Getting ready for entrepreneurs at MDEC for a VC pitch.

1. Venture Clinic Venture Capital Series Roydean Osman, Vice President SEED Investment – CRADLE Fund Sdn. Bhd 29-30 th April 2008 MSC Incubation Center, Multimedia University, Cyberjaya

3. Where we are ? – Funding ECO System (1) Growth & Profit Funding Needs Point Zero Other Grants, SME Loans & Incubators, Government Incentives, Angels & Corp Investors Project Financiers, Commercial Banks, Venture Capitals, Private Equity, Credit Guarantee Corporation, Leasing & Factoring Providers, Govt. Agencies Cradle Investment Programme Institutional & Foreign Investors, Public Funds, Merger & Acquisitions, Merchant Banks MDeC Maturity Expansion Production & Commercialisation Market Entry Production Enhancement New Markets Scaling & Expansion Commercial Success Pre IPO Listing & Go Global Design & Conceptualisation Idea Birth Product Prototype & Proof of Concept Seed Pre Seed Growth

4. Where we are ? – Funding ECO System (2)

6. What VCs look for in a company ? (2) List the most important points about your company.  Strong management team.  Patents and unique technology or model.  Use of Proceeds  Attractiveness of the venture for investment.  Market trends, market growth rates.  Size of the target market.

7. What VCs look for in a company ? (3) 1. What is the market potential for your company's product or service offering(s)? What is the revenue potential for the industry, and what is its growth rate? 2. How did you calculate market potential? How do you determine industry sales and growth rate? 3. What makes your business different or unique? 4. Why would someone be "compelled" to purchase your product or service? What specific needs does it address? 5. How do you know that your business has high growth potential? 6. What is it about your management team that makes them uniquely capable of executing on this business plan? 7. What are the primary risks facing this opportunity? 8. Who are your competitors? 9. What gives your company a competitive advantage? 10. Does the company have proprietary intellectual property in the form of patents, trademarks, copyrights, etc.?

8. What VCs look for in a company ? (4) 11. When will your company break even in terms of profitability and cash flow? 12. How do you plan to acquire customers? 13. How do you plan to keep customers? 14. What drives customer satisfaction for this industry and for the product? And, how do you know? 15. Who is the end user of the product or service offering? 16. What alliances or partnerships have you entered (e.g. joint ventures, marketing alliances, licensing arrangements, selling/distribution agreements, channel partnerships, software agreements, etc.)? 17. What is the anticipated lifecycle of your product or service offering? What are your current and future plans for R&D investments? 18. How do you plan to expand your labor force? 19. What are the probable exit scenarios? 20. What is the planned "Use of Proceeds"?

12. Valuation Methodologies used by VCs (1) Understanding the Venture Capital investment process Biz Plans Kicks-In Products /Services Concepts/Ideas Analysis Entrepreneur Analysis Business/ Venture Analysis Conditional Termsheet Approval Deal Sources Due Diligence Deal Terms Investment Decision Go/No-Go Screening Evaluation Continues

13. Valuation Methodologies used by VCs (2) VC Cash Leadership (CEO) Implementation (CMO, CTO, CFO) Idea Idea has limited value Ability to implement project is most important What are you worth ?

14. Valuation Methodologies used by VCs (3) Cash Investment : $3 million Proposed Investor Share: 22.5 % Post-Money Valuation : $ 10.7 million Pre-Money Valuation : $ 7.7 million Exit Valuation (Yr 5): $10 million (PAT) Return to Investor (IRR): 46% Cash-on-Cash Return Investor 3.3x First hand valuation by VCs – expected Return on Investment

15. Valuation Methodologies used by VCs (4) Negotiation with VCs $ Company Value VC Maximum Value Entrepreneur Minimum Value Negotiating Space

23. Thank You ! [email_address] [email_address]