A complete description of your business
NOT solely a description of your product or technology
 Comes in several flavors – each used for different
purposes
 Must be written by you, but
 Use a template
 Employ editors
 Engage advisors

10. Do you need a Business Plan?
Ignore investors who say “I never read plans”
The business plans is written for:
 You – do you really understand all aspects of the business
 For employees, partners and investors
 Clarity of purpose and direction
 Alignment of interests

11. Business Plans for Startups
Business Plan Description of Form Use of Form with Investors
Elevator Pitch 2-5 minute verbal summary First introduction
Video Pitch Covers entire plan Capture interest
Not use product/technology Goal: Another meeting
Executive Summary 2-page summary of plan Intro to opportunity
Comprehensive but brief Capture interest
Include contact information Goal: Another meeting
PowerPoint For multiple investors Presentation plus Q&A
Presentation Full plan, not just product Discuss: Investment offering
10 slides, 20 minutes Goal: Enter Due Diligence
Full Business Plan Full plan with financials Prepared for entrepreneur
20 -50 pages and investors
Written first/by entrepreneur Due diligence guide

12. When to Use Which Plan
ATTRACTING INVESTORS (casting the lure)
 First contact
 Elevator pitch (verbal)
 Video pitch (video)
 Executive summary (written)
 Investors never write checks when pitched
 Objective: Get a meeting
 Provide contact information
 Get a business card
 Ask for meeting or to follow up

13. When to Use Which Plan
SETTING THE HOOK WITH INVESTORS
 First formal meeting
 PowerPoint presentation
 Investors still won’t write checks
 Objective: Solidify interest
 Find potential lead investors
 Begin due diligence process
 Intense interactions with investors

14. When to Use Which Plan
REELING INVESTORS IN
 Due diligence process (2-3 months)
 Validation of Business Plan
 DD Team validation
 Negotiate term sheet
 DD Team members agree to write checks
 Other investors will follow
 Be patient: Closing takes time

15. Business Plans Content

16. Business Plan Content
PRODUCT OR SERVICE
 What problem do you solve? What makes your product a
“must have” to customers? What are the unique features
of your product?
 What differentiates you from the competition? Why will
customers insist on buying your product?
 What competitive advantage? What keep the competition
from copying your product, especially those with lots of
resources?

17. Business Plan Content
MANAGEMENT TEAM
 What skills and experiences do you bring to this business?
 Experience in the business sector
 Management and leadership
 Describe the rest of your team, including any “waiting in the
wings”
 What are you doing to build a world-class team?
 Who are your advisors? Board of directors?

18. Business Plan Content
SALES AND MARKETING
What is the size of opportunity?
 Annual revenues of the addressable or target market
 Who are the key customers in this market?
What customer relationships are established?
 Are customers using or at least testing your product?
What sales channels will you utilize?
 How will you sell to these customers?
 Partners?
What is your branding and pricing strategy?

19. Business Plan Content
COMPETITIVE ANALYSIS
 Who is selling in this marketplace
 SWOT Analysis – Your company and products versus the
competition
 Strengths
 Weaknesses
 Opportunities
 Threats
 Why would customers buy from you?

20. Business Plan Content
OPERATIONS
 Where will product be manufactured?
 Partnering: Vendors, manufacturers
 Sales cycle and idiosyncrasies
 Product development pipeline
 Inventory management and issues
 Facilities and outsourcing

21. Business Plan Content
PROFORMA FINANCIALS (five year projections)
Income statements – build revenues from the
bottom up (who will buy what and when)
Cash flow projections – how much cash will it take
to achieve break-even? How fast can the
company grow on cash from earnings?
Balance sheet for five years
Financing requirements and sources
 to break-even
 for growth

22. Business Plan Content
GROWTH PLANS
Key milestone – how does investment increase
valuation of the company?
New products and management team additions
necessary to exceed expectations
Exit strategy for the company
 What large public companies would want to buy?
 Why?
 When?

23. Tips on Business Plans
 Find a template and good advisors
 Keep it balanced, don’t focus only on product or technology
 Keep it concise. Put summaries in the body and extended
data and spreadsheets in appendix
 Find and use outside market validation
 Size and growth of market
 Use editors, make it readable

24. Don’t Make These Mistakes

25. 1. Taking dumb money
from many investors!

26. 2. Pitching only product and
technology. Investors want to see
business plans and the investment
opportunity

27. 3. Overestimating the market size

28. 4. Don’t “ball park” revenues as a
percentage of the total market.

29. 5. Don’t press a
“first mover advantage”

30. Pitching Investors
PowerPoint Presentation Content

31. The Art of the Start
Guy Kawasaki Rule
10:20:30 Rules for Pitching Investors
10 - Ten slides
Give investors the info they need
20 - Twenty minutes
Leave plenty of time for questions
30 - Minimum font size
Do not clutter slides with excessive
words and data. Slides are an outline
of the presentation

32. From the Tech Coast Angels
PPT Presentations Content
A Cover Slide: Company name, business one-
liner and your contact information (doesn’t
count as one of the 10).

33. From the Tech Coast Angels
PPT Presentations Content
1. Market – What problem does the product/
service solves for customers – a solution they
absolutely cannot live without – a “must have?”

34. From the Tech Coast Angels
PPT Presentations Content
2. Solution – Describe the product(s), the
features and benefits of the product. What is
unique about your solution?

35. From the Tech Coast Angels
PPT Presentations Content
3. Competitive Position – Who are the
competitors, what are their strengths and
weaknesses, and what are your advantages over
each competitor. Why would customers
purchase product from you?

36. From the Tech Coast Angels
PPT Presentations Content
4. Marketing /Sales /Support – How will you make
customers aware of the product? What is your
value proposition to customers? How will you
establish a recognizable brand? Describe sales
channels. How will you provide product and
technical support to your customers? How long is
your sales cycle?

37. From the Tech Coast Angels
PPT Presentations Content
5. Business Strategy – Most of us know how to
find the first customer for a product. But, it is
more difficult to describe how to grow the
business. What partnerships, team
members, facilities and capital will be required
to achieve the five-year plan?

38. From the Tech Coast Angels
PPT Presentations Content
6. Financial Projections – It would be nice to
provide the usual spreadsheets: Income
statements, balance sheets and cash flow
projections for the first five years of operations.
However, in a 20 minute presentation, an
abbreviated income statement showing revenue
ramp and anticipated earnings will probably
suffice. In some cases, cash flow statements or
balance sheets might be available in an appendix.

39. From the Tech Coast Angels
PPT Presentations Content
7. Funding Sought – How much money do you
need to achieve early milestones? How much
additional funding will be necessary to achieve
positive cash flow? From what sources to you
expect to raise these funds? And when?

40. From the Tech Coast Angels
PPT Presentations Content
8. Management – What is the relevant background
and experience of the existing team? Describe the
characteristics of additional team members that
will be required to achieve positive cash flow.
Describe your advisors and board of directors.

41. From the Tech Coast Angels
PPT Presentations Content
9. Milestones – Investors want to know how this
round of funding will increase the value of the
company. What accomplishments can the
company achieve and how will that increase the
valuation of the company?

42. From the Tech Coast Angels
PPT Presentations Content
10. Exit Strategy – In most cases, IPOs are no
longer a rational exit expectation for startup
investors. Which large public companies might be
interested in buying this company and why? What
does the company need to achieve to attract
potential acquirers?

43. Tips on PPT Presentations
 Get to meeting on time, dress neatly
 Follow 10:20:30 Rule
 Do not read slides or use notes, use slides as an
outline to make sure you cover all the material
 The audience wants to listen to you, not read
your slides
 Finish presentation on time or early, leave lots of
time for questions
 Practice…practice…practice a smooth delivery

45. MORE INFORMATION
www.fiban.org/billpayne