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The Plan and the Pitch

The pitch and business plan for investors and partners
Received: November 8 2011

Arthur A. Boni

is John R. Thorne Chair of Entrepreneurship; Distinguished Career Professor; and Director, Donald H. Jones Center for Entrepreneurship, Tepper School of Business, Carnegie Mellon University.

This article covers the essentials of constructing and delivering a “pitch” of a business opportunity to potential investors or corporate partners. We advocate constructing an effective pitch first and then using that as a guide to prepare your business plan. The content of the pitch itself as described herein in effect comprises the elements to be incorporated into a business plan as a more comprehensive documentation of the business. Therefore, focusing efforts on creating and delivering the components of a compelling pitch will provide the essence of what you will then need to put into prose as a business plan. So, our mantra is “pitch then plan,” i. e. don’t waste your time writing prose until you know what you need to write. Furthermore plans change many times between the first writing and successful implementation.
Journal of Commercial Biotechnology (2012) 18, 38–42. doi: 10.5912/jcb.509 Keywords: pitch; business planl investor; partner




itches do not come easily, so our recommendation is to work up a pitch and practice it multiple times with multiple audiences. This is an iterative process and as you proceed to try out your pitch with diverse audiences (customers, partners, investors, team members), you will receive questions and constructive feedback that will in effect help you to refine your understanding of the market need, how to articulate the value that you create, your go to market strategy, etc. Plans don’t sell opportunities; people do via their pitch. Investors typically invest in management teams — especially those with good opportunities and an ability to articulate that opportunity. It is well known by most experienced investors that a business strategy changes many times from inception to successful execution. Therefore, at the “end of the day” most will invest in a team that can survive, grow, and thrive in the face of incredible uncertainty and risk. The team is so important that our Biotechnology Entrepreneurship Boot Camp dedicates a

Correspondence: Arthur A. Boni, Ph. D., John R. Thorne Professor of Entrepreneurship, Tepper School of Business, Carnegie Mellon University, Pittsburgh, PA 15213 US. Email:

special session to this topic (see article by Boni and Weingart in this special edition). In the Biotechnology Entrepreneurship Boot Camp we assemble two sessions to demonstrate how to give a pitch. The first is targeted at venture/angel investors and the second to corporate partners. We assemble panels to which CEOs give their pitch, and then get “grilled” in real time by real investors and corporate partners. Seeing this process in action provides a great learning experience for both the CEO and the participants in the boot camp. This article will illustrate that the pitches basically contain the same elements, but that the elements of focus for a venture pitch and a corporate pitch may differ somewhat. Distinctions will be made in the article. Unfortunately we cannot simulate the real time learning experience in this article, but the information contained in this article is provided to the audience, to the presenting CEOs, and to the VC/partner panels prior to the Boot Camp itself. The setting for the pitch is that you have been able to get an introduction to an angel investor, venture capitalist, or potential corporate partner. This personal introduction or referral is generally required, especially for a venture or angel investors since they are deluged with plans and requests for audiences. They are not going to be able to spend the time reading through a business plan (or perhaps even an executive summary) to decide whether or not to meet with you. It is also helpful with


Journal of CommerCial BioteChnology

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However.” The ability to deliver a short compelling summary of your opportunity sets the stage for engaging your audience. The purpose of the elevator pitch is to convince them that they want to hear more in a meeting and perhaps request some preliminary information such as an executive summary prior to the meeting.” There will generally be a short phone call to the appropriate person in the organization and this is your first opportunity to deliver your “elevator pitch. why you think it is different and will succeed. You can convey the importance of the problem. an introduction from someone whom they know. and what you plan to do in a few short sentences. trust and respect will help with setting up a meeting and also prevent your hard work from ending up “in the wastebasket or shredder. Therefore. Therefore. Corporate partners tend to be more interested in products since most typically the partner will bring the product to market thru their organization. you must convince them that your opportunity is a good one for them. • • • Apr il 2012 i Vo lu m e 18 i N u m B er 2 39 . You should know the key points that you want to make so that you don’t need to write down every point that you will want to make verbally. Anticipate that the audience may or may not understand the significance of something that you understand very well but that they do not. Kawasaki1 also advises that the entrepreneur ask himself or herself the question “so what?” That advice is particularly pertinent to the technologist who assumes that the audience is as familiar with their jargon as they are. and the critical skills that you and your team will bring to the success of your opportunity — and why this would set the stage for making money and for the corporate partner to find a significant opportunity for their portfolio. they will need to be convinced that your business is a viable partner that will be able to deliver the product to them over time. what they don’t like.the corporate partner since it may not be clear whom to contact in a large organization. You won’t get a second chance to make a good impression. Use pictures or simply graphs/charts so that they will listen to what you are saying (instead of reading ahead and getting confused). so 20 minutes of planned presentation will expand to an hour or so with questions and discussion. at the meeting. Stay short and focused. 20 minutes. So anticipate this and explain the significance of what you have just said in terms that they understand with a “for instance” to really make your point. Do some market research on the firm and see what deals they have done. Now. They invest in businesses. and 30-point font. before the meeting you should prepare yourself as follows: • Know your audience and prepare for highstakes selling. Guy Kawasaki1 in “The Art of the Start” suggests that Know your audience Pitch a Business Stay short and focused Clarify statements with business relevance Figure 1: Preparing for the pitch your pitch should consist of 10 slides. It’s not the pitch itself. but your ability to articulate your venture concept. You can generally make all of your points on 10 slides. We cannot stress enough the importance of being able to do this in the short amount of time (comparable to a ride on an elevator) when you encounter someone for the first time. Talk to someone who has done business with the firm previously including the contact that you used to get the meeting. If you are talking to a venture capitalist be prepared to pitch a business and not a product. the uniqueness of your solutions. A first meeting will generally not last more than an hour. A 30 point font means that you should not cover a slide with so much material that it really can’t be read by someone with normal vision. what they like. but you may need additional slides as backups to get into detail as questions are asked. Anticipate the questions that may be asked and prepare answers to them. Your passion and dedication need to come through.

and authentic. Timmons and Spinelli 2. and say something that validates the authenticity of the opportunity. What is the “pain” or compelling need in the marketplace? How is that need addressed today. how it works. Kaplan and Warren3. deliver and capture value in the market. the infrastructure. This first part of the Elevator Pitch should be short and comprise the first “15 seconds or so. Keep in mind that you will not walk out of this meeting with a deal in hand. See Osterwalder5 for a very compelling and visual description of how business models are 2. get them thinking about synergies with what they do and what they need. 1. This slide should be used to illustrate a clear and compelling market need. why is it different. which should take about 60 seconds more. Just say that you’ll get back with them. The business model can be defined as how you arrange the elements of your business to create. The Problem. Make it real! The Solution. There are four elements: customers. 40 Journal of CommerCial BioteChnology ht tp://www. that it really exists. and who are the customers? The goal here is to get everyone in the room to buy into the problem or need. This slide is just used as a visual while you give your elevator pitch. address. Often time some presenters use a “persona” to illustrate the problem in the form of a fictitious or real person who can be used to make the problem personal in the context of people who we really know. explain why it’s important. 4. and the financial viability.” This first part is to engage the audience and make sure that you highlight what you do. The Business Model. and then do. The slides (as do you) need to communicate enough information to explain your material and also enlist intelligent questions from the audience. This slide lists the name of the organization. These topics should look familiar to you since they comprise the main elements of any business plan as outlined in any book that includes a discussion on construction of business plans. not days. passionate. and that it is significant. get them thinking of how this solution will result in fast customer acquisition and market penetration.CommerCialBioteChnology.The ANATOmy OF A PITCh At the start of your pitch. In the elevator pitch and in the pitch itself (which follows) you will need to be enthusiastic. Simply said this slide explains how your proposed solution solves the problem. If you don’t have an answer to a question don’t fake it. Hopefully the audience will now be engaged and want to hear more. what gaps exist. You then proceed to the next part of the elevator pitch. Why is this a better solution than the alternative? For a partner. Title Slide. Some people may include a picture or some other object on this slide that illustrates something about them or their opportunity. and what are the demonstrated outcomes of the concept as it currently stands. c. f. This is the objective of the Elevator Pitch. your offering (product/service). It should cover the following points: • • • • • The opportunity is big and unsolved and the need is compelling Your solution is unique (can be differentiated) and has a competitive advantage Identify the customer and why they care — talk about the value that you create (or the pain that you take away) How you are going to make money (and return it to the investor) Why this CEO and team? Current Status Finances Title Slide Problem Solution Competition Market Technology Business Model Team Figure 2: The ten necessary slides will need to know who you are and how to contact you. VCs and corporate partners each have their own process that takes months. Dorf and Byers4 for example. Moving forward to a term sheet (and deal) is an iterative process and will take a period of time.Com . while encouraging them to the next step in evaluating your opportunity in subsequent meetings and in the due diligence process. the first objective will be to get the attention of the audience and have them in effect anticipating to hear more about the opportunity and your team. For an investor. contact person and any other pertinent information that your audience 3. Your pitch should be organized into ten sections as shown below (remember Kawasaki’s 10 slides).

the opportunity and the synergies for the corporate partner. 9. how it is unique and protected (yes patents are essential in biomedical companies in particular and also in most technology companies). The Current Status. Have lots of backup slides for answers to the questions (and have them organized and indexed for easy retrieval)! Then use these to write your business plan. state your barriers to entry and reiterate your sustainable competitive advantage. Explain what you have accomplished to date. clinical.5. how many are there. learn to pitch at the right level to get the next meeting. growth rates. tranches. the value that you create. Keep in mind that there are always competitors even if it’s getting the job done in a different way. You will want to address the issue of “why this team” in this section. clinic. Overview the competitive landscape — who is in this market. Explain your technology in simple terms. etc. You will need here to talk about who is your customer. Talk a little about how you are building value in your company. pictures. and what still needs to be accomplished (tasks and current milestones) — development. But don’t put it into a bound volume since it will change many times over the lifetime of your venture. Are there other technologies in development that might be competitive or synergistic? The less text here the better. and value inflection points. economic and technological factors (SET Factors) or drivers that create this market opportunity? Who are your target customers? Talk about market size. For the investor this slide will get them thinking about exit paths through M&A or IPO. how you access customers (access to market channels). significant and sustainable. What are the social. etc. cash flow. The Competition. 8. As final advice we recommend that you practice your pitch repeatedly. Have backup charts or white papers available as backups. team. You might also want to have a backup chart to list key assumptions that you have made. Things change frequently and unexpectedly in the real world. The Management Team. 10. what will drive adoption. choice and retention? How much does it cost and how long will it take to make a sale? You can also talk about regulatory and reimbursement issues in this section. consideration. market segments. and how you make money (the revenue model). Sell the team. Have these in a back-up slide. IP. Use charts. market entry points. and balance sheet (for the business plan). In this latter regard how do you drive customer awareness. 7. your value proposition. You will be expected to produce a five-year pro forma with profit & loss. clinical. We recommend that you recognize gaps in your team and address how they will be filled — it is better to anticipate this question proactively. and how you acquire customers. appropriate for your business. etc. The Market. products sold. The BUsINess PlAN The above can be assembled into a business plan that demonstrates that your business is based on the following principle anchors as described by Timmons and Spinelli2: Apr il 2012 i Vo lu m e 18 i N u m B er 2 41 . Also list your Board of Directors and Advisors and note your existing investors if you have any. Identify who is on your team. current status of your IP. team. The Technology. market penetration rates. For a corporate partner it will show where you sit in the value chain and where they sit and capture or share value. You will be expected to address key metrics such as customers. market. Some also use this chart to illustrate funding needs. list their relevant experience(s) and expertise that is needed to advance your opportunity. Most entrepreneurs want to address the management team early in the presentation since the management team is so essential to the opportunity. how it is different. and the current state of development and demonstration in the lab. what are the product lines. Also anticipate how your competition will respond to your market entry. constructed. etc. but be aware that investors will be thinking about how to monetize that value in an exit — what IRRs are possible here? You may also want to start a discussion here about next steps with the investor or corporate partner. 6. Indicate how much money you will need over time and how you will reduce risk in technology. Talk about how risk is reduced and value created at each milestone over the 5-year period (investors think in terms of value created for each funding tranche). competing technologies in development? Show how you compare / differentiate against the competition. etc. but in this section use a chart to show revenue and cash needs over time. The Finances.

Anthony C. From Idea to Venture”. Alexander and Pigneur. 5. Technology. conviction.. The Finances. “Technology Ventures.CommerCialBioteChnology. 42 Journal of CommerCial BioteChnology ht tp://www. (2010) • 3. and ability to work in a collaborative team environment that incorporates diverse skills sets and perspectives. winning products are important 4. 5. and Warren. “Patterns of Entrepreneurial Management”. Yves. Portfolio. Inc.1. Kawasaki. Economic and Technological Drivers) · The Market. published by the Penguin Group (2004) Timmons. Creates or adds significant value to a customer or user Solves a significant problem in a large and growing market The opportunity can be differentiated and a sustained competitive advantage can be developed The market has the potential for good margins and moneymaking characteristics There is a good fit with the founders and management team at the time with a balance of risk and reward — and alignment of interest with all constituents including investors The Context (SET Factors) Market Drivers. Inc. Financial return and its magnitude and timing are important for investors. Steven. The descriptions of the appropriate content for the business plan are outlined in the above section on the pitch. However what is important to stress here is that in biotech deals science and technology is very important (and must be differentiated carefully). McGraw Hill (2008) Osterwalder. These include with respect to the founders and management team. These sections may be augmented with Appendices and supporting documentation drawn from the backup slides used in your slide deck for the pitch. John Wiley & Sons. and equity ownership is important for entrepreneurs. The Solution (your offering). “The Art of the Start”. The Competition • ReFeReNCes 1. A good financial deal is good for all parties concerned so interests must align well — at the time of the deal and into the future. Jack M. (2010) Dorf. In concluding it is important to stress that biotechnology investment opportunities fall into the general class of entrepreneurial deals. and these must be evident in your pitch and your plan. The Business Model The Infrastructure that enables execution (Resources) · Resources: The Management Team. The plan itself may be visualized in three layers: • The Foundation or Pillars of the Business (Opportunity) · Opportunity: The Problem (need). 2. the quality of the deal is based on many more factors. willingness to be coached. Current Status (Resources) The Foundation (Opportunity) Problem. Above we have stated the importance of the team (and its advisors). John Wiley and Sons. Thomas H. Jeffrey A. A good deal is further differentiated by many factors. McGraw-Hill Irwin (2007) Kaplan. Solution. Business Model Figure 3: Building blocks for a winning business to partners. and Spinelli. passion. Infrastructure Finances.Com . but are not limited to: ability to communicate. Competition The Team. and Byers. The Technology. perseverance. 3. Guy.. “New Venture Creation: Entrepreneurship for the 21st Century”. Current Status The Context (Social. Richard C. 2. “Business Model Generation”. That is beyond the scope of this article. however. 4. Deals are done every day in all sectors of the economy and there is extensive literature on what constitutes a good deal and what does not.

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