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Pitching the Plan - Nutter McClennen & Fish LLP
The document outlines a comprehensive guide for pitching business plans, focusing on the role of Jeremy Halpern from Nutter McClennen & Fish LLP in supporting emerging companies. It includes key elements such as developing a strong value proposition, understanding the market landscape, and effectively engaging investors. The guide emphasizes presentation skills, strategies for customer acquisition, and addressing potential risks and milestones to achieve successful funding.
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Pitching the Plan - Nutter McClennen & Fish LLP
- 1. Nutter McClennen &Fish LLP Attorneys at Law Pitching the Plan: The Deck Jeremy Halpern Partner, Nutter McClennen & Fish LLP
- 2. Jeremy Halpern Biography › Nutter,McClennen & Fish, LLP - Partner; Director of Biz Dev, Emerging Companies Team • Top 10 Boston law firm • Represent clients in technology, hardware, software, mobile, medical devices, health IT, biotechnology, cleantech CPG, consumer electronics, sports & entertainment • Provide support and outreach to the entrepreneurial community › MTDC– Director & Investment Committee Member • The Venture Arm of the Commonwealth-- catalyzing innovation in Massachusetts by providing seed and early stage venture funding to high growth technology startups. › The Capital Network – Director; Past Chairman • Providing education, resources and community to high growth entrepreneurs and angel investors as they navigate the early stage capital process. › Tufts University; Professor of Entrepreneurial Leadership • Educating students in the art and science of leading ventures with limited resources. › Entrepreneurial Experience › UC Berkeley, B.A. (Go Bears!); UCLA School of Law, J.D.; Admitted to practice, CA and MA. 2
- 3. Nutter’s Emerging CompaniesGroup As a full service firm with a dedicated team of lawyers in the Emerging Companies Group, Nutter supports ventures across the innovation economy: • Biomedical Devices • Cleantech • Biotechnology • Mobile • Pharmaceuticals • Consumer Products • Life sciences • Analytics • Software • New Media • Hardware • Robotics • Information Technology We provide entrepreneurs will the full spectrum of support that they need to build their businesses and realize their visions: • Entity Formation • Employment support • Founders Agreements • Equity Compensation • Financing Strategy and Key Introductions • Tax Strategy • Angel & Venture Capital • Litigation • Debt Financing • Licensing • Private Equity • Distribution • Initial Public Offerings • Manufacturing • Private Placements • Supply Agreements • Strategic Partnering • Electronic Commerce • Mergers & Acquisitions • Patent and Trademark Strategy & Prosecution 3
- 4. Cover Slide Introduction •1 Minute Elevator Pitch – Get their attention! • Introduce company without distracting from spoken introduction • Sets the tempo • Content: – Logo – Tag Line – should explain business and begin to differentiate – Contact information ‒ Name of the investor/group to whom presentation is delivered ‒ Possibly a non-distracting picture • Be enthusiastic – people buy from people not PowerPoint 4
- 5. Company Value Proposition(*Zoom out) • Argued to be most important slide in presentation – a 1 slide summary – Important enough to repeat 3 times – Bookend the deck – begin and end presentation • Content objective – why should investors invest – 5-7 bullets outlining strengths and direction of presentation • Core technology • Product candidates • Market opportunity • Key partnerships • Management strengths 5
- 6. The Problem a/k/athe Opportunity • What is the unsolved problem or need? • Who has this problem? Define your Core Customer and their attributes • How serious is it? Do you have Metrics? – Magnitude : How significant is it? Can you quantify it? – Frequency: How often is pain experienced (life insurance vs. coffee) – Criticality: Will the pain disrupt the business (e.g., IT outage). • Cancer Drug vs. Aspirin vs. Vitamin? • How have the alternative offerings failed to meet the need? • Analysis of why has the problem not been solved until now? • Remember! – Customers buy if they experience need, not if society does. – Business customer buy to make money or solve problems. 6
- 7. Product/Service Solution •Describe your product or service? • What does it do and how does it work? • Do not get too detailed? Assume technical matters will be validated later. • Use pictures or diagrams where possible. • Demo / screen shots, etc. if necessary. • How does it fit within the customer’s environment? • What proof of concept have you achieved? Prototype? Beta? • What proof do you have of its effectiveness? • Use accurate words to describe phase of development: • “it does” vs. “it will” vs. “it may” 7
- 8. Solution Value Propositionand Competitive Advantage (*Zoom In) • How is your solution better, faster or cheaper than the existing solutions for your customer? **Remember Different ≠ Better** – Saves costs - – Drives revenue or customer acquisition – Allows customer to offer its customers a superior value proposition – Decreases risks – Leverages customer’s existing customers or solutions – Provides enjoyment, recreation, education, time saving… (consumer product) • How much better, faster, cheaper? Can you quantify the value proposition to the customer? – Can you validate that your solution is better? Do you have data to indicate that such items are meaningful to the customer? – Can you quantify a Return on Investment (ROI) for your customer. 8
- 9. Strategy: Business andRevenue Model • Answer the question on the VC’s mind upfront: How and when will you make money? • Who is going to pay (i.e, what is the “Revenue Model”)? Explain are YOUR customers? • Manufacturing and commercialization strategies • Timing and frequency of buying decision and payments • Average $/purchase? Likely to increase or decrease? • Cost of Customer Acquisition (CCA/CAC) vs. Lifetime Value of Customer (LTV/LVC) • Fixed vs. variable costs • Direct Sales • Professional Services • Multi-level marketing (MLM) • Indirect Sales • SAAS • Cost Savings Share • Razor (asset) and blade • Licensing • Franchise (consumable) • Maintenance Contracts • Data Broker • Auction / Arbitrage • Insurance • Sponsorship • Digital Marketplace • Loyalty business models • Government Contractor • Subscription • Freemium business model • Advertising • Value Added Reseller (VAR) 9
- 10. Sales and DistributionModel • How you get your customers and costs • How you actually deliver solution to customers (trucks, distributors or click?) • Go-to-Market and General Marketing strategies • How you incentivize and compensate sales (if applicable) • Explain geography and expansion strategy (scaling or growth issues) • Discuss critical distribution partners, options and roadblocks • Core business vs. non-core business • potential licensing or spin-off opportunity • Conversion metrics (identification > lead > sales process > conversion) 10
- 11. Competitive Landscape • Whois competing with you? • Barriers to entry for you? For others? Ones that you are creating? • Blocking IP • Geography • Startup Cost to competition • Contract exclusivity or change penalties • Change Cost to customers • Market dominating companies (“800lb Gorillas”) • Competitive Advantage revisited - Why will you be able to win (not “cooler”) • Points solution vs. total solutions • Current major competitors and why you will beat them • Avoiding the “no-competition trap” • Explaining their trends of growth or contraction • On a matrix – show advantages and areas where you don’t compete • Pick metrics your customers care about not just those you “win” at! • Avoid upper right quadrant graphs 11
- 12. The Addressable Market •Industry size = the total revenue generated in a segment of the economy. • These are what are tracked by Forrester, Gartner, Thomson etc. • Only useful for trend analysis, not for evaluating investability. • Example: “The internet advertising industry is an $X billion industry” • Addressable Market = the total amount of revenue that your company could generate if it acquired every potential customer (the “Addressable Population”). • Willing and able buyers that you can reach • Initial Target Market: subset of the addressable market for whom the value proposition is truly compelling and obvious at product introduction. • Annual Sales: that subset of the addressable market or the initial target market who buy or who are likely to buy each year. • Explain how the market is changing and why. • Customers, pricing, competition, new technology, etc. • $500m TAM vs. $50m TAM – know your investors! 12
- 13. Defensibility • IntellectualProperty: Patents, Trademarks, Copyrights, Trade Secret • Difference between provisional, applications and granted patents • Patent strategy • IP that covers advantage vs. extraneous claims/assets • How unique is your solution? • Trade Secret and development lead; Ease of replication • Cost/Ability of customer to replace your Solution • Key relationships • Contractual protection 13
- 14. Management Team andAdvisors • Top executives, Board of Directors, Board of Advisors & SAB • Startup, domain, customers or key opinion experience • Prior success • Balance • Cohesiveness • Don’t put their whole resume on the slide • Only show actives • Current staffing gaps and strategy for filling • Orientation towards success not control (“Rich” not “Monarch”) 14
- 15. Current Status: Achievementsand Upcoming Milestones • Demonstrate current progress and achievement of milestones • Development partnerships • Distribution partnerships • Customer acquisition progress (conversion rates) • Publications • Financing • Team Developments • Upcoming milestones and Challenges • Gant-style Charts • How you will overcome the challenges/weakness (ex. key hire) • Often integrated with use of proceeds slide 15
- 16. Funding, Cash andUse of Proceeds • Identify existing/timing of prior preferred stock deals • Cash and monthly cash burn • How much of burn is variable vs. fixed • Lowest you can the Burn without killing the company • Time and investment dollars to reach cash flow positive • Timing and quantity of future rounds • Current round size and timing • Use of proceeds - what will it be used for? What will it buy? • Optimal deal structure • Pre Money Valuation • Dangers of including suggested valuations • Dangers of not knowing the appropriate valuations 16
- 17. Risks and Plans •Technology / Product – Will the solution work? Can you build it? • Business Model – Can you sell the solution at margin? • Supply – Can you acquire and manage critical vendors • Customer Adoption Risk – Will the Dogs eat the Dog Food? • Market Dynamics – Do customers have cash and the will to spend? • Distribution Risk - Can you acquire and run critical distribution and sales points? • Competition Risk – Is there an opportunity in the marketplace? Will an 800lb gorilla eat your lunch? • Financial risks – Will you have positive cash flow? Will you have sufficient capital? Will investors be interested in you down the road? • Legal risks –Freedom to operate ? Do you have the ability to defend your IP? • Regulatory risks – Are there barriers beyond your ability to influence? • Team risks – Is our product or customer knowledge distributed and accessible? • Exit Risk – Are there willing buyers (or a public market) for your company? 17
- 18. Exit Strategy andOptions • Length to liquidity • IPO vs. M&A vs. Licensing (vs. other) • Potential Acquirers • Acquirer characteristics and rationale for acquisition • How frothy is the current/expected market now and at maturity • Recent exits for similarly situated companies • Valuations (if available) • Counterpoint: Building a company vs. building an exit 18
- 19. Summary Slide/ InvestmentRationale • End with a summary of what you have just said. • Leave them with the key message points you are trying to convey. • Be prepared for questions • Appendices • All of the information that may backstop your conclusions • Case studies • Customer testimonials • More detailed technical or product information • More detailed market or customer information • Demo videos 19
- 20. Financials and Projections • P&L – Historical + 3-5yrs; Often with cash, customers and headcount • Segment revenue by type of revenue • Fixed vs. Variable cost structure • Revenue and Margin Ratios • Think about cash flow timing issues – see revenue model (e.g., direct/reimbursement) • Bottom-Up vs. Top-Down projections • Assumption tab in the Excel build • What does “conservative” mean: Use of High / Medium / Low • Perfect vs. Functional – Running your business vs. Building a model • Anticipating investor cutback • Risks of projections being tied to equity and compensation • Valuation Issues 20
- 21. General Dos andDon’ts: “Presentation is a visual not a reference” Do Don’t • Use one topic per slide • Use sounds with slide transitions • Limit text on each slide • Overdo the ALL CAPS, bolded, italicized or underlined text • Use pictures, graphs, video’s – Not all bullets • Use too many different fonts • Choose fonts and colors that are easy • Overuse special effects – focus on the to read content • PowerPoint is the accessory to YOUR • Have technical difficulties – test before presentation the meeting • Spell Check 21
- 22. Presentation Skills: PartI • Know your material cold! Don’t wing it. • DON’T READ your presentation. • You should have answers to likely questions. • Be clear when you don’t know an answer – then follow up. • When possible, know the room. Arrive early, walk around the speaking area and practice using the microphone and any visual aids. • Body language and appearance = 50% of the pitch • Prioritize and eliminate less critical points. • Be flexible – be prepared to be interrupted. • Understand the goal of your presentation. Is it to inspire, to educate, to connect, to get attention, to get a second more personal meeting? 22
- 23. Presentation Skills: PartII • Modulate your pace, pitch, volume, tone and enthusiasm – like when you are telling a story. This helps keep the audience focused. • Use humor, personal stories and conversational language where possible. Use easy to understand analogies. • Practice. Practice. Practice! GO SEE OTHER PRESENTATIONS! • Slides should HELP the oral presentation, not BE the presentation. • Bring a backup copy on a flash drive and via cloud • Slides should be professional and consistent with your image. • Spend more time building the business than the presentation • Leave time for questions. • RELAX, BREATHE and SLOW DOWN 23
- 24. Interacting with Investors BasicPrinciples - Overview • Research the investor in advance • Pay attention to what you say during the presentation banter • Communicate • Be likeable • State your value proposition up front • Come prepared with sufficient data (including back up slides) • Enjoy yourself and let it show • Keep the presentation within allotted time • Be realistic about valuations in the market • Make due diligence easy • Realize investors are thinking about exit strategy 24
- 25. Interacting with Investors CautionaryOverview – Don’t do the following • Bash the competition • Hype • Condescend or talk down • Be arrogant • Be vague about your technology • Underestimate the importance of the core science/development • Deluge investors with facts • Act desperate for funding (even if you are) • Act like you don’t need money • List ‘the company is undervalued’ as a reason to invest • Overprice your rounds so you can keep stepping up valuation • Give investors a reason to turn you down 25
- 26. Nutter McClennen &Fish LLP Attorneys at Law Jeremy Halpern Partner Director of Business Development Emerging Companies Team Pitching the Plan: Nutter McClennen & Fish LLP T: (617) 439-2943 The Deck M: (617) 905-1893 [email protected] @startupboston www.linkedin.com/in/jdhalpern
Editor's Notes
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