2. 2
6XXXX
About the lecturer
Wharton MBA
JP Morgan – Vice President
IB Technology, GM Internet Marketing
Parallax Capital Mgmt – Co-founder and MD Private Equity
Extream Ventures – Co-founder and MD
S$20 million seed fund
Expara – Founder and MD
IDM Ventures Incubator, advisory, training
NUS – Adjunct Associate Professor, Business School,
Entrepreneurship
Sasin – Visiting Professor, Venture Capital
3. 3
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
4. 4
6XXXX
Go big or go home
Introduction to scalable entrepreneurship
Understanding risk and return
Let’s fail
5. 5
6XXXX
What is an entrepreneur?
A person who organizes, operates, and assumes the risk for a
business venture.
From Old French, from entreprendre, to undertake.
Enterprise: An undertaking, especially one of some scope,
complication, and risk.
Enterprising: Willingness to undertake new ventures; initiative:
"Through want of enterprise and faith men are where they are,
buying and selling, and spending their lives like serfs" (Henry
David Thoreau).
6. 6
6XXXX
What is a scalable business?
Small business: limited scope, complication and risk. Slow
growth.
Scalable business: significant scope, complication, and risk.
Rapid growth.
8. 8
6XXXX
What are the qualities that make a successful
entrepreneur?
Intelligent
Creative problem-solving skills
Self-starting
Committed
Motivated
Risk taking
9. 9
6XXXX
Is entrepreneurship important to the country?
The development of a thriving entrepreneurial sector is not just an
economic "nice-to-have." In the knowledge- and innovation-driven
globalized economy of the 21st century it is a competitive necessity.
In one year alone, the small number of venture-backed companies in the
US generated $736 billion in revenues, created 4.3 million new jobs,
accounting for 3.3% of total jobs in the US and 7.4% of GDP.
The more than 4,000 companies started by MIT grads employ more than
1.1 MM people and generate more than $232 B in revenue p.a.
Innovative entrepreneurs drive long-term economic growth – creative
destruction
10. 10
6XXXX
Why is entrepreneurship important to you?
What type of life do you want to have?
– An average life or an extraordinary life?
What do you want to do with your life?
– Create something of value from nothing or just make money?
Do you want to:
– Make a difference?
– Change the world in some way?
– Leave something of value after you are gone?
11. 11
6XXXX
As an entrepreneur, you can:
Have an extraordinary life
Create something of value from nothing
Become rich
Do something meaningful
Make a difference
Change the world in a positive way
Leave something of value behind after you are gone
12. 12
6XXXX
Obstacles to entrepreneurship
Lack of entrepreneurial skills
Attitudes toward risk
Cultural attitudes toward failure
Entrepreneurial success is difficult
13. 13
6XXXX
This could be you - iTwin
BMA5108 – “Cable-less cable”
remote access device based on
A-Star technology
Selected for TechCrunch 50 2009
in Silicon Valley
Spin-off company launched in
2010
Raised S$2 MM Series A funding
in July 2010
14. 14
6XXXX
This could be you - Sparefoot
2007 – Chuck Gordon takes
TR3002
2008 –Co-founds Ikatoo –
Winner, IDM Prize S@S and
i.JAM recipient
2008 – Returns to US and
resumes work on Sparefoot
2010 – Sparefoot raises
US$3 MM VC
17. 17
6XXXX
This could be you: Facebook
Feb 2004: Mark Zuckerberg, 19, launches The Facebook from
his Harvard dorm room, with ~10K investment. Half of Harvard
signs up in the first month
June 2004: Facebook receives $500K funding from Peter Thiel
Mid 2005: Accel partners invests $12.7MM and Greylock
$27.5MM
Oct 2007: Microsoft buys 1.6% of Facebook for $246MM
Nov 2007: Li Ka-shing invests $60MM
2009-10: Elevation partners invests $210MM at valuation $12 -
23B
2011: Goldman Sachs buys shares in the secondary market at
an implied valuation of $50B
2012: Goes IPO at valuation ~$100B (now $67B)
“The youngest
billionaire on
earth” - Forbes
18. 18
6XXXX
This could be you: Instagram
2010 - Kevin Systrom and Mike Krieger
focus their multi-featured HTML5 check-
in project Burbn on mobile photography
Mar 2010 – Close $500K seed funding
round from Baseline Ventures and
Andreessen Horowitz; est. val. $5 MM
Oct 2010 – Product launches on Apple
App Store
Feb 2012 – Raise $7MM Series A
funding; valuation $25 MM
Apr 2012 – Raise $50 MM at $500 MM
valuation; sold to Facebook, val $1 B
0
5
10
15
20
25
30
35
Millions of Users
19. 19
6XXXX
This could be you: Google
1995: Sergey Brin and Larry Page,
two Stanford University graduate
students develop the technology that
will become the Google search engine.
1998: Sergey and Larry raise $1
million in funding from family, friends,
and angel investors to start Google in a
friend's Menlo Park, Calif. garage with
four employees.
1999: Google raises $25MM from VCs
and angel investors
2004: Google goes IPO at a valuation
of US$23.1 billion. Sells 7% to public
for $1.67 billion. Market cap Jan 2007
US$149 billion.
20. 20
6XXXX
This could be you: YouTube
Feb 2005: Chad Hurley, Steve Chen,
and Jawed Karim found YouTube, Inc.
Nov 2005: YouTube receives funding
from Sequoia Capital
Dec 2005: YouTube service is officially
launched
Nov 2006: Google acquires YouTube
for US$1.65 billion, 20 months after the
company was founded
21. 21
6XXXX
Founded by undergrads: Dell and Microsoft
Michael Dell, who founded Dell in
1984 with $1,000 when he was 19
years old. The company now employs
approximately 41,800 people
worldwide and reported revenues of
$38.2 billion for the past four quarters.
Bill Gates, who founded Microsoft in
1975 while still an undergraduate at
Harvard. Microsoft had revenues of
US$32.19 billion for the fiscal year
ending June 2003, and employs more
than 54,000 people in 85 countries and
regions.
22. 22
6XXXX
SEA exit markets at an inflection point
Exit activity in SEA, especially in Singapore, has exploded
• Increased investment in startups since 2007 is beginning to yield results
• Number of exits increased from 5 or less pre-2011 to 60 in last three years
• Singapore alone has had 40 exits since 2007
• Value of exits increased from 51 MM in 2010 to 1.2 B in 2014
23. 23
6XXXX
Some recent exits
Company Country Acquiror Price Year
ZopIM Singapore Zendesk US$29.8MM 2014
Non-Stop Games Singapore King US$ 100MM 2014
sgCarMart Singapore SPH S$60 MM 2013
DS3 Singapore Gemalto S$50 MM est. 2013
Asian Food Channel Singapore Scripps Networks Undisclosed 2013
Reebonz Singapore MediaCorp and Existing investors S$250MM 2013
Yfind Singapore Ruckus Wireless Undisclosed 2013
Techsailor Singapore TO THE NEW Undisclosed 2013
travelmob Singapore HomeAway Undisclosed 2013
Catcha Digital Media Singapore Opt Inc Undisclosed 2013
GridBlaze Singapore Undisclosed Silicon Valley Startup Undisclosed 2013
Viki Singapore Rakuten US$200MM 2013
SGE Singapore Tech In Asia Undisclosed 2013
ThoughtBuzz India To The New Undisclosed 2013
AyoPay Indonesia MOL AccessPortal Undisclosed 2013
Tongue in Chic Malaysia PopDigital Undisclosed 2013
Ocision Malaysia Star Publication US$ 4.36MM 2013
Glamybox Vietnam VanityTrove Undisclosed 2013
PaymentLink Singapore Wirecard US$41.2MM 2013
Dealguru Singapore iBuy S$34.28 MM 2013
Buy Together Hong Kong iBuy S$21 MM 2013
Dealmates Malaysia iBuy S$10 MM 2013
PropertyGuru.com Singapore ImmobilienScout24 S$60 MM 2012
HungryGoWhere Singapore Singtel S$12 MM 2012
AdMax Network Singapore Komli Media Undisclosed 2012
TheMobileGamer Singapore Singtel US$1.5 MM 2012
24. 24
6XXXX
Go big or go home
Introduction to scalable entrepreneurship
Understanding risk and return
Let’s fail
25. 25
6XXXX
What is the relationship between risk and return?
Risk and return are highly correlated
You cannot increase return without taking more risk
Return
Risk
Potential outcomes
26. 26
6XXXX
Go big or go home
Introduction to scalable entrepreneurship
Understanding risk and return
Let’s fail
28. 28
6XXXX
3 key elements for success
Do something you love to do – something meaningful
Create opportunities – don’t wait for them
Don’t give up – stay the course
29. 29
6XXXX
What about luck?
Luck by definition is random
In the long run, luck should even out for most
Luck plays an important role in initial conditions but after that much
less than you imagine
Don’t wait to get lucky; make your own luck
Chance favors the prepared mind
31. 31
6XXXX
Evolving cultural attitudes toward failure
Failure is
bad; avoid
at all costs
Failure is
acceptable;
leads to
learning
Traditional Current
32. 32
6XXXX
Evolving cultural attitudes toward failure
Failure is
bad; avoid
at all costs
Failure is
acceptable;
leads to
learning
Failure is
desirable;
necessary for
innovation
Traditional Current Future
33. 33
6XXXX
Why is failure desirable?
Willingness to fail – allows risk-taking and innovation
Risk and return – high risk ventures means they are likely to fail
Innovation – key to scalable ventures – innovators will fail
34. 34
6XXXX
Rate of tech change is increasing exponentially
1 10 100 1,000 10,000 100,000 1,000,000 10,000,000
100,000,00
0
First Humanoids
Language
Agriculture
Abacus
Calculating machine
Telegraph
Stock Ticker
Light Bulb
Recording sound
Television
General purpose computer
Stored program computer
Integrated circuit
Mini computer
Microprocessor
Personal computer
IBM PC
Pentium
World Wide Web
Deep Blue defeats Kasparov
40. 40
6XXXX
Why are people afraid to risk failure?
Fear of the unknown - “Why take a chance?”
Fear of looking stupid - “What will they think?”
Judging too quickly - “That will never work”
Attachment to the old - “We have always done it this way”
Attachment to past successes - “This approach got us here”
41. 41
6XXXX
Do not let fear stop you
Why are you afraid to try?
The outcome must be important to you; otherwise no fear
This makes you afraid to fail
If you do not try, then you have already failed
“You miss 100% of the shots you do not take” - Wayne Gretzky
Fear causes you to fail at the things that are most important to you
42. 42
6XXXX
Why fear?
Fear is good when it helps us stay
alive
It is rational to be risk-averse in
life-and-death situations
Most investment decisions are not
life-and-death situations
43. 43
6XXXX
Conquering your fear
Everyone is afraid
It is OK to be afraid
Don’t try to eliminate your fear
Work through your fear
44. 44
6XXXX
If you don’t fail, you are not trying hard enough
Most learning and progress are achieved through failure
The top scientists in the world fail more than average scientists
Everyone who is now highly successful took significant risk to get
there
We don't regret the things that we do and fail at; we regret the
things that we fail to do.
A life lived in fear is a life half lived
46. 46
6XXXX
Product failures – from Apple III to Apple Newton
1980 - Apple III - 75k units sold
1983 – Apple Lisa - 40K units sold in
1984 vs. 80K forecast
1986 – Pixar Image Computer - <
300 units sold
1990 – NeXT workstation – 50K
units sold
1993 – Newton – 100MM spent on
development – 80K units sold
Apple clones, NeXT software
48. 48
6XXXX
Competitive failure – Apple vs. Microsoft
1980 – Apple’s share of PC
market 15%
1996 – 4%
2005 – 2.2%
2011 – Microsoft Windows still
has 92% share of operating
system market
49. 49
6XXXX
Steve Jobs career timeline
Success - 1977
• Apple II
Failure – 1980
• Apple III
Failure – 1983
• Lisa
Success – 1984
• Macintosh
Failure – 1985
• Ousted from Apple
Failure – 1988
• Pixar Image
Computer
Failure – 1990
• NeXT Workstation
Failure – 1993
• NeXT discontinues
HW
Success – 1995
• Toy Story; Pixar
IPO
Success – 1996
• Apple buys NeXT
Success – 1997
• Return to Apple
Success – 1998
• Apple profitable
Success 2001
• IPod
Success 2007
• Iphone
Success 2010
• iPad
50. 50
6XXXX
Success from failure
Pixar animated films – 1995 (Toy Story)
– 26 Oscars, 7 Golden Globes, 3 Grammies
– Films have earned > $6.3 billion worldwide
iPod - 2001
– 300 MM units sold
– 90% market share
iPhone – 2007
– > 75 MM units sold
– 50% of profits from global mobile phone sales
iPad
– > 15 MM units sold, more than all other tablets combined
– 83% market share
52. 52
6XXXX
What makes Silicon Valley different?
A different attitude toward failure
Many Silicon Valley VCs will only invest in entrepreneurs who have
already failed
“I got my education on the mean streets of Silicon Valley, where I
got to see how huge mistakes are made. Knowing what doesn’t
work is perhaps more valuable than knowing what should work.
Failure is just tuition. If you are in a failing start-up, take notes.” -
successful start-up founder
53. 53
6XXXX
Only do things that are difficult to do
Everything that is worth doing is difficult
If it is easy, it is probably not worth doing
Therefore, you should never hesitate to do something difficult
Start-up entrepreneur is one of the most difficult jobs in the world
The more difficult it is to do, the greater the return when you
succeed (risk/return correlation)
Returns to successful start-up entrepreneurs are the highest in the
world
54. 54
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
55. 55
6XXXX
Investment: why and how
Why entrepreneurs raise money
Why investors invest in startups
How to raise venture funding
56. 56
6XXXX
Why should companies raise investment?
Lifestyle or scalable?
Paycheck or payout?
A big piece of a small pie?
A small piece of a big pie?
Founder
Investors
Investors
Founder
62. 62
6XXXX
Investment: why and how
Why entrepreneurs raise money
Why investors invest in startups
How to raise venture funding
63. 63
6XXXX
Why invest in venture capital?
As of 31-Dec 2014 The Cambridge Associates LLC U.S. Venture Capital Index® is an end-to-end calculation based on data compiled from 1,569 U.S. venture capital funds (1,002
early stage, 175 late & expansion stage, 386 multi-stage and 6 venture debt funds), including fully liquidated partnerships, formed between 1981 and 2014.
1Pooled end-to-end return, net of fees, expenses, and carried interest. Sources: Cambridge Associates LLC, Barclays, Dow Jones Indexes, Frank Russell Company, Standard &
Poor's, Thomson Reuters Datastream, and Wilshire Associates, Inc. *Capital change only
Case Shiller Real Estate Index 4.1
Expara IDM Ventures (2) 43.03
64. 64
6XXXX
Impact of VC on a diversified portfolio
Private Equity and Strategic Asset Allocation. 2007 Ibbotson Associates
66. 66
6XXXX
How does early-stage out-perform?
10 years after investment. Data from Sand Hill Road Econometrics. Companies received first financing before 1 January 1999. First non-seed
round investment. Returns are gross - before fees and carry
Gross value multiples at all stages of investment
67. 67
6XXXX
65% of the portfolio will deliver less than 1x
Gross value multiples for losers
10 years after investment. Data from Sand Hill Road Econometrics. Companies received first financing before 1 January 1999. First non-seed
round investment. Returns are gross - before fees and carry
68. 68
6XXXX
Early-stage winners will have more home-runs
Gross value multiples for winners
10 years after investment. Data from Sand Hill Road Econometrics. Companies received first financing before 1 January 1999. First non-seed
round investment. Returns are gross - before fees and carry
69. 69
6XXXX
Early-stage has 450% more 50x and 800% more
100x than later rounds
Gross value multiples for home runs
10 years after investment. Data from Sand Hill Road Econometrics. Companies received first financing before 1 January 1999. First non-seed
round investment. Returns are gross - before fees and carry
70. 70
6XXXX
How does a venture capital fund work?
Fund
Investors
VC
8
$ 10 mm
2
$ 10 mm
$ 58 mm
25%
75%
Fund size 10,000,000$
Life of the fund 7
Management fee 2.5%
Investable 8,250,000$
Investment size 1,031,250$
Companies 8
Fail 4 50%
Break even 2 25%
Exit 2 25%
Investor's required ROI 35%
Fund multiple return 5.76
Fund size at exit 57,600,000$
Carry @ 20% 9,520,000
Distribution 48,080,000$
Fund return multiple 4.81
Fund ROI 35%
Required return per exit 28 times
Equity per company F/D 15%
Required value of equity at exit 28,800,000$
Required co value at exit 192,000,000$
71. 71
6XXXX
GVMs for all first-round investments
10 years after investment. Data from Sand Hill Road Econometrics. Companies received first financing before 1 January 1999. First non-seed
round investment. Returns are gross - before fees and carry
72. 72
6XXXX
How do VCs make money?
Trade sale – sell to
another company
IPO – sell to the
public through listing
on an exchange
76. 76
6XXXX
Product or service: which scales better?
Product-based start-ups
– Value proposition is delivered
via product
Service-based start-ups
– Value proposition is delivered
via people
77. 77
6XXXX
Getting to gatekeepers
It’s not what you know; it’s who you know
Network, network, network
Strong ties and loose ties
78. 78
6XXXX
Connecting to my network
My company websites: www.expara.com
My blog: www.douglasabrams.com
E-mail: dka@expara.com; lanie@expara.com
Facebook: bizadk@nus.edu.sg
Linked-In: dka@parallaxcapital.com
Twitter: twitter.com/douglaskabrams
79. 79
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and
plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
80. 80
6XXXX
Key elements for success
Develop an innovative product – Innovation
Solve a problem for customers – Value proposition
Identify your customers – Market identification and analysis
Reach your customers – Marketing strategy
Compete when others enter - Sustainable competitive advantage
Make money – Business model and financial plan
Team – A team or B team
81. 81
6XXXX
Problem Solution
Key Metrics
Cost drivers Revenue model
Innovation
and value
proposition
Sustainable
competitive
advantage
Channels
Customer
segments
Market size
Customer
archetype
High concept
Existing
solutions
Top 1-3 customer
problems
How are these
problems solved
today?
Your solutions to
customer
problems
Key numbers that
tell if you are
succeeding
What is innovative
about your
solution? Why are
you better than
existing solutions?
One sentence that
says it all
How will you
create barriers to
entry for
followers?
How will you get
your product to
customers?
Who are your
target customers?
How big is your
market and how
fast is it growing?
Characteristics of
your key
customers
How do you
generate
revenue?
What are your key
cost drivers?
Expara Business Model Canvas
82. 82
6XXXX
Writing a model business plan
1. Executive summary
2. Value proposition and
innovation
3. Market identification and
analysis
4. Marketing and sales strategy
5. Sustainable competitive
advantage
Overview, innovation, market
6. Company products and services
7. Team
8. Expansion plan
9. Operational plan
10. Finances – Revenue and cash
flow, valuation, funding required,
equity offered, ROI
Execution and financials
83. 83
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value
proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
84. 84
6XXXX
Innovation and value proposition
Sources of innovation
– Trend-driven: forces, trends and mega-trends
– Technological, macro, social, demographic, political
Types of innovation
– Technology, product, process, positioning, paradigm,
operational, cost, customer experience, management, business
model, industry, attribute-driven (Blue Ocean)
Degrees of innovation
– Incremental, disruptive
85. 85
6XXXX
Types of innovation
Trend-driven: forces, trends and mega-trends
– Technological, macro, social, demographic, political
Business model: changing market and industry structures & needs
– Market inefficiencies
Attribute-driven
– Blue Ocean strategy
86. 86
6XXXX
Generating innovations
Alternative approaches to existing innovations
– Second mover advantage
Personal experience, hobbies and pastimes, personal
passions, annoyances
De-commoditize a commodity
– Starbucks
Drive an innovation down-market
– Spinbrush
Import geographically isolated innovations, cross
regional, discipline or industry
– Red Bull, Starbucks
Identify small companies with niche products with
broader market appeal potential
– Gyration and Nintendo
87. 87
6XXXX
Value propositions
• What value do we deliver to
customers?
• Which one of our customer’s
problems are we helping to solve?
• What bundles of products and
services are we offering to each
Customer Segment?
• Which customer needs are we
satisfying?
Key questions
• Newness
• Performance
• Customization
• Getting the job done
• Design
• Brand/status
• Price
• Cost reduction
• Risk reduction
• Accessibility
• Convenience/usability
Types of values
89. 89
6XXXX
Value proposition – degrees of recognition
Latent problem – they have a problem but don’t know it
Passive problem – they know they have a problem but not looking
for a solution yet
Active or urgent problem – they know they have a problem, are
actively looking for a solution but no serious work done yet to solve
A vision – they have an idea for solving the problem and a home-
grown solution but are prepared to pay for a better solution
91. 91
6XXXX
Disruptive business model or disruptive tech
Diamond is the first mover in
portable MP3 in 1998
Apple enters in 2003 and
captures 90% of the market
Business model innovation –
hardware + software + service
92. 92
6XXXX
Disruptive models from Gillette to Google
Gillette – razor and blade
Southwest Airlines – budget airlines
Dell Computer – mass customization
Charles Schwab – on-line broker
Amazon – ecommerce
eBay – peer to peer marketplace
Google – search-based advertising
93. 93
6XXXX
Innovation and value proposition
1. What is your product and what is innovative about it?
2. What is the painful problem you are solving for customers?
3. What are the shortfalls of the current solutions?
4. How do you solve this problem and can you quantify your benefit?
5. How does your innovation enable you to accomplish this?
94. 94
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and
analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
96. 96
6XXXX
Choose an industry favorable to start-ups
Increasing returns business: up-front costs are high relative to
marginal costs
Network externalities
Complementary technologies are important to use
Producer learning is strong, switching costs are high
97. 97
6XXXX
Look for fast-growing, segmented markets
The cost gap between new and established firms is smaller in
larger markets
In fast-growing markets, new firms can serve new customers
rather than customers of existing firms
Segmented market provide niches for new firms to enter and
reduce retaliation by existing firms
98. 98
6XXXX
Market timing – entering at the inflection point
Measure of
performance
Measure of effort invested
The technology adoption S curve
99. 99
6XXXX
Industry life cycles and structures
Choose a young industry – more demand and less competition
Enter before a dominant design has been adopted
Labor intensive rather than capital intensive
Advertising and branding less important
Less concentrated industries – smaller competitors
101. 101
6XXXX
Market identification and analysis
1. What is your market type?
2. How big is your market and how fast is it growing?
– Top-down approach
– Bottom-up approach
3. What are trends in your market are favourable for you?
– Technological, social, demographic, regulatory
4. Who are your direct and indirect competitors?
105. 105
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
107. 107
6XXXX
The customer discovery process
Phase 1
State Hypothesis
Draw Business
model canvas
Phase 2
Test the problem
Phase 4
Verify or pivot
Phase 3
Test the solution
Customer validation
108. 108
6XXXX
Phase 1: Business model hypothesis
Market size hypothesis
Value proposition hypothesis
– Product vision
– Product features and benefits
– Minimum viable product
Value proposition 1: low fidelity MVP
– Do customers care about the problem?
– Write a user story
109. 109
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and
strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
110. 110
6XXXX
What are the elements of marketing strategy?
Differentiation – how is your product different from competition
– Product - superior customer value – better, faster closer
– Cost leadership
Positioning – market selection + differentiation
– Image for the product that embodies its values
Marketing Execution – the 4 Ps
– Product, pricing, place, promotion
111. 111
6XXXX
Marketing strategy
1. How is your product differentiated from your competitors’ product?
Use a comparison matrix to illustrate.
2. What is your position in the market? Use a positioning map or
Blue Ocean Strategy canvas to illustrate
3. What are your price, place, product, promotion and initial sales
plans
4. What is your tagline?
118. 118
6XXXX
Develop a tagline
Clear, strong, authentic
Describes your unique
offering to customers
Provides focus and
differentiation
119. 119
6XXXX
Elements of the 4 Ps
Product
– Name, functionality, styling, quality, safety, packaging, repairs and
support, warranty, accessories and service
Price
– Pricing strategy, MSRP, volume discounts and wholesale pricing, cash
and early payment discounts, seasonal pricing, bundling, flexibility
Place
– Distribution channels, market coverage, specific channel members,
inventory management, logistics
Promotion
– Push/pull, advertising, selling and sales force, sales promotions, PR
and publicity, budget.
– How will you make your first sale?
120. 120
6XXXX
Competitors will enter
How to compete with followers?
How to compete with existing companies?
Sustainability of technological lead
– Competitors cannot duplicate the technology
– Firm can innovate as fast or faster than competitors
First-mover disadvantages
Last-mover advantage
123. 123
6XXXX
Creating last-mover advantage
Reputation
Preempting positioning
Switching costs/Lock-in/Network effects
Unique channel access
Move down learning curve
Favorable access to inputs
Definition of standards
Institutional barriers – IP protection
First Mover Advantages
Pioneering costs
Demand uncertainty
Changes in buyer needs
Specificity of investments
to early generations
Technological
discontinuities
Low-cost imitation
Disadvantages
124. 124
6XXXX
Strategies to create last-mover advantage
IP strategy – patents, copyrights, trademarks, trade secrets
Create barriers to entry
– Network effects and externalities
– Lock-in effects
125. 125
6XXXX
Established company strengths and weaknesses
Learning curve
Reputation effect
Cash flow
Economies of scale
Complementary
assets
Advantages
Difficult to innovate
They need to satisfy existing customers,
partners and supply chain
Existing organizational structure is appropriate
to current tasks
Risk aversion
Weaknesses
126. 126
6XXXX
Opportunities that favor new firms
Existing firms frozen in the headlights
Disruptive technologies and business models
Uncertainty: existing firms’ advantages in market research are
neutralized; risk propensity
Technologies: Discrete versus systemic technologies, based on
human capital, general purpose rather than specific
Bad customers: Enter market that is unattractive to existing
competitors due to established cost structure
127. 127
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and
archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
128. 128
6XXXX
Customer segments
• For whom are we creating value?
• Who are our most important
customers?
Key questions
• Mass market
• Niche market
• Segmented
• Diversified
• Multi-sided platform or market
Types of customer segments
129. 129
6XXXX
Customer segments: who/problem
Customer problem
– Latent
– Passive
– Active or urgent
– Vision
Customer types
– End user
– Influencer
– Recommender
– Economic buyer
– Decision maker
Customer archetype
A day in the life of a customer
Organizational/influence maps
Consumer/web influence map
131. 131
6XXXX
Customer relationships
• What type of relationships does each of
our customer segments expect us to
establish and maintain with them?
• Which ones have we established?
• How are they integrated with the rest of
our business model?
• How costly are they?
Key questions
• Personal assistance
• Dedicated Personal Assistance
• Self-Service
• Automated Services
• Communities
• Co-creation
Examples
132. 132
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
134. 134
6XXXX
Sales and distribution
Great sales and distribution vs great product
Best sales is hidden
Products don’t sell themselves
135. 135
6XXXX
Metrics for effective distribution
CLV: total net profit earned over the course of relationship with
customer
CAC: cost to acquire a new customer
CLV>CAC
140. 140
6XXXX
Marketing and advertising
Work for products with mass appeal but not viral – FMCG
Can work for start-ups but
Only when CLV-CAC make all other channels uneconomical
141. 141
6XXXX
Viral marketing
Core functionality encourages users to invite their friends
Move first to dominate most important segment of market with viral
potential
Get the most valuable users first
Paypal – initial focus on 20K Ebay PowerSellers
142. 142
6XXXX
Power law of distribution
Select one - one distribution
channel will be more powerful than
all others combined
Most businesses get zero
distribution channels to work
Poor sales rather than bad product
is most common cause of failure
Sell your company to the media
Everyone sells
143. 143
6XXXX
Channels
• Through which channels do our
customer segments want to be
reached?
• How are we reaching them now?
• How are our channels integrated?
• Which ones work best?
• Which ones are most cost-efficient?
• How are we integrating them with
customer routines?
Key questions
• Awareness: How do we raise awareness
about our company’s products and
services?
• Evaluation: How do we help customers
evaluate our organization’s Value
Proposition?
• Purchase: How do we allow customers to
purchase specific products and services?
• Delivery: How do we deliver a Value
Proposition to customers?
• After sales: How do we provide post-
purchase customer support?
Channel phases
144. 144
6XXXX
Channel hypothesis – physical products
Does your product fit the channel?
Physical channel choices
– Direct sales
– Independent sales rep firms
– SI/VAR
– Distributors/resellers
– Dealers/Retailers
– Mass merchandisers
– OEMs
Which channel should I use?
145. 145
6XXXX
Channel hypothesis – web/mobile
Pick one distribution channel – use tests to choose
Web/mobile channel choices
– Dedicated e-commerce – your website
– Two-step e-distribution - Amazon
– Aggregators - Lendingtree
– Platform app store – Apple
– Social commerce - Facebook
– Flash sales - Groupon
– Free-to-paid channel
Multi-sided markets need unique channel plans
146. 146
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
148. 148
6XXXX
Get customers strategy
Who is your audience and where are they?
What content will they like?
Make sure your content works in location
Participate in their communities
Create content that people want to link to
149. 149
6XXXX
Get customers tactics
Earned or free
– Public relations
– Viral marketing
– SEO
– Social networking
Paid
– Pay-per-click advertising
– Online or traditional media advertising
– Affiliate marketing
– Online lead generation; permission-based emailing
150. 150
6XXXX
Keep customers
Interact, retain
Customization
User groups
Blogs
Online help
Product tips/bulletins
Outreach, affiliates
151. 151
6XXXX
Grow customers
Get current customers to spend more
– Cross-sell
– Up-sell
– Next selling
– Unbundling
Get customers to send more customers
– Encourage likes
– Discounts or free trials to share
– Enable email to friends to create mailing lists
– Contests or incentives for viral activities
– Highlight social networking action buttons
– Encourage bloggers to write about the product
152. 152
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
153. 153
6XXXX
Revenue models
• For what value are our
customers really willing to
pay?
• For what do they
currently pay?
• How are they currently
paying?
• How would they prefer to
pay?
• How much does each
Revenue Stream
contribute to overall
revenues?
Key questions
• Asset sale
• Usage fee
• Subscription
Fees
• Lending/Renting/
Leasing
• Licensing
• Brokerage fees
• Advertising
Types
• List price
• Product feature
dependent
• Customer segment
• dependent
• Volume dependent
Fixed pricing
• Negotiation
(bargaining)
• Yield Management
• Real-time-Market
Dynamic pricing
155. 155
6XXXX
Other revenue model issues
Total cost of ownership (TCO)
Return on investment (ROI)
Multi-sided markets have multiple revenue models
Distribution channel affects revenue streams
Consider lifetime value
156. 156
6XXXX
Revenue diagram – Grateful Dead
From Note on Business Model Analysis for the Entrepreneur – HBS Publishing
157. 157
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
158. 158
6XXXX
Cost structure
• What are the most
important costs
inherent in our
business model?
• Which Key
Resources are most
expensive?
• Which Key Activities
are most expensive?
Key questions
• Cost Driven (leanest cost
structure, low price value
proposition, maximum
automation, extensive
outsourcing)
• Value Driven (focused on
value creation, premium
value proposition)
Is your business more
• Fixed Costs (salaries, rents,
utilities)
• Variable costs
• Economies of scale
• Economies of scope
Sample characteristics
162. 162
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
164. 164
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
165. 165
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
166. 166
6XXXX
Key roles in a start-up company team
Position Skills
1 CEO (Chief Executive Officer) Leadership, vision, presentation
2 CFO (Chief Finance Officer) Financial
3 COO (Chief Operating Officer) Operations and HR
4 CTO (Chief Technology Officer) Technical/product background
5 CMO (Chief Marketing Officer) Sales and marketing
168. 168
6XXXX
Key partnerships
• Who are our key partners?
• Who are our key suppliers?
• Which key resources are we acquiring
from partners?
• Which key activities do partners
perform
Key questions
• Optimization and economy
• Reduction of risk and uncertainty
• Acquisition of particular resources and
activities
Motivations for partnership
169. 169
6XXXX
Partners hypothesis
Strategic alliances
Cooperation with competitors
Joint business development efforts
Key supplier relationships
Traffic partners (web/mobile)
Other partners – app stores, payment providers
170. 170
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
172. 172
6XXXX
Patents
Technical inventions
Novelty, inventiveness & industrial application
Registration system – national & PCT systems
Novelty & infringement searches
20 years, if continuously renewed
Exclusive monopoly
Business methods & computer programs, algorithms, ideas
173. 173
6XXXX
Copyrights
Exists on creation, no registration procedures
Searches are therefore not available
Expression not ideas – words, music, art, film, sound, broadcast,
cable, publishing, live performance
Life or author/ creator+ 50 years; or 50 years
Copy, publish, perform, broadcast, cable, adapt
Software, databases, GUI, multimedia
International protection e.g.., Berne, TRIPs
174. 174
6XXXX
Trade Marks
Registration system – national, CTM & Madrid treaties
Capable of distinguishing & earlier marks
Substantive examination
Searches? – national or CTM
10 years, renewable indefinitely
Right to use in the course of trade
Domain names, marketing, web partnerships
175. 175
6XXXX
Design registration
National registration system
Novelty and mass-produced articles
Formal examination only
15 years / 25 years protection, if continuously renewed
Exclusive monopoly
Computer icons
Register or almost no protection, not even copyright
176. 176
6XXXX
Trade Secrets
Formula (e.g. Coca Cola formula)
Pattern, Plan, Customer Lists, etc
Process, R&D Data
Device, Apparatus, Machinery etc
177. 177
6XXXX
Advantage of Trade Secrets
No fees
No time limits
Information not available to competitor for improvements
No blocking patents
Freedom to operate
Proprietary position
178. 178
6XXXX
Forms of organization
Sole proprietorship
Partnership
Limited Liability Partnership
Companies
– Private Limited companies
– Public companies
– Listed public companies
180. 180
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
181. 181
6XXXX
Who are the players?
Entrepreneurs
– Lifestyle entrepreneurs - limited scope, complication and
risk. Slow growth.
– High-growth entrepreneurs (scalable business)
Significant scope, complication, and risk. Rapid growth.
Venture investors
– Venture capitalists (VCs)
– Seed investors/incubators
– Angel investors
– Corporate VCs and investors
– Banks, government
182. 182
6XXXX
What roles do they play?
Identify opportunities
Provide funding
Oversee finances
Assist with growth
Generate returns for themselves or
their investors
Venture investors
Create opportunities
Raise funding
Manage finances
Increase value
Generate returns for investors
Entrepreneurs
183. 183
6XXXX
VCs invest at multiple stages
Founder’s
Capital
Seed/
Angel
Series
A, B, C
Mezzanine Pre-Exit Exit
VC hurdle rates 60-100% 40-60% 20%
OM
F,F&F
Incubators
corporations
government
Customers, suppliers,
strategic partners
VCs, Banks for VC loans
R&D Establishment GTM/Rollout Accelerated Expansion Maturity
Enablement growth
184. 184
6XXXX
How much funding is required?
What are sources of funds – debt, equity, retained earnings
How much money do you need to raise and how much equity will
the investor receive?
You should generally be raising around $0.6MM to $1.5MM at this
stage.
Remember that if you are raising less than $1MM, you will likely be
seeking investment from Angel investors rather than from VCs.
185. 185
6XXXX
Equity offered – how much do you need?
What percentage does the company want to sell?
– Often too much or too little
– This is the wrong question
Set performance and fund-raising milestones
– How much money do you need to achieve the next milestone?
– Divide defensible firm value by funds needed to determine
percentage to sell
Equity offered in the seed stage should usually be in the range of
15-30%
186. 186
6XXXX
Use the funds to fuel company growth
How are you going to use the money you are raising?
Show a detailed breakdown
Minimize investment in fixed assets
No big salaries for founders
187. 187
6XXXX
Exit strategy and ROI
How will your investors make money and how much will they
make?
The most likely exit strategies are IPOs (sell to the public) and
trade sale (sell to another company), with trade sale the first choice
in most cases.
For VCs, ROI should be at least 10 times and preferably 30-100
times over 5 years.
188. 188
6XXXX
How do VCs make money?
Trade sale – sell to
another company
IPO – sell to the
public through listing
on an exchange
190. 190
6XXXX
Exit markets at an inflection point
Exit activity in SEA, especially in Singapore, exploded in 2013
• Increased investment in startups since 2007 is beginning to yield results
• Number of exits increased from 6 in 2010 to 20 in 2013
• Singapore alone has had 30 exits since 2007, 13 in 2013
• Value of exits increased from 51 MM in 2010 to 400 MM in 2013
191. 191
6XXXX
Recent exits in SEA
Company Country Acquiror Price Year
ZopIM Singapore Zendesk US$29.8MM 2014
Non-Stop Games Singapore King US$ 100MM 2014
sgCarMart Singapore SPH S$60 MM 2013
DS3 Singapore Gemalto S$50 MM est. 2013
Asian Food Channel Singapore Scripps Networks Undisclosed 2013
Reebonz Singapore MediaCorp and Existing investors S$250MM 2013
Yfind Singapore Ruckus Wireless Undisclosed 2013
Techsailor Singapore TO THE NEW Undisclosed 2013
travelmob Singapore HomeAway Undisclosed 2013
Catcha Digital Media Singapore Opt Inc Undisclosed 2013
GridBlaze Singapore Undisclosed Silicon Valley Startup Undisclosed 2013
Viki Singapore Rakuten US$200MM 2013
SGE Singapore Tech In Asia Undisclosed 2013
ThoughtBuzz India To The New Undisclosed 2013
AyoPay Indonesia MOL AccessPortal Undisclosed 2013
Tongue in Chic Malaysia PopDigital Undisclosed 2013
Ocision Malaysia Star Publication US$ 4.36MM 2013
Glamybox Vietnam VanityTrove Undisclosed 2013
PaymentLink Singapore Wirecard US$41.2MM 2013
Dealguru Singapore iBuy S$34.28 MM 2013
Buy Together Hong Kong iBuy S$21 MM 2013
Dealmates Malaysia iBuy S$10 MM 2013
PropertyGuru.com Singapore ImmobilienScout24 S$60 MM 2012
HungryGoWhere Singapore Singtel S$12 MM 2012
AdMax Network Singapore Komli Media Undisclosed 2012
TheMobileGamer Singapore Singtel US$1.5 MM 2012
192. 192
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
193. 193
6XXXX
In the financial section of the business plan
Business model
Financial projections
Valuation
Funding required and equity offered
Use of Proceeds
Exit Strategy and ROI
196. 196
6XXXX
Create financial projections
3-5 years of projected balance
sheet, income statement and cash
flow statements.
Project from bottom up and top
down
Sales growth and market share are
key
Project cash requirements using a
detailed budget
Yr 1 Yr 2 Yr 3 Yr 4
Gross Revenues
Operating Expenses
EBITDA
Metric: Ex: Units sold/leased
Scalability necessary for VC investment - $50MM in annual rev
198. 198
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
199. 199
6XXXX
Company valuation methods
Price to earnings (p/e)
Dividend yield
Multiple of book value
Comparables
Discounted Cash Flow (DCF)
VC method
200. 200
6XXXX
Valuation – how much is your business worth?
How much is your business worth, based on comparables and a
DCF valuation of your projected cash flows at an 80% discount
rate?
Make sure that you can explain how you arrived at this valuation.
For seed stage companies, this should generally be in the range of
$2-4 MM.
Pre-money valuation - worth of the business before VC investment
Post-money valuation – after VC investment
201. 201
6XXXX
VC method of valuation
Variation on NPV/IRR method
Founders expect to sell company for $25 MM in 4 years
Need to raise $3MM; investors require 50% return (discount rate)
Post-money valuation = $4.9 MM ($25MM/(1.54)
Pre-money valuation = $1.9MM ($4.9MM-$3MM)
Equity required = $3MM/$4.9MM = 60.75%
202. 202
6XXXX
How much equity does the investor receive?
Pre-money valuation
– Amount invested by VC ÷ (Agreed pre-money value of business
+ Amount invested by VC)
– $3MM pre + 1 MM VC = 25% VC equity
Post-money valuation
– Amount invested by VC ÷ post-money valuation
– $4MM post = 25% VC equity
204. 204
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term
sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
205. 205
6XXXX
Key elements of the deal
Board of directors
Protective provisions
Drag-along agreement
Conversion
Control
Price-per-share
Valuation
Amount of financing
Liquidation preference
Vesting
Options pool
Anti-dilution
Pay-to-play
Economics
208. 208
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
209. 209
6XXXX
VC vs. entrepreneur - interests
Solve sorting problem
Minimize agency costs/problems
Maximize financial returns
Maintain option to abandon
Be able to force entrepreneur to
exit and distribute proceeds
Maintain reputation
VC
Get outside capital
Maximize financial gains from
equity stake
Retain control, minimize
constraints on behavior and
decision making
Build successful firm
Build reputation
Get outside expertise and contacts
Entrepreneur
From Venture Capital Negotiations: VC versus Entrepreneur – HBS Publishing
210. 210
6XXXX
VC versus entrepreneur
Entrepreneur compensation increases
when value of VC's stake increases
Vesting of entrepreneur's stake
Key-person agreements
Ability to fire managers
Ways to align incentives
Due diligence
Repeated relationships
Monitoring/information rights
Ways to reduce information asymmetries
From Venture Capital Negotiations: VC versus Entrepreneur – HBS Publishing
211. 211
6XXXX
VC versus entrepreneur
Equity stake senior to that of
entrepreneur
Option to abandon through staging of
investments across financing rounds
Forcing exit through decision-making
control
Convertible debt
Puts rights and anti-dilution provisions
Ways for VC to protect downside
Seat on board of directors
Covenants in agreement limiting
entrepreneur's ability to use capital in
undesirable ways
Involvement in operations
Super-majority rights
Ways for VC to control decision making
From Venture Capital Negotiations: VC versus Entrepreneur – HBS Publishing
212. 212
6XXXX
Entrepreneur versus investor
Maximize financial returns
Maintain option to abandon
Be able to force entrepreneur to
exit and distribute proceeds
Maintain reputation
VC
Get outside capital
Maximize financial gains from
equity stake
Retain control, minimize
constraints on behavior and
decision making
Build successful firm
Build reputation
Get outside expertise and contacts
Entrepreneur
213. 213
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
215. 215
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation
materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
217. 217
6XXXX
Use meaningful titles
The title of each slide should communicate the key message for
that slide.
For example, if you have a slide that shows projected sales, do not
make the title "Projected Sales."
Instead, make the title something like, "Projected Sales in 2003 are
$3 Million."
218. 218
6XXXX
Less is more
Your message needs to be clear and concise
Clean visual design – avoid chart junk and “design-itis”
On presentation slides, less is more – slides, bullet points, text
If you can't explain your message simply, you need to re-formulate
your message.
219. 219
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
220. 220
6XXXX
How long does it take to make a first impression?
First impressions are critical
You make yours in the first 7
seconds of your presentation
How long to feel someone is
trust-worthy? 0.1 second
How can people decide so
quickly? Appearance and
body language.
221. 221
6XXXX
You can’t judge a book by its cover, can you?
Appearance counts
Attractive people are viewed as more interesting, credible,
trustworthy and persuasive
Good looking people get better jobs, tall men perceived as
powerful
222. 222
6XXXX
Which one is more likely to be the CEO?
In the U.S. population, about 14.5 percent
of all men are six feet or over
Among CEOs of Fortune 500 companies,
that number is 58 percent
3.9 percent of adult men are 6'2" or taller
Among CEOs, 30 percent were 6'2" or
taller
An inch of height is worth $789 a year in
salary
From Blink – Malcolm Gladwell
224. 224
6XXXX
You can’t judge a book by its cover: Part III
You can’t judge a book by its cover;
appearance doesn’t matter
Everyone judges books by their
cover; appearance matters a lot
We can be seriously misled by this
approach – Susan Boyle
So why does everyone judge a
book by its cover?
225. 225
6XXXX
All stereotypes are wrong, aren’t they?
Beauty is not in the eye of the beholder –
standards of beauty are innate
One-week old babies look longer at attractive
faces
Beauty is not only skin-deep
Bi-lateral symmetrical and composite
appearance are correlated with genetic and
developmental fitness
Tall and strong men were more successful in
our ancestral environment
226. 226
6XXXX
Presentation dos and don'ts
Rock back and forth - nervous
Fidget - nervous
Shake leg while sitting – bored,
nervous
Too many um and uh
Voice too soft – shy; too loud –
overbearing
Rubbing back of the neck – bored
Don’t
Stand up straight, open body
language – nothing crossed
Arms at side - relaxed and proper
gesticulation – hands below chin
and within shoulder ranger
Be aware of hands and feet
Face smiling and inviting
Silent pause – thoughtful and
confident
Do
227. 227
6XXXX
Maintain proper eye contact
Too little eye contact – lying
Too much eye contact – stalker stare
Look directly at the audience for emphasis or conviction
Sweep and click to create connections
Handshake – strong and confident. Pump 2-3 times, then release.
Don’t use two hands
229. 229
6XXXX
Getting past gatekeepers
Why are presentations important?
Understand gatekeepers’ incentives
Avoid raising red flags
Attention to detail
Get it right the first time
231. 231
6XXXX
What causes choking?
Top performance under pressure
requires focus and relaxation
Too much focus on performance
causes skill to break down
Forget about your bad shots;
remember your good shots
232. 232
6XXXX
Create takeaway messages
People remember the first or last things that you say, so start and
end the presentation strong
Communicate your important points clearly, concisely and
memorably.
People remember stories more easily than lists of facts, so if you
can make any of your key points in story form, that can be helpful.
233. 233
6XXXX
Do not read your slides
Do not just stand and read your presentation slides.
Makes your presentation redundant and therefore uninteresting,
since the audience can just then read the slides.
Try to pick out one or two important points on each slide to discuss
in more detail.
234. 234
6XXXX
Practice and test
Analyze the details of your presentation, then master those details
by practice, practice, practice.
Arrive early and if you are using any technology, test it
If you can not get in early, try to test the night before
It is OK to be nervous before you begin
235. 235
6XXXX
Q&A is the most important part
Audience has a chance to ask you about what is on their mind.
Q&A is do or die time.
Prepare for Q&A by studying your material in-depth
Anticipate likely difficult questions and formulate answers
Note questions you are asked and if you did not have a good
answer to a specific question, formulate one for next time.
Don’t disagree - agree
236. 236
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation
workshop
• Demo Day
Financing and
fundraising
238. 238
6XXXX
Expara Accelerator Program
• Go big or go home
• Investment: why and how
• Business model canvas and plan
Understanding the big
picture
• Innovation and value proposition
• Market identification and analysis
• Customer discovery workshop
• Competitive analysis and strategy
• Customer analysis and archetype
• Channel strategy
• Sales strategy
• Revenue model
• Cost model
• Customer acquisition and
activation workshop
• Low fidelity MVP demo
Key elements for success:
product/market fit
• Team, team and team
• Legal and regulatory issues
Key elements for
success: business
• The fundraising process
• Financial plan and model
• Valuation
• Key deal terms and term sheets
• Negotiating with investors
• VC-startup negotiation
workshop
• Investor presentation materials
• Presenting to investors
• Investor presentation workshop
• Demo Day
Financing and
fundraising
241. 241
6XXXX
The customer discovery process
Phase 1
State Hypothesis
Draw Business
model canvas
Phase 2
Test the problem
Phase 4
Verify or pivot
Phase 3
Test the solution
Customer validation
242. 242
6XXXX
Testing the problem
• Do we really understand the customers
problem?
• Do enough people care about the
problem for the business to scale?
• Will they care enough to tell their
friends?
Key questions
• Designing experiments for customer tests
• Preparing for customer contacts and
engagements
• Testing customers understanding of the
problem and assessing its importance to
customers
• Gaining understanding of customers
• Capturing competitive and market
knowledge
Key steps
244. 244
6XXXX
Prepare for customer contacts – physical
Start with 50 target customers
Develop a reference story
Start the appointment setting process
245. 245
6XXXX
Build low-fidelity MVP – web/mobile
Makes sure the problem or need is an urgent one
Presents the problem
Asks for a response
Can use multiple MVPs
246. 246
6XXXX
Test understanding of problem and assess its
importance - physical
Develop a problem presentation
The problem meeting
Understand how they solve the problem today
Collect information on everything
Amalgamate and score customer data
247. 247
6XXXX
Low fidelity MVP problem test – web/mobile
Push – push contacts need referral sources
Pull – pull strategies
Pay – pay for contacts
Drive traffic and start counting
Consider scalability
Use traffic measurement tools
248. 248
6XXXX
Gain customer understanding
Participate in their culture
Get to know real customers
Internalize customer experience
Understand how they discover new ways to spend their time