Talk to INSEAD MBAs on my fund raising journey

1. RAOMAL PERERA
raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.facebook.com/LeanDisruptor
MY FUNDRAISING JOURNEY
Network365 / Valista

2.  Serial Entrepreneur
 ISOCOR (NASDAQ: icor) & Network365/Valista (Intel)
 Adjunct Professor of Entrepreneurial Studies
 INSEAD, IE Business School, UCD, UCC
 Innovation, Lean Startup, Leadership, Business Planning &
Fund Raising
 Consultant
 Clients include MSD, Alltech, Darley Flying Start,
MoneyMate, HP, ResMed …
 Accolades
 Finalist Ernst & Young Entrepreneur of the Year
 Tech Pioneer World Economic Forum
 ISA Award for Outstanding Software Achievement
 Blog: www.LeanDisruptor.com
RAOMAL PERERA
2

3. CONTACT ME
Twitter: @raomal
www.facebook.com/LeanDisruptor
www.LeanDisruptor.com
www.linkedin.com/in/raomal
Email: raomal.perera@insead.edu
3

4. Courses I Teach at INSEAD
2016J
P3 – Entrepreneurial Field Studies EFS
(FBL)
P4 – Business Planning Workshop – Lean
Approach BPW (FBL)
2016D
P3 – Entrepreneurial Field Studies EFS
(SIN)
P4 – Business Planning Workshop – Lean
Approach BPW (FBL) 4

5. The Environment https://strategyzer.com/projects/aca
demy/business-model-environment
5

6. 6

7. 1991
2000+
1996
1999
NASDAQ: ICOR
~$100m
Offer $237m
Closing:
$450m+
I exit to setup N365
7

8. 1999
2013
2003
I exited Valista
Acquired
by
Merged with
2008
2009
B round €15m
Acquired iPin
2000
Mobile
commerce
Mobile
payments Offers to
acquire
Valista
2007
8

9. MY FUND RAISING JOURNEY | @raomal 9
QUESTIONS

10. How Do You Finance A New Venture?
- Sine Qua Non
- Without which there is nothing!
How much money do I really need?
When must I have it?
What is the best funding I need?
What is the best source for it?
How do I go about securing it?
10

11. Looking for Investment
• What is the most important thing
that an investor looks at?
• What is he investing in?
YOU!
11

12. Investors look for:
• Integrity
• Passion
• Experience
• Knowledge
• Skill
• Leadership
• Commitment
• Vision
• Realism
• Coach-ability
12

13. 13

14. MY FUND RAISING JOURNEY | @raomal 14
THE TOOLKIT

15. Master Your Weapons
15
• Yourself
• Business Model Canvas
• Your Pitches: Elevator Pitch, 2-page
Executive Summary, Slide Presentation
• Pitching Skills
• Financial Plan – do stress test your
assumptions
– Pricing
– Market
– Customers, Partners
• Term Sheets
15

16. MY FUND RAISING JOURNEY | @raomal 16
MY JOURNEY

17. The Investment Dance
17
$
Teaser,
Elevator
pitch
2 pager, PPT,
working
sessions with
partner, team
Terms
discussed
Your team
pitches to their
full partnership
Final DD,
legal docs
drafted
Your
GREAT
innovation
3-9 months
Invited
to office
Term sheet
issued
Invited
for
coffee
They visit
onsite, key
suppliers,
…
Receive
them
onsite
Check
received
Now the
fun part

18. 1999
2013
2003
I exited Valista
Acquired
by
Merged with
2008
2009
B round €15m
Acquired iPin
2000
Offers to
acquire Valista
2007
My Fund Raising Journey
18

19. The Investment Dance
19
$
Teaser,
Elevator
pitch
2 pager, PPT,
working
sessions with
partner, team
Terms
discussed
Your team
pitches to their
full partnership
Final DD,
legal docs
drafted
Your
GREAT
innovation
3-9 months
Invited
to office
Term sheet
issued
Invited
for
coffee
They visit
onsite, key
suppliers,
…
Receive
them
onsite
Check
received
Now the
fun part
19

20. 2020

21. MY FUND RAISING JOURNEY | @raomal 21
THREE FOUNDERS:
CEO (LEADER)
CTO (TECHNICAL GURU)
SALES & BUSINESS DEVELOPMENT

22. copyright © 2002 Network365 Ltd. • company confidential
2000
2002+
network365 history to-date
Network365 innovation
SMS
messaging
Mobile
top-up
Mobile
payments
Global
presence
First
transactional
system
using WAP
Global
network
compliance
Mobile
Wallet
technology
3G
Europe’s first
3G trial
First
transactional
MMS application
SMS time
management
Mobile
Lottery /
Mobile
Billing &
Rating
First loyalty
Program in
Japan/ePurse
Global Payments
agreement
Optimization
of content
eyeWitness
technology
22

23. copyright © 2002 Network365 Ltd. • company confidential
industry recognition
GSM Award Winner 2002
Best Wireless Application Developer Ernst & Young
Emerging Entrepreneur award
nomination
One of “Europe’s
30 Hottest Tech Firms” 2001 &
2002
One of “Europe’s
Top Ten Start ups” Modezilla 50: The hot players
in wireless & I-mode
Ulster Bank/Irish Independent
Business Achievers 2002
finalist
'Tornado Insider 100’ featuring
Europe's top 100 emerging
private tech companies 2002
23

24. © 2005 Valista Ltd.www.valista.com
brand recognition
thought leadership
3rd Annual Mobiles Vietnam
2006, May 10th, Vietnam
Speaker: Gregg Marshall
ITU Telecoms World Event,
December, Hong Kong
Speaker: Raomal Perera (TBC)
Mobile Payments Asia 2006,
7-8 Sept, Bangkok, Thailand
Speaker: Raomal Perera
3rd Annual Mobiles Indonesia
July 5-6, Indonesia
Speaker: Gregg Marshall
CommunicAsia 2006,
June 20-23,
Singapore Exhibition
booth on Ireland stand
Off-Deck Mobile Content,
July 11-12, New York
Speaker: Craig McDonald
Exhibition booth
The 3rd Annual
Mobiles Indonesia
2006
Mobile Payments
Asia 2006
upcoming events: Valista is an invited speaker at many of the industry’s
leading events, recognized for its market expertise and leadership position
24

25. © 2005 Valista Ltd.www.valista.com
brand recognition
key global awards
Best Mobile Application Developer,
GSMA Awards 2002 & 2004
Top 100 Global
Companies, 2004 & 2005
One of IDC’s Top 10 companies
to Watch, 2005
One of Tornado Insider's
Top 100 Companies, 2004
Top 100 Global Companies 2006
Valista Honored in ‘The Stevies’ –
The International Business AwardsSM
25

26. © 2004 Valista Ltd. confidential information.
value proposition
about Valista
for buyers
secure, easy payments
wherever I am,
however I pay
for sellers
efficient access to
customers and
subscribers 24 X 7
Valista’s innovative e- and m-payment services are
fulfilling a strong demand for premium services by major
operators and ISPs in Europe, Asia and the Americas
150+ million users can
purchase using Valista
payments technology
1000+ digital and
real goods merchants
integrated
global service providers
monetize web and mobile
premium services
- higher ARPU
- service differentiation
- brand development
for service providers
26

27. © 2004 Valista Ltd. confidential information.
 top up
my phone
 subscribe to a
newspaper
 book a flight
download
a report
 book a hotel
pay a bill
 cancel a check
 top-up kid’s
phones
 vote online
 top-up my phone
 download a
new game
 buy an MP3
 download
a voucher
 change my ringtone
 play the lottery
 check my
phone credit
12
6
39
1
2
4
57
8
10
11
on the move at home
at play at work
premium services for subscribers
about Valista
27

28. First Steps (Pre-Seed)
• Incorporated Company
–EQUAL split of the shares; 1/3 each
between the three founders.
• Unsecured overdraft of IE£60k
• Invested £7,501 each (Total of £22,503)
• Enterprise Ireland Feasibility Grant of IEP
£15k
• Agreed that the founders will also
vest their shares over 48 months
28

29. Initial Cap Table
Founder 1 – 750,100 @ £0.01
Founder 2 – 750,100 @ £0.01
Founder 3 – 750,000 @ £0.01
Valuation = £22,503
(Transferred 50k shares to each of my
four children)
29

30. Value of Founder’s Share = IEP 22,503
Ownership = 100%
External Funding = IEP 22k
30

31. NEXT
Funding:
• Capitalised the Co. with IE£22k
• Bank Overdraft IE£60k
• EI (Gov) Feasibility Grant IE£15k
• First Customer – Carphone Warehouse IE£15K
• Did not draw a salary – but accrued it.
31

32. Build Profile
RAISE PROFILE
PR
(KINMAN)
ACCOUNTANTS
(PWC)
BANK
(AIB)
ENTERPRISE
IRELAND
LAWYERS
(MOP)
32

33. Angel Funding (Startup Funding)
• Build Product – Mobile Commerce Server
• Ask Andy De Mari (serial entrepreneur) to
join the Board as Chairman & Mentor
• Source Angel Financing ~ IE£1 million
• Get started on the PR campaign
33

34. Angel Types
Newbie: Easily seduced by the product and the story:
Strategy: Focus on the vision. Make him an advisor. Reciprocate his
love.
Thought Leader: look for deals in key markets, leveraging certain
trends
Strategy: Teach him something new about the market--share an insight.
Captain Diligence!: Team leader, gives your plan a virtual
colonoscopy
Strategy: Have a detailed business plan. Prepare to defend key metrics.
Follower: follows the lead of key influencers in the group
Strategy: Find out who the influencers are, skip the followers
Network Angel: Leverages multiple angel groups-even his deals
have deals
Strategy: Leverage his network to build a syndicate for your company 34

35. Angel Types
Darth Vader: Cynical, thinks of a million reasons to say
NO, negative influencer
Strategy: Avoid, counteract by gaining support of thought
leaders
Ego capitalist: He’s cool, he’s hip, he’s made money as
a CEO and he’s figured out the formula--invest in what
made him $$ before.
Strategy: Wear a hoodie with his incubator’s name on it
Mercenary: Feigns interest but is really looking to sell
you his services
Strategy: Use pepper spray
35

36. Mentor Capital
What angel investing can be all about...
• Individual mentor and investor
• Helps with an angel or VC round
• Joins your team and rolls up sleeves
• Finds early €
• Helps you achieve milestones
• Introduces you to angels and VCs, when you are ready
How to find mentors:
• Network
• Ask your lawyer
• Go to angel pitch events
• Contact experts in your field who might be mentors
• Examine similar companies: who are their advisors?
36

37. Angel Funding Series A1
Series A1: 400,000 @ IE £1.00
Total No. of Shares = 2,650,300
Valuation IE £2.65 million
37

38. Angel Funding Series A2
Series A2: 724,700 @ IE £1.75
Total No. of Shares = 3,375,000
Valuation just under IE £6 million
TIP:
Mentors are great. There’s no reason not to give
someone a small success fee if they help you raise
money
38

39. CAP Table at Angel Round
Raomal Perera 19.2% IR£7,501 IR£0.01 750,100
Denis Hennessy 19.2% IR£7,501 IR£0.01 750,100
Patrick O'Callaghan 19.2% IR£7,501 IR£0.01 750,100
Founders 57.7% IR£22,503 IR£0.01 2,250,300
Private Investors - Series A1 10.3% IR£400,000 IR£1.00 400,000
Private Investors - Series A2 18.6% IR£1,268,225 IR£1.75 724,700
Staff 10.9% IR£0.10 425,000
Directors 2.6% IR£0.10 100,000
39

40. Value of Founder’s Share = IEP 3.9m+
Ownership = 57.7%
External Funding = IEP 1.69m+
TIP:
Don’t be held hostage by any Investor.
Make Sure Friends and Family understand the ‘Risk’ in
the investment.
40

41. N365: Close 1st Major Customer Deal
Closed first customer deal with Digifone (now
O2). Licence fee: > IE£80k + maintenance
41

42. N365: Built a Pipeline
Second Telco customer (HK-CSL)
at over 50% probability
42

43. Convertible Loan from VC
Received €1.0m as a Convertible Loan from a
VC.
Loan to convert into shares at a discount of
10%
43

44. VC Psychology: The Fear / Greed Pendulum
Greed:
• Wanting to maximize fund returns
• Wanting to build the next big thing
Fear:
• Down round if company runs out of cash before
achieving milestones
• Loss of capital (and prestige)
• Loss of Limited Partner support for next fund
44

45. VC Funding
TIPS:
• Understand the economic and control terms
• Get to know the General Partners in the VC – They
matter and make the decisions
• The term sheet is critical. What’s in it usually
determines the final deal structure. Don’t think of it
as a letter of intent. Think of it as a blue print for
future relationship with your investor.
• Liquidation preference is a critical term that is part
of most equity financing
• Move to close the deal quickly – From Term Sheet
to money in the bank - we did it in 10 days!
45

46. Example: Liquidation Stacks
0
25
50
75
100
0 25 50 75 100 125 150
Proceeds($Millions)
Exit Value ($ Millions)
D Round
A-B-C Round
Common
46

47. Reps & Warranties
• What is the true and complete state of
this company?
– Company registration
– Financial statements
– Business plan
– IP rights and other assets
– Liabilities
– Material contracts
– Litigation
47

48. Details of a Term Sheet
• Pre-Money and Post Money
• Liquidation Preference and
Participation
• Board of Directors
• Protective Provisions
• Drag Along
• Anti-Dilution
• Pay-to-Play
• Dividends
• Redemption Rights
• Conversion
 Vesting
 Employee Pool
 Information and
Registration Rights
 Right of First Refusal
 Voting Rights
 Restriction on Sales & Co-
Sales Agreement
 Founders Activities
 Indemnification &
Assignment
 Closing Conditions
 No Shop Agreement
48

49. Discount Rates
• Why so high
(typically 40% –
75%)?
– Compensation for
company building,
value add
– Illiquidity of the
shares
– As a proxy for
haircutting financial
projectionsSeed Start-up Expansion ExitMezzanine
Stages
JustifiableDiscountRate
Base ROR
Systematic Risk
49

50. A Good VC Pitch – What is the opportunity?
• Tells VCs what they need to know
• Is different from your customer sales
pitch
• Is about your business, not about your
product
• Is clear about what you do
• Excites VCs about the opportunity to
build a market leader
50

51. A Good VC Pitch – Deal with the Risks
• Deal honestly with your key risks:
• Product Risk: Does the product work & meet
customer needs?
• Market Risk: Is there a large € market for this?
• Competitive Risk: Is this the best company in this
space?
• Management Risk: Is this the right management
team to execute and build this business?
• Liquidity Risk: Can VCs exit (within the timeframe
of the fund) and return € to investors?
51

52. What You Say – What the VC Hears
• We are three years ahead of the market
– OK, call me in two years when customers need
you, if you haven’t run out of money waiting for
the market to emerge.
• The big guys don’t have a clue
– Great. They won’t partner with you, either.
• Our model is conservative and only assumes
we get 1% of the market.
– Why 1%? Your model is faith-based, not fact-
based.
• We are the next Instagram.
– Please don’t skip your meds. 52

53. WHAT YOU SAY – WHAT THE VC HEARS
• We are Groupon for restaurants, events….
– You and 10,000 others… most of whom will fail
• We are destined to win because our product is
so compelling.
– And you’ll be outclassed by folks with better
marketing
• Exit strategy? As the next big thing, we’ll IPO
for sure.
– But 95% of exits are M&A.
• We have no competition.
– You have no market… OR...
– Really? We met two competitors last month 53

54. VC Funding Series B
• €15m
• Pre money valuation €30m
– Dropped from €38m due to dot com crash
• Price per share €6.1418
– Dropped from €7.54491
• Employee Option Pool (20%)
• 2 Investor Directors
• Legal fees capped at £25k
• Weighted average anti-dilution
• Liquidation Preference etc…
54

55. Value of Founder’s Share = IEP 13.8m+
Ownership = 30.6%
External Funding = IEP 16.69m+
TIP
Understand the economic and control terms
55

56. VC Funding Series C
• €10m
• Pre money valuation €21m
• C convertible preferred shares @ €2.801 per share
• Employee Option Pool (20%)
• 3 Investor Directors
• Keyman insurance for Raomal Perera & Denis
Hennessy
• Legal fees capped at £50k
56

57. Moving to the US
• Consider buying a US product firm to establish a
beach-head
• Choose US geography based on proximity to
customers and relevant capital
• Keep engineering in a lower-cost region outside of
US
• You don’t need to hire an American to run your
operation but your US head should have US
experience, especially sales & business
development
• Leverage existing multinational customers
/partners 57

58. Acquisition Series C-1
• €11m
• Acquired iPIN
• Entry into the US market
• Create clear market leader
• Build strength against new competitors
• Accelerate growth and profitability
58

59. Stage Pre-Money/ Post-Money Valuation Distribution of Equity Ownership
Seed Pre-money Investment Post-
money
Team Angel VC1 VC2 VC3 VC4 VC5
€0 €22,5k €22.5k 100%
Series A Pre-money Investment Post-
money
Team Angel VC1 VC2 VC3 VC4 VC5
€2.9m €0.5m €3.4m 89.7% 10.3%
€4.3m €1.6m €5.9m 71.1% 17.9% 9%
Series B Pre-money Investment Post-
money
Team Angel VC1 VC2 VC3 VC4 VC5
€30 €15m €45 49.7% 12.1% 15% 16.2% 4% 3%
Series C Pre-money Investment Post-
money
Team Angel VC1 VC2 VC3 VC4 VC5
€22.5m €10m €32.5m 29.9% 5.4% 20.3% 19.5% 2.9% 2.9% 19.1%
Network365 – Multiple Funding Rounds
59

60. 1999
2013
2003
I exited Valista
Acquired
by
Merged with
2008
2009
B round €15m
Acquired iPin
2000
Mobile
payments
Offers to
acquire Valista
2007
60

61. The Key to Getting Funded
• Has a credible CEO /founders with relevant market
experience for this business
• Has traction & proof points (customers)
• Is strongly differentiated from the competitors
• Has a well conceived business model
– Financials are supported by business assumptions
– Company is metrics and milestone driven
– CEO/team knows what it takes to get sustainable growth
– Is capital efficient
– The economics seem to make sense
– The team lives their model
• Is solving a problem that matters and captures the
investors imagination
61

62. Courses I Teach at INSEAD
2016J
P3 – Entrepreneurial Field Studies EFS
(FBL)
P4 – Business Planning Workshop – Lean
Approach BPW (FBL)
2016D
P3 – Entrepreneurial Field Studies EFS
(SIN)
P4 – Business Planning Workshop – Lean
Approach BPW (FBL) 62

63. raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.linkedin.com/in/raomal
RAOMAL PERERA
THANK YOU!

64. MY FUND RAISING JOURNEY | @raomal 64
APPENDIX

65. Elevator Pitch Vs 2 Pager
• Elevator Pitch
– 60 seconds/ 3 minutes
– Goal: pursuit
– Killer idea
- Real pain/best product
– Verbal
– Immediate & simple
– Next step: Send me
more info.
 2 Pager
 10 minutes
 Goal: hook
 Killer plan
- Real pain/best plan
(product and so much
more)
 Written
 Nuanced with
details
 Next step: Can you
come in? 65

66. Perfect Pitch Outline
The Investment Opportunity (Elevator Pitch: the wow!)
Company Overview (Who are you?)
Our Opportunity / Business Problem (So what?)
Our Unique Solution (What, exactly, do you do?)
Underlying Technology (How do you do it?)
Business Model (How do you make money?)
Target Market (Who writes the check?)
Competitive Landscape (Whom do you win against?)
Go to Market Strategy (Unfair competitive advantage?)
Financials (Succeed: how big can you get and at what cost?)
Milestones / Uses of Capital (You’ll succeed…. by when?)
Team (On whom are the investors betting on?)
Summary: Reasons to Invest (Restate elevator pitch)
66

67. Elevator Pitch (The WOW)
What Investors Want to See
• Large Market Opportunity
• Unique, compelling
solution validated by early
customers
• Unfair market advantage
• Right team for this
opportunity
• Multiple exits yielding
venture-scale returns
Common Mistakes
 What is this all about
 Poor pacing
 Lack of impact
 Unsubstantiated claims
Smart Strategy
 Get us excited!
 Borrow credibility from
customers and partners
 Be confident, crisp,
credible & compelling
67

68. Company Overview (Who Are You?)
What Investors Want to Know
• What do you do?
• How old is the firm? Key
milestones achieved?
• Customers & Partners?
• Your financing history?
• Who are your advisors?
• Anyone of note on your
Board?
• What is the investment
opportunity for me?
• Tell me about this round
Common Mistakes
 Lack of clarity about what
you do
 Put the “WOW” up front
 Bermuda Triangle #1
Smart Strategy
 Emphasize relevant
experience
 Borrow credibility from
customers and partners
 Bootstrap to first
milestone
68

69. Business Problem (Is This A Compelling Problem?)
What Investors Want to
Know
• What market?
• What customer?
• Pain?
• Market forces?
• What’s wrong with the
existing solutions?
• Is the pain serious enough
to create an opportunity
for a startup?
Common Mistakes
 A nice to have but
not a must have
 Techno-idealism
Smart Strategy
 Customer design
partners
 Customer Advisory
Board
69

70. Unique Solution
(Is This Compelling For Customers?)
What Investors Want to KNOW
• What exactly is the
product/service that
customers buy?
• Your value proposition
• Did customers help define
the product?
• Broadly applicable or a one-
off?
• Price? A “whole product”
solution?
• Do you have reference
account proof points? ROI?
Common Mistakes
 No clear business
benefit or ROI
 Faith-based design
 A consulting business
Smart Strategy
 Design partner
 Customer advisory
board
 External market
validation / research 70

71. Underlying Technology (Is this Hard to do?)
What Investors Want to
Know
• Does it work?
• What is the secret sauce?
• How hard is it to
productise?
• Is the product finished? Is
this the release we are
betting on?
• Are the most important
elements patent-
protected? Worldwide
patent?
Common Mistakes
 Too much detail for non-
specialist investors
 Too much customisation
needed to scale
 Bermuda Triangle #2
Smart Strategy
 Simple diagram showing
how this fits into the
customer’s environment
71

72. Business Model (How do you make money?)
What Investors Want to
Know
• Who pays you?
Customers? Partners?
Advertisers?
• What is your customer or
partner acquisition model?
• Revenue Cycle?
• Pricing model?
• Customer acquisition
cost?
Common Mistakes
 Confusing a product
plan with a business
plan?
 Underestimating
customer acquisition
cost
Smart Strategy
 Use a peer company
model
 Show a credible sales
pipeline
72

73. Target Market (Is This A Large Market?)
What Investors Want to
Know
• What is the market we are
betting on?
• How big is the market
today? Tomorrow?
• CAGR
• Underlying market forces
driving this growth?
• What is your market share
at break even?
Common Mistakes
 Market is too small
 Anemic growth
 Lack of focus – you are
pursuing too many market
markets or niches
 Uncritical reliance on
market analysts
 1% fallacy
Smart Strategy
 Credible, bottoms-up data
backed up with your
pipeline
73

74. Competitive Landscape (Are you meaningfully ahead?)
What Investors Want to Know
• Who are your primary
competitors?
• What do you do better than
anyone else?
• Are the differentiators you
highlight really important to
customers?
• Are these advantages
sustainable?
• Where are you vulnerable?
• What is your Gorilla
strategy?
Common Mistakes
 “We have no competition”
 Dis (mis)sing the
competition
 Narcissism of small
differences
 Focus on features more
than benefits
Smart Strategy
 3rd party reviews &
customer references
 Differentiate on business
attributes, not just
technology
74

75. Go–to-market Strategy (Can You Build The Business?)
What Investors Want to
Know
• Your unfair business
advantage?
• Can you sell efficiently?
• What is your world
domination strategy?
• How much sales visibility
do you have for this year
& next year? Really?
• What partners do you
need to ‘own’ the market?
Common Mistakes
 “Our technology is so
much better than the
competition”
 “If we build it, they will
come”
 A science project, not a
business
Smart Strategy
 Have a go-to-market
partner … but don’t bet
the farm on him
 Show a credible sales
pipeline
75

76. Financials (How Capital Efficient Are You?)
What Investors Want to
Know
• Customer acquisition cost
• 2-3 year P&L
• Burn (monthly cash use)
• Snapshot at break-even:
– # of customers
– Revenue
– Market share
– Employees
– MRR & Churn
– Cash used/cash in bank
• Can you get to break-even
with reasonable capital?
Common Mistakes
 Don’t understand what an
investor want to see
 Hockey-stick growth or
anemic growth
 Unrealistically low capital
needs
 Build a model for investors
rather than run the company
Smart Strategy
Integrate key metrics and
financials
Backup financial slides
Have a spreadsheet model
Use peer comparisons
76

77. Metrics, Milestomes & Uses Of Capital (What Has To
Happen For A Successful Next Round?)
What Investors Want to Know
• Do you live your model? Is
management metrics-
driven?
• Milestones & metrics
– Cashflow
– Product milestones
– Team milestones
– Customers (€€ and logos)
– Partnership milestones
– Financial (break-even) metrics
– Operational metrics
– Exit metrics for this market
• Risk of running out of cash before
reaching milestones
• How will capital be used?
Common Mistakes
 No real business plan
 Vague metrics
 High risk milestones
 Viewing your model as an
exercise for the investor
rather than managing your
company
 “Numbers? Go ask my
CFO”
Smart Strategy
 Identify realistic peer
companies to explain and
benchmark your business 77

78. Team (This Is The Biggest Bet The Investors Make)
What Investors Want to Know
• Person, title, experience
• What have you done that is
relevant to this business?
• Have you worked together
as a team before?
• Have you made investors
€€?
• Does anyone know this
business ‘in their bones’?
• Who are you missing?
Hiring plans?
• Can investors help build out
the team?
Common Mistakes
 A “jailhouse”- “time-
served” resume
 Experience is irrelevant
for this business
 Focus on where you
went to college
Smart Strategy
 Map your team’s skills
to the skills needed to
build THIS business
78

79. The Dream Team
• Made € for investors
• Built marquee companies
• Has startup experience
• Worked together before
• Developed world class products
• Dealt well with adversity; turned around company
from under performer to high impact winner
• Managed positive M&A or IPO exits
• Has an excellent contact network in this market
• Hires well
79

80. Pitching
PITCH KILLERS
• Don’t know your
audience
• Opening with team bios
• Slide abuse
• No hook/No power
• Monotone/lecturing with
many people
• Not prepared for Q&A
• Bullshitting (there’s no
way this can fail)
• Weak closing
KILLER PITCHES
Know your audience
Opening with The Promise
Kawasaki’s 10/20/30 rule
Driving home the need
Athletic presentation by 1
person
Prepared for Q&A
Credibility (these are the
risk, we mitigate them by..)
Killer closing
80

81. MY FUND RAISING JOURNEY | @raomal 81
THE ELEVATOR PITCH

82. Why is an Elevator Pitch so Important?
• I’m bootstrapping my business – I don’t
need any funds – Why do I need an
elevator pitch?
• An elevator pitch will help you figure out
what’s at the core of your business.
82

83. Six Questions you must answer with
your Elevator Pitch
Start with a HOOK
1.What is your product or service?
2.Who is your market?
3.What is your revenue model?
4.Who is behind the company?
5.Who is your competition?
6.What is your competitive advantage?
End with an Ask 83

84. Sample Elevator Pitch
Ring tones are just the tip of the ice berg. Soon,
Mobile Network Operators will have access to a very
large revenue stream as a result of creating a 3G
Network. Network365 provide a payment platform for
value added services and products that can be either
directly integrated to the Billing system of providing
several channels to receive payment for these
additional services.
IDC estimates that the market for Internet Commerce
Applications is at $1.7B and expects it to top $13B by
2003.
Network365 will charge a license fee and a usage fee
to the Operators. We will also provide a ‘managed
services’. 84

85. Sample Elevator Pitch
Our team has the experience of building scalable
software platforms and has the experience of selling
to telecos. The CEO is was the co-founder of
ISOCOR, which was listed on NASDAQ and
delivered the second highest return to the lead
investor’s fund.
Our competitors are Qpass & i-Pin two companies in
the US also building payment platforms for mobile
operators.
85

86. Sample Elevator Pitch
Our differentiator will be our ability to penetrate
the Japanese market which is the most
advanced market for value added services.
We are anticipating $2million this round to be
used for employee building, increased office
space, entry into Japanese market.
We have a compelling two page executive
summary that I would like to send you. Can I
get your address? 86

87. Take a few minutes to write down your
Elevator Pitch
• HOOK
• What is your product or service?
• Who is your market?
• What is your revenue model?
• Who is behind the company?
• Who is your competition?
• What is your competitive advantage?
• ASK
87

88. raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.linkedin.com/in/raomal
RAOMAL PERERA
THANK YOU!