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Startup Best Practices:


A Field Guide to the Perfect Pitch

Startup Idol Conference

Nathan Beckord, CFA


VentureArchetypes, LLC
July 23, 2009
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Agenda
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Intro– The Pitch Defined


Preparation & Process
Content Structure
Elevator Pitch Template
1st VC Meeting Pitch Outline
Audience Tuning
Delivery Tips- Do’s and Don’ts
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What is a Pitch?
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A pitch is an attractive lure that


has a hook attached to it

The Goal:
A. Get a meeting
B. Get the 2nd, 3rd, and 4th
meetings until you get
funding (or a firm “no”)
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What type of pitch?


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Back of the napkin? Elevator pitch? In-office meeting?


Æ Progressively deeper levels of information

Negotiations / Structuring / Close

Due Diligence Documentation

Level of
Business Plan / Additional Detail
Investor
Interest Pitch Deck / Exec Sum

Elevator Pitch / Email Teaser

Level of Detail In Your Pitch


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Why is it so important?
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“The statistics of obtaining funding dramatically improve


if you get that first meeting.

If you get to a meeting, your odds of getting funding


increase 30 times from 0.3% to over 10%.

These statistics demonstrate why it is crucial how you get


to your VC, because you are more likely to get a
meeting if your materials reach the VCs desk through
a trusted and friendly source.”

~from David Blumberg of Blumberg Capital, and published in How to Value Your Business
and Increase its Potential, by Jay B. Abrams, McGraw-Hill.
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Preparation & Process


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First:
Pick your best cat herder
Figure out your audience (more on this later)
Develop ideas first, slides 2nd

Then:
Start with an attention grabber
Quickly get to the ‘a ha’ moment
Tell a complete (short) story

And of course:
Extreme text minimalism (“highway billboard”)
Weave in a killer, kick ass demo
Tout your numbers if you’ve got ‘em
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Elevator Pitch Template


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Analogy
Hi, I’m Joe Smith, founder of Acme Software. We develop sales lead
What we doÆ
tracking applications for the real estate market. It’s like CRM, but with
a lot of embedded data and very powerful analytics.

Our home pricing tool is more than twice as accurate as the leading
Why we
are better Æ
competitor, due to our proprietary data scraping engine. And, our UI is
easier to use because it was based on 6 months of shadowing agents in
the field. This helps agents sell more homes, faster, at higher prices.

How we Our business model is a “freemium” subscription service, where agents


make money Æ pay a monthly fee for access to our database after an initial usage level.
Our upsell rate is 65%, based on 7,000 trial users.

Current statusÆ We are currently running beta trials with two of the largest local
brokerage firms. We have raised $1 million from angels.
What we We are seeking $3 million in VC funding for marketing and hiring.
need and whyÆ
This will get us to a national launch with 6 additional brokers in Q1.

“Hooks”
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VA Elevator Pitch Template


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My name is ____________, and I am CEO of ___________________________ . We are a developer of


name company name

__________________________________________________________ for the ____________________________________ market. Our product/service


product name or brief description of what you do name the market

__________________________________________________________________ for ____________________________________ . We do this


describe a specific problem you solve or need you address specific target customers

_____________________________________________ than the competition because ___________________________________________________________ .


better, faster, cheaper, etc. main source of proprietary advantage or “secret sauce”

Our business model is ____________________________________________________________________________________ .


how you make money– e.g., license sales, subscriptions, advertising, etc.

At present, we are __________________________________________________________________________________________________


describe stage of business– concept stage, in product development, beta trials, etc.

We are seeking _______________ in funding to be used for __________________________________________________________________ .


$XX million launch, commercialization, marketing and sales, hiring, etc.

This amount will get us to ___________________________________________________________________________________. Our exit strategy


describe next major milestone– e.g., commercial launch, profitability, etc.

is ___________________________________________________________________ .
IPO, acquisition, etc.– name possible acquirers if relevant

Optional: selectively include other key points, such as current investors, major partners, or customer traction as appropriate.

Remember: your main goal is to hook their interest– not describe your entire company or technology. This hook will encourage
investors to ask follow-up questions and engage in further dialogue.

Email me for a copy:


nathan@venturearchetypes.com
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VC Meeting Pitch Deck– Topics to Address


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Who– are you?


What – are you doing?
Why – are you doing it (Pain or opportunity + size)
How – are you doing it? (Your solution, and how it is better)
When – why now? (Have you launched? Growing? etc.)

Then,
How – will you get market share? (aka, Marketing and Sales)
Who – else is doing it? (aka, Competition)
How Much – money do you need?
How Far – does that take you? (Milestones)
How Much – money will it make? (Business + Financial model)
Who – else is on the team? (full bios)
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Sequoia’s Outline
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1. Company Purpose 6. Competition


Define the company/business in a single declarative sentence. List competitors & competitive advantages

2. Problem 7. Product
Describe the pain of the customer (or the customer’s customer). Product line-up (form factor, functionality, features,
Outline how the customer addresses the issue today. architecture, intellectual property).
Development roadmap.

3. Solution
Your company’s value prop. to make the customer’s life better.
8. Business Model
Show where your product physically sits. Pricing, Revenue model
Provide use cases. Average account size and/or lifetime value
Sales & distribution model
Customer/pipeline list
4. Why Now
Set-up the historical evolution of your category.
Define recent trends that make your solution possible.
9. Team
Founders & Management
Board of Directors/Board of Advisors
5. Market Size
Identify/profile the customer you cater to.
Calculate the TAM (top down), SAM (bottoms up) and SOM.
10. Financials
P&L, B/S, Cash flow
Cap table, The deal

See also Guy Kawasaki, Brad Feld, etc…


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Audience Tuning
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Stage Focus Areas


Initial market validation points
Seed Team, team, and team
Product specs & advantage

Initial customer traction / adoption


Series Show how VC $ will add “fuel to the fire”
A Plus, all of the above

Growing momentum - sales numbers,


trends and economics
Series
New growth avenues, Exit possibilities
B
Plus, all of the above
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More Audience Tuning


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Connection:
Know who will be there
Get them involved, interacting
Ask lots of questions
Make it personal

Messaging:
Tell them, show them, tell them
again
Use cases to connect the dots
Have a memorable mission or
mantra
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Delivery Tips: Top Ten To-Do’s


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1. Know your material


2. Engage the audience
3. Manage the clock
4. Keep it painfully simple
5. Polish the non-verbal
6. Make it memorable
7. Repeat as necessary
8. Control the presentation
9. Create a killer summary slide
10. Go for the close, steely-eyed and cocksure.
11. Bonus: Have fun with it!
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Delivery Tips: Top Ten To-Don’ts


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1. Don’t bring unnecessary people


2. Don’t speak to the screen
3. Don’t use as much text as I do
4. Don’t get funky with animation
5. Don’t get stuck on proving a point
6. Don’t (not) know your numbers
7. Don’t fake an answer
8. Don’t say “NDA” “no competition” “conservative numbers” “first mover
advantage” “1% of the Chinese market” etc.
9. Don’t state a specific valuation
10.Don’t fabricate other VC interest
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50,000-ft. view
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Startup Formula for the “Perfect Storm”

Position the company correctly with a clear, compelling story


polished materials, and passionate presentation

+
Target the right investors; Reach them through warm referrals

+
Demonstrate management’s execution credibility through early
sales, partnerships, and recruitment skills
=
“Perfect Storm” for raising capital and maintaining
negotiating leverage
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Thank You
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www.venturearchetypes.com

Nathan@venturearchetypes.com

P: 415-370-5060