WHAT IS AN MVP?

Prototype: A replica of a product as it will be manufactured, which may include such details as
colour, graphics, packaging and instructions.

One of the essential early steps in the inventing process is creating a prototype--which, simply
defined, is a three-dimensional version of your vision. But what exactly should a prototype look
like? First, it depends on your idea. Second, it depends on your budget and your goals. If
possible, it's great to start with a handmade prototype, no matter how rudimentary. We've seen
prototypes made from the simplest of household items: socks, diaper tabs, household glue,
empty milk containers--you name it. If it works for your initial demonstration purposes, it's as
good as the most expensive materials.

A prototype provides other advantages, as well:

1. It enables you to test and refine the functionality of your design. Sure, your idea works
perfectly in theory. It's not until you start physically creating it that you'll encounter flaws in your
thinking. That's why another great reason to develop a prototype is to test the functionality of
your idea. You'll never know the design issues and challenges until you begin actually taking
your idea from theory to reality.

2. It makes it possible to test the performance of various materials. For example, your heart may
be set on using metal--until you test it and realize that, say, plastic performs better at a lower
cost for your particular application. The prototype stage will help you determine the best
materials.

3. It'll help you describe your product more effectively with your team, including your attorney,
packaging or marketing expert, engineers and potential business partners.

4. It will encourage others to take you more seriously. When you arrive with a prototype in hand
to meet any professional--from your own attorney to a potential licensing company--you
separate yourself from the dozens of others who've approached them with only vague ideas in
mind. Instead, you'll be viewed as a professional with a purpose, as opposed to just an inventor
with a potentially good idea.

So now that you know that creating a prototype is a vital step in your invention process, how
exactly do you move forward and actually do it? This stage in the inventing process is possibly
the period of greatest learning. This is where your words and thoughts change from "Can I?" to
"How will I?"

Making a prototype by hand is a great way to start bringing your product to life. Remember,
there are no rules! Give yourself permission to experiment. Look around the house and select
materials that you can use to test to see if your idea works.
One of the most common items used for prototyping is something you may be familiar with as a
child. Lego! It is great for putting concepts together.

Of course, your product could also be made from any number of materials, ranging from metals
to chemicals to textiles. When using any material, try to be open to alternatives you may not
have originally considered. For example, you may be convinced that you want to use cotton. If
this is the case, challenge yourself by asking "Why?" Perhaps another material might work
better, such as a stretch material like Lycra. Or how about using mesh, canvas, nylon or
leather? What about taking a leap and trying Neoprene? This is the time to say "What if" and
allow yourself the freedom to explore. Put aside your original thoughts--you may end up coming
back to them, but at least then you'll know you've made the best decision.
 FUN FACT: Vertiball, the world’s first mobile back massager, made
220 prototypes before finally arriving at their final product!

Once you've developed your prototype as far as you reasonably can, it's time to consider hiring
a professional to help you with the next steps. There are many avenues you can take at this
stage. You may wish to hire professional prototype developers, engineers and designers, but
others may be able to help you as well, including a handyman, a machinist or a student from a
local industrial design college. The complexity and materials to be used in your specific product
will help drive this decision. Your budget may also be a consideration--a handyman or
machinist, for example, will probably charge much less per hour than an engineer, and their
services may be perfectly sufficient if your design is relatively straightforward.
Eventually, if you decide to move forward with your invention, you'll probably need a minimum
viable product or MVP. We covered this when we were discussing the lean Start-up. An MVP
will be the minimum version of the product, which can be delivered to the market right away. In
this aspect, think of the prototype as just the draft and the MVP built with the core functionality.
After launching it, if the market decides it has value (purchases from your early customers), then
it’s time to include all the additional features.

How to build and validate MVP:

https://youtu.be/tWtMD5_XhcI

Solution Validation : Example Questions

Main Goal is to understand which features create value (if any)

• Does [X] solve your problem? Why not?

• Where does [X] fall short of your expectations?

• How does this product/feature compare to your current solutions? How do you evaluate
alternative solutions today?

• Will this be better than your current solution?

• Quantify “how much” better.

• Have you used something similar? What was the experience? Do you still use [Y] today?
Why?

• What does [X] remind you of?


• Would [solution X] create new problems or pains for you? What needs to be before you
would use [X]?

• Why will you not use this?


 • What is the most remarkable element of [X]? What is the most critical/crucial feature of
[X]? What can’t be left out? Why?


• Where do you start to use [X]?


• What do you like or dislike about [solution X]? Why?


• Why do you think this could be beneficial for other people? For whom? Would you
recommend this to someone? (Who? ask to confirm)

General Tips

• First validate whether you’re talking to a relevant user (target segment).

• To verify real interest, ask for some commitment (pre-payment if possible). e.g. ask for
personal contact details for follow-up.

• Show the solutions when possible (even a sketch will do!).

• Make it clear that this solution is not final, anything can be changed. Don’t explain how
much effort went into this project/solution. Avoid hypothetical questions about the future.

• Don’t ask for a redesign or to come up with new features.

• Your main priority = to learn, not to sell.

Low Cost MVPs
Example: Mobile Application design
https://youtu.be/y20E3qBmHpg
How to Make a Cardboard MVP: https://youtu.be/k_9Q-KDSb9o

TOOLS:MVP
Marvel App is an app that allows you to design and create prototypes of your own apps. It is a
great way to use your imagination and create your own apps.
With Just In Mind users can design from scratch clickable wireframes to completely interactive
prototypes with a full range of web interactions and mobile gestures to select from.
Oneweb.tech helps you build apps with a modular and service oriented approach. Comes with
UX/UI, Process and Page Designer and Run Time.
AppSheet allows you to create a mobile app for free without needing to code.
Miro is an online whiteboard app that allows you to build templates of samples and navigation
steps for your website or mobile app prototype.
WEEKS 9-10

USER EXPERIENCE DESIGN

What is UI and UX? How are they different?

UX Design refers to the term User Experience Design, while UI Design stands for User
Interface Design. Both elements are crucial to a product and work closely together. But
despite their professional relationship, the roles themselves are quite different, referring
to very different parts of the process and the design discipline. Where UX Design is a
more analytical and technical field, UI Design is closer to what we refer to as graphic
design, though the responsibilities are somewhat more complex.

There is an analogy I like to use in describing the different parts of a (digital) product:

If you imagine a product as the human body, the bones represent the code which give it
structure. The organs represent the UX design: measuring and optimizing against input
for supporting life functions. And UI design represents the cosmetics of the body–its
presentation, its senses and reactions.

But don’t worry if you’re still confused! You’re not the only one!

User Experience Design is a human-first way of designing products.

As is found on Wikipedia:

• User experience design (UXD or UED) is the process of enhancing

customer satisfaction and loyalty by improving the usability, ease of use,
and pleasure provided in the interaction between the customer and the
product.

This implies that regardless of its medium, UX Design encompasses any and all
interactions between a potential or active customer and a company. As a scientific
process it could be applied to anything, street lamps, cars, Ikea shelving and so on.
 • User Experience Design is the process of development and improvement of
quality interaction between a user and all facets of a company.

• User Experience Design is responsible for being hands on with the process
of research, testing, development, content, and prototyping to test for
quality results.

• User Experience Design is in theory a non-digital (cognitive science)

practice, but used and defined predominantly by digital industries.

While User Experience is a conglomeration of tasks focused on optimization of a

product for effective and enjoyable use; User Interface Design is its compliment, the
look and feel, the presentation and interactivity of a product.

• User Interface Design is responsible for the transference of a brand’s

strengths and visual assets to a product’s interface as to best enhance the
user’s experience.

• User Interface Design is a process of visually guiding the user through a

product’s interface via interactive elements and across all sizes/platforms.

• User Interface Design is a digital field, which includes responsibility for

cooperation and work with developers or code.

Or in analogical terms, UI Design produces a product’s:

Skin - a product’s visual/graphic presentation.

Senses - a product’s reactivity and interactivity in response to a user’s input or different

display environments.

and Makeup - a product’s guides, hints, and directives that visually leads users through
their experience.

Why Is It Important?
Two words: usability and familiarity.
WHAT IS MARKETING STRATEGY?

Now that you have designed your product or service using empathy or systems thinking,
built your MVP, and even identified your suppliers, competitors, and resources, how
would you bring your product or service to market?

What is your go to market strategy?

Although there are many steps to developing your go to market strategies which have
been designed over the years and are of course, constantly evolving based on the state
of the market, we have chosen to look at 7 steps.

1. Establishing your ideal target market

2. Defining your market strategy

3. What’s your channel of choice?

4. Shaping your price

5. Developing your marketing strategy

6. Ensuring you can follow through

7. Getting your first few customers

Establishing your ideal target market

You would have already gone through this in the previous lessons. Some key points to
revisit.

Identify your markets: Which are the markets or industries that are experiencing the
voids or gaps? What are their most urgent or chronic pain points? Are these markets or
industries aligned with your capability to serve them?

Identify their personas: Who would be using your offering? What are their specific
characteristics and behaviours? Try to narrow this down to 1 or 2 user personas and get
specific.
Identify yourself: Does your product or service address their needs? Can you reach and
access these markets proficiently? Can you also consistently measure your progress?
How underserved is this market and what is the level of competition you’d expect to
face?

Identify your objectives: Why are you doing this now and what can you eventually hope
to gain from this? Whatever the reasoning may be, ensure you are specific, concise,
and honest.

Defining your market strategy

Where would your product or service fit in the market and how would you let users
know?

What is your value proposition: What makes you unique from your competition? Why
would your customers choose your brand over what’s already available? Start by
asking:

• What are the real needs of your target customers?

• Which features in your product or service addresses these needs?

• What are the important benefits of your product or service?

• How is your offering differentiated in the marketplace?

Position your brand: How would you position your brand in the mind of your customers?
How do you want people to view you in relation to what is already available in the
market? Strong brand positioning is what makes your business unique. For example,
do you want to be a budget traveller or luxury Airbnb?

Messaging: How do you talk about the value you create? Does it create an emotional
connection with your customers?
Identify your customers’ journey: Recall the lesson on the customer journey maps and
how many stages there are in your customer’s buying journey? Have you identified their
behaviours before and after they make a purchase? At which point should you reach out
to them?

What’s your channel of choice?

We define channels as how you will be linking your offerings to your customers. Sales
channels might include products or services being sold through a physical brick and
mortar store(retail), call centre (credit cards or loan applications), face-to-face (direct
sales from a home visit), a trade show (launch of new products), e-commerce platforms
(Lazada, e-bay , Amazon or Alibaba), social media (Instagram or Facebook
advertisements) and the list goes on.

Whichever channels you choose to connect your customers with, there should be a
consistent brand offering. Start by ensuring the right fit, for example can complex and
highly priced products be sold over e-commerce? Is the level of customer involvement
high or low? We would rank buying light bulbs online as low and choosing a wedding
gown as high involvement. Ultimately, what level of interaction do your customers
require and can your channel of choice provide you with a competitive advantage?

Shaping your price

Once you’ve defined your channels, you’ll need to take a look at your finance. You
would need to define how you would price your product as well as gather the estimated
costs associate with your strategy. Consider the message that will be communicated
through your price. Are you a premium product that will need to be aggressively sold?
Or are you trying to go lower than the current competition and open to new customers?
Be mindful though, how will that affect your profit margin?

Consider the following when shaping your price,

• How much value are you bringing to your customers?

 • Are there any existing price assumptions?

• How should you price your product in comparison to your competitors?

• Will you be competing on price?

• Can you create a competitive advantage with your pricing model?

Develop Your Marketing Strategy

The final step is to develop a unique marketing strategy to reach out to your target
market. How would you delight your customers and surprise your competitors? Recall
how Apple used to work hard to build suspense and keep their iPhone plans secret until
“just the right moment” to go to market with their new product.

Lead generation: You already have your target market set in your sights. However, how
are you going to find people within your target market to become your customers? For
example, if you are selling app development packages to brick and mortar companies,
who in these companies should you reach out to? Where would you find all their
contacts? How would they prefer to be contacted? How would they prefer to respond?

Content: What value are you creating for users outside of the product or service? Well
curated content is a powerful way to get in front of potential customers and show them
that you’re knowledgeable and trustworthy. Can your content strategy educate users
and get them emotionally involved? Think about what you can teach users and how
your content strategy can help support your launch with tools like social media posts
and short video posts.

Marketing site: Where will the main information about your offering be found? Will it be
on your website, mobile app, social media platforms, posted all over the entrance to
your shop or all of them? Are they consistent and regularly updated? Are you explaining
your value quickly and in a compelling enough way to encourage a purchase? Most
importantly, is it easy to make a purchase? Have you ever come across any websites
that does everything right and when you decide you want to make a purchase, you
realise there’s no shopping cart?
Events, ads, and PR: What else can you do to get people interested? This could mean
using paid ads, search engine marketing, hosting or presenting at events, and using
Public relations (PR) to amplify your presence.

Ensuring you can follow through

Now that you have the plan, it is imperative that you have the systems and processes in
place to follow through. What is the right approach for reaching out to your customers?
For example, if you have chosen to utilise either inbound or outbound marketing, are
there processes in place to ensure the smooth and consistent delivery of your offerings
to your customers?

Inbound marketing (Blogs, social media): Which platform and tools are you going to use
for managing relationships and promoting the product? Can you be consistent and quick
to answer any enquiries and concerns? Do you have time to build an online community?
Are you in the loop with the latest Instagram trends and other key marketing channels
your customers are active on?

Outbound marketing (print media, TV commercials, brochures, radio, email, cold

calls): If you are building a sales team, how are you going to train them so that they’re
knowledgeable enough and confident in selling the product on the telephone? How are
your sales team going to find, engage with, and find the right leads? Are you able to
cope with all the enquiries after paying to broadcast your commercial on a popular TV
series for the month?

The Marketing Mix

"Marketing Mix" is a general phrase used to describe the different kinds of choices
companies have to make in the whole process of bringing a product or service to
market. It can be used to help you decide how to take a new offer to market. and to test
your marketing strategy.
The 4Ps

The 4Ps is just one way of defining the marketing mix. The 4Ps are:

1. Product (or Service).

2. Place.

3. Price.

4. Promotion.

Product/Service

1. What does the customer want from the product/service? What needs does it satisfy?

2. What features does it have to meet these needs?

3. Are there any features you've missed out?

4. Are you including costly features that the customer won't actually use?

5. How and where will the customer use it?

6. What does it look like? How will customers experience it?

7. What size(s), color(s), and so on, should it be?

8. What is it to be called?

9. How is it branded?

10. How is it differentiated versus your competitors?

11. What is the most it can cost to provide, and still be sold sufficiently profitably? (See
also Price, below).

Place

1. Where do buyers look for your product or service?

2. If they look in a store, what kind? A specialist boutique or in a supermarket, or both?

Or online? Or direct, via a catalogue?

3. How can you access the right distribution channels?

4. Do you need to use a sales force? Or attend trade fairs? Or make online
submissions? Or send samples to catalogue companies?

5. What do you competitors do, and how can you learn from that and/or differentiate?

Price

1. What is the value of the product or service to the buyer?

2. Are there established price points for products or services in this area?

3. Is the customer price sensitive? Will a small decrease in price gain you extra market
share? Or will a small increase be indiscernible, and so gain you extra profit margin?

4. What discounts should be offered to trade customers, or to other specific segments of

your market?

5. How will your price compare with your competitors?

Promotion

1. Where and when can you get across your marketing messages to your target
market?
2. Will you reach your audience by advertising in the press, or on TV, or radio, or on
billboards? By using direct marketing mailer? Through PR? On the Internet?

3. When is the best time to promote? Is there seasonality in the market? Are there any
wider environmental issues that suggest or dictate the timing of your market launch, or
the timing of subsequent promotions?

4. How do your competitors do their promotions? And how does that influence your
choice of promotional activity?

So Why Mix?

All elements from the Marketing Mix have an interaction on and with each other. If you
have a product, you will have to create a price and sell it. The way you communicate
this product will make it either more or less visible to your target market. The price you
ask for the product will infer a special quality. If you communicate effectively about the
product, it will need to be for sale in a place where your target market has access to it.
These elements, product, price, place and promotion all influence each other.

Most businesses understand the marketing mix; but finding the right marketing mix
balance takes time to put together.

SWOT vs. PESTEL

SWOT Analysis

SWOT analysis is a tool for auditing a company and the environment around it. It is the
first stage of planning and helps a company to focus on key issues.

SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and
weaknesses are internal SWOT factors. Opportunities and threats are external SWOT
factors.

• A strength is a positive internal factor.

 • A weakness is a negative internal factor.

• An opportunity is a positive external factor.

• A threat is a negative external factor.

A company should try and aim to turn it’s weaknesses into strengths, and it’s threats
into opportunities. The outcome should be an increase in value for customers - which
hopefully will improve the company’s competitive advantage.

PESTEL Analysis

PESTEL Analysis, is a concept of marketing, used as a tool by companies to track the

environment they’re operating in or are planning to launch a new project/product/service
etc.

PESTEL stands for:

• P for Political,

• E for Economic,

• S for Social,

• T for Technological,

• E for Environmental, and

• L for Legal.

It gives a bird’s eye view of the whole environment from many different angles that one
wants to check and keep a track of while contemplating on a certain idea/plan.

Marketing With No Budget

Guerrilla marketing is quite different from traditional marketing efforts. Guerrilla
marketing means going after the conventional goals of profits, sales and growth but
doing it by using unconventional means, such as expanding offerings during gloomy
economic days to inspire customers to increase the size of each purchase.
Instead of asking that you invest money, guerrilla marketing suggests you invest time,
energy, imagination and knowledge instead. It puts profits, not sales, as the main
yardstick. It urges that you grow geometrically by enlarging the size of each transaction,
having more transactions per year with each customer, and tapping the enormous
referral power of current customers. And, it does it through one of the most powerful
marketing weapons around--the telephone.

The telephone is a remarkably effective follow-up weapon. Don't use the phone to follow
up all your mailings to customers, but research has proved that it will always boost your
sales and profits. Sure, telephone follow-up is a tough task. But it works. Anyhow, no
one ever said that guerrilla marketing is a piece of cake.

E-mail ranks up there with the telephone, possibly even out outranking it. It's
inexpensive. It's fast. It lets you prove that you really care. It helps strengthen your
relationship.

Lean upon your website as well. Instead of telling your whole story with other marketing,
use that other marketing to direct people to your site. Then, use the site to give a lot of
information and advance the sale to consummation. A key to online success is creating
a brief and enticing e-mail that directs readers to a website that give enough information
for a person to make an intelligent purchase decision.

Guerrilla marketing preaches fervent follow-up, cooperation instead of competition,

"you" marketing rather than "me" marketing, dialogues instead of monologues, counting
relationships instead of counting sales, and aiming at individuals instead of groups.

All guerrillas realize that the process of marketing is very much akin to the process of
agriculture. Their marketing plans are the seeds they plant. Their marketing activities
are the nourishment they give to each plant. Their profits are the harvest they reap.
They know those profits don't come in a short time. But come they do if you start with a
plan and commit to it.

Guerrillas know they must seek profits from their current customers. They worship at the
shrine of customer follow-up. They are world-class experts at getting their customers to
expand the size of their purchases. Because the cost of selling to a brand-new
customer is six times higher than selling to an existing customer, guerrilla marketers
turn their gaze from strangers to friends. This reduces the cost of marketing while
reinforcing the customer relationship.

When your customers are confronted with their daily blizzard of junk mail and unwanted
e-mail, your mailing piece won't be scrapped with the others and your e-mail won't be
instantly deleted. After all, these folks know you, identify with you, trust you. So they'll
be delighted to purchase--or at least check out--that new product or service you're
offering. They'll always be inclined to buy from a company they've patronized.

Guerrillas are able to think of additional products and services that can establish new
sources of profits to them. They're constantly on the alert for strategic alliances--fusing
marketing efforts with others in order to market aggressively while reducing marketing
investment.

The internet and your bookstore are teeming with a treasure trove of marketing tactics
that can help you discover smart guerrilla marketing tactics.

But learning about them is only half the battle. If you don't begin putting them into
practice, you won't see the results these type of marketing efforts can have on your
bottom line.

BRAND STRATEGY- What is BRANDING?

Branding is one of the most important aspects of any business, large or small, retail or
B2B. An effective brand strategy gives you a major edge in increasingly competitive
markets. But what exactly does "branding" mean? How does it affect a small
business like yours?

Simply put, your brand is your promise to your customer. It tells them what they can
expect from your products and services, and it differentiates your offering from your
competitors'. Your brand is derived from who you are, who you want to be and
who people perceive you to be.
Are you the innovative maverick in your industry? Or the experienced, reliable one? Is
your product the high-cost, high-quality option, or the low-cost, high-value option? You
can't be both, and you can't be all things to all people. Who you are should be based to
some extent on who your target customers want and need you to be.

The foundation of your brand is your logo. Your website, packaging and promotional
materials--all of which should integrate your logo--communicate your brand.

Brand Strategy

Your brand strategy is how, what, where, when and to whom you plan on
communicating and delivering on your brand messages. Where you advertise is part of
your brand strategy. Your distribution channels are also part of your brand strategy. And
what you communicate visually and verbally are part of your brand strategy, too.

Consistent, strategic branding leads to a strong brand equity, which means the added
value brought to your company's products or services that allows you to charge more for
your brand than what identical, unbranded products command. The most obvious
example of this is Coke vs. a generic soda.

Because Coca-Cola has built a powerful brand equity, it can charge more for its
product--and customers will pay that higher price.

The added value intrinsic to brand equity frequently comes in the form of perceived
quality or emotional attachment. For example, Nike associates its products with star
athletes, hoping customers will transfer their emotional attachment from the athlete to
the product. For Nike, it's not just the shoe's features that sell the shoe.

Defining Your Brand

Defining your brand is like a journey of business self-discovery. It can be difficult, time-
consuming and uncomfortable. It requires, at the very least, that you answer the
questions below:
 • What is your company's mission?

• What are the benefits and features of your products or services?

• What do your customers and prospects already think of your company?

• What qualities do you want them to associate with your company?

Do your research. Learn the needs, habits and desires of your current and prospective
customers. And don't rely on what you think they think. Know what they think.

Because defining your brand and developing a brand strategy can be complex, consider
leveraging the expertise of a nonprofit small-business advisory group or a Small Business
Development Center .

Once you've defined your brand, how do you get the word out? Here are a few simple,
time-tested tips:

• Get a great logo. Place it everywhere.

• Write down your brand messaging. What are the key messages you want to
communicate about your brand? Every employee should be aware of your brand
attributes.

• Integrate your brand. Branding extends to every aspect of your business--how you
answer your phones, what you or your salespeople wear on sales calls, your e-
mail signature, everything.

• Create a "voice" for your company that reflects your brand. This voice should be
applied to all written communication and incorporated in the visual imagery of all
materials, online and off. Is your brand friendly? Be conversational. Is it ritzy? Be
more formal. You get the gist.

• Develop a tagline. Write a memorable, meaningful and concise statement that

captures the essence of your brand.

• Design templates and create brand standards for your marketing materials. Use
the same color scheme, logo placement, look and feel throughout. You don't need
to be fancy, just consistent.

• Be true to your brand. Customers won't return to you--or refer you to someone
else--if you don't deliver on your brand promise.
 • Be consistent. I placed this point last only because it involves all of the above and
is the most important tip I can give you. If you can't do this, your attempts at
establishing a brand will fail.

Building A Mission / Vision Statement

Vision Statements and Mission Statements are inspiring words chosen by successful
leaders to clearly and concisely convey the direction of the business. By crafting a clear
mission statement and vision statement, you can powerfully communicate your intentions
and motivate your team or company to realize an attractive and inspiring common vision
of the future.

"Mission Statements" and "Vision Statements" do two distinctly different jobs.

A Mission Statement defines the company’s purpose and primary objectives. Its prime
function is internal – to define the key measure or measures of the company’s success –
and its prime audience is the leadership team and investors.

Vision Statements also define the company’s purpose, but this time they do so in terms
of the company’s values rather than bottom line measures (values are guiding beliefs
about how things should be done.) The vision statement communicates both the purpose
and values of the organization.

For employees, it gives direction about how they are expected to behave and inspires
them to give their best. Shared with customers, it shapes customer's understanding of
why they should work with your company.

When developing a mission statement, try and answer the following questions:

• What do we do today?

• Who do we do it for?

• What is the benefit?

When developing a vision statement, try and answer the following questions:

• What do we want to do going forward?

• When do we want to do it?

• How do we want to do it?

ENTREPRENEURIAL FINANCE
https://youtu.be/lH95Ih8Q0QE
CASH FLOW
Cash flow is the money that is moving (flowing) in and out of your business in a month.
Although it does seem sometimes that cash flow only goes one way - out of the business - it
does flow both ways.
Cash is coming in from customers or clients who are buying your products or services. If
customers don't pay at time of purchase, some of your cash flow is coming from collections of
accounts receivable.
Cash is going out of your business in the form of payments for expenses, like rent or a
mortgage, in monthly loan payments, and in payments for taxes and other accounts payable.
Think of 'cash flow' as a picture of your business checking account. If more money is coming in
than is going out, you are in a "positive cash flow" situation and you have enough to pay your
bills. If more cash is going out than coming in, you are in danger of being overdrawn, and you
will need to find money to cover your overdrafts. This is why new businesses typically need
working capital, in the form of a loan or line of credit, to cover shortages in cash flow.
Lack of cash is one of the biggest reasons small businesses fail. The Small Business
Administration says that "inadequate cash reserves" are a top reason start-up don't succeed.
It's called "running out of money," and it will shut you down faster than anything else. As a
start-up, you may need to keep track of cash flow on a weekly, maybe even a daily basis.
https://youtu.be/hISdzmjNO5w
BURN RATE
What Is Burn Rate & How Is It Calculated?
The term is usually used in connection to a start-up, and indicates the rate at which your
company is consuming, or burning, its financing or store of venture capital to support
operations in excess of cash flow.
It's a measure of negative cash flow, and it is most often expressed in months, though in a crisis
it might be measured in weeks or days.
For instance, let's say your company needs $5000 every month to keep the lights on, but sales
are only $2500 for the same period. You are then burning $2500 a month.
There are two good reasons that burn rate matters. The first is that it tells you when you're
going to run out of money.
The second is that investors look at a start-up companies burn rate and measure it against
future revenues of the company to decide if the company is a worthwhile investment. If the
burn rate is greater than forecast or if the company's revenues are not growing as rapidly as
they are forecast to grow, then investors may think the company is not a good investment. It
may be too risky.

You should calculate and watch your burn rate carefully, as many businesses, such as those in
technology, may take a long time to find their market and become profitable.
2 Easy Steps to Calculating Burn Rate
Let's focus on a period, such as a quarter. What's the difference in your cash balance at the
beginning of the quarter and at the end of the quarter? So, if you started with $10,000 "in the
bank", and at the end of the quarter you have $4000 you burned $6000.
Divide by the number of months in the period you selected. There are three months in a
quarter, so your company burned $2000 a month.
If you want to stay in business, sales must rise to generate at least $2000 a month. Of course, if
you have planned acquisitions coming up, your burn rate going forward will be higher.
BALANCVE SHEET
What Is A Balance Sheet?
The balance sheet is a very important financial statement that summarizes a company's assets
(what it owns) and liabilities (what it owes). A balance sheet is used to gain insight into the
financial strength of a company. You can also see how the company resources are distributed
and compare the information with similar companies.
The balance sheet informs company owners about the net worth of the company at a specific
point in time. This is done by subtracting the total liabilities from the total assets to calculate
the owner's equity, also known as shareholder's equity (for corporations) or simply the net
worth.
https://youtu.be/NkbCHQKxXXY
RETURN OF INVESTMENT (ROI)
What Is ROI & How To Calculate It?
An investor cannot evaluate any investment, without first understanding how to calculate
return on investment (ROI). This calculation serves as the base from which all informed
investment decisions are made, and although the calculation remains constant, there are
unique variables that different types of investment bring to the equation.
To calculate it, you simply take the gain of an investment, subtract the cost of the investment,
and divide the total by the cost of the investment. Or:
ROI = (Gains – Cost)/Cost
An Example
If an investor buys 20 shares of Your Company for $10 a share, his investment cost is $200. If he
sells those shares for $250, then his ROI is ($250-200)/$200 for a total of 0.25 or 25%. This can
be confirmed by taking the cost of $200 and multiplying by 1.25, yielding $250.

https://youtu.be/eoAR8ZyAyoc
STARTUP VALUATION
What is Valuation & How to Value a Start-up?
Business valuation of any kind is never cut and dry. For start-ups with little or no revenue and
an uncertain future, assigning a valuation is especially tricky. For mature businesses that are
publicly listed and have a steady revenue, there are specific facts and figures to use to
determine a value. However, a start-up is much more difficult to value since it is likely nowhere
near making relevant sales. If you need to raise capital for your start-up, it’s important to
determine what your start-up’s value is. But do you know how to best value your start-up?
One of the most basic economic principles is that of supply and demand. You can use this
principle for valuing your start-up. As the name implies, the more scarce a supply, the higher
the demand. For your start-up, that means if you are part of a much talked about new patented
technology start-up, you could drive up your valuation by attracting multiple interested
investors competing for the deal.
Most start-ups won’t be fortunate enough to experience multiple investors courting them for a
deal. However, even if you don’t have real demand from investors, you can create a perceived
demand when dealing with one investor. To do so, don’t let them think that they are the only
investor interested in your start-up, as that can decrease your valuation. Work to portray your
start-up as new and unique to create the scarcity needed to maximize your valuation.
Without a history showing profit or revenue, your start-up has very little to no liquidity.
Without cash flow, it is difficult for start-ups to determine their valuation. It’s going to take time
to become profitable, so you will need to look to your future success to determine a value. Ask
yourself a few key questions:
How many years will it take you to be profitable? If you can get there quicker, your valuation
will be higher.
How much are comparable companies valued at when they become profitable?
A company may be worth a fraction of the number they are valued at when they reach
profitability. Factors like likelihood of success and the quality of the management team should
be taken into factor.
Your industry makes a difference. Each industry has its own way of valuing start-ups. For
example, an VR/AR Start-up would have a much higher valuation than a SaaS CRM. Research
the valuations achieved in recent investments or M&A transactions in your market before you
approach investors.
Some angel investors and venture capitalists use a “rule of thumb” value to quickly come up
with a range of start-up value. The values are typically set by the investors, and they depend on
the start-up’s stage of development. Simply put, the further along the start-up has progressed,
the lower the investor’s risk and the higher its value. Examples of stages of development
include:
A start-up has an exciting business idea
A start-up has a stunning team of engineers and a great business person
The start-up has a Minimum-Viable-Product (MVP) with early adopters
The start-up has partners, a customer base and a pipeline of prospects
Revenue growth and an obvious pathway to profitability is shown.
What Grade Are You? Another way to look at the developmental stages is by breaking it out
into four stages similar to the four years of high school education. The stage you are in is a key
factor in determining your value.
Freshman: an idea, team and a prototype. Bootstrap financed and raised $50 thousand to
$0.5M.
Sophomore: MVP with early adopters. Seed stage angels financed from $500 thousand to $1.5
million.
Junior: Experiencing user or revenue growth and displayed a full proof of concept around the
start-up. Nearing up to $1 million in revenue. Series A venture capital financed from $1.5
million to $5 million.
Senior: Reached multi-millions in revenue and ready to scale up with a capital raise. Series B/C
venture capital financed from $5 million to $50 million.
https://youtu.be/USDkr-dmkDo
ASSESSMENT: Using the tools provided in the Toolbox, build a 3 Year Financial Plan for your
business.
TOOLBOX: STARTUP RUNWAY
Startup Runway is a cash planning tool which helps start-ups understand, manage and extend
their cash runway.

FUNDING AND EXITS

https://youtu.be/Jibp_2GUxbM

Bootstrap

This is where you invest your own money to startup. You can use your savings or use your credit
cards to pay for initial expenses that you will incur.

Pre-Seed Capital

You have an idea, maybe a working prototype and are looking for funding that will allow you to
focus on your business full time. Pre-seed capital tends to cover the first stage in the life of a
start-up and is often comprised of three main sources of financing:
 1. FFF (fools, friends, and family): the three classical Fs that support you and are
keen to invest in your business.

2. Business angels: previous start-up founders who have had exits and decide to
invest the money in other start-ups (or their own) or investors that despite not
having a tech-related background decide to back companies in the space, given
their potential growth and current market situation. Contrary to Venture Capital
firms, business angels often invest their own money and at one of the riskiest
stages for start-ups, thus their importance in every single start-up market.

3. Accelerators: These organisations provide capital, mentorship and office space to

teams in exchange for 5 to 10% of equity.

Seed Capital

Seed capital can be described as the capital necessary to start a company and to try to find
product-market fit. Seed rounds range from S$250K to S$750K or S$1 million. The main
providers of capital at these stage are business angels, super angels and early stage Venture
Capital firms. However, in recent years more players have joined the game and are, in theory,
improving the ecosystem.

Crowdfunding: there are two types of crowdfunding that are closely tied to start-up investing.

1. Reward based: For hardware start-ups and creative projects there’s what’s often called
‘reward-based crowdfunding’, where sites like Kickstarter and Indiegogo are global leaders.
Users can back the projects they like and get something material in return (physical or digital
products and services), receiving no equity from the teams or companies providing such goods.
“The funding goal is the amount of money that a creator needs to complete their
project. Funding on Kickstarter is all-or-nothing. No one will be charged for a pledge towards a
project unless it reaches its funding goal. This way, creators always have the budget they scoped
out before moving forward.” – Kickstarter.com

2. Equity based: The other kind of crowdfunding that’s relevant for start-ups is equity
crowdfunding. As the name indicates, in this instance backers (investors) of the companies get
equity in return, thus becoming shareholders of the companies and being able to participate in
the future returns the start-ups might be able to provide to investors. This type of investing is
often carried by platforms that serve as aggregators, choosing start-ups and inviting backers to
invest in them through the platform, which get to charge a fee per deal closed.

Syndicate investing: the idea of a syndicate is to let angel investors syndicate deals with each
other. This means that angels with good track records can lead investments in early stage start-
ups and allow other angels to co-invest, providing additional capital to the financing rounds.
The advantage for the three parts involved are simple to understand:
 • Lead angel investors get to choose the start-ups they want to invest in and don’t
have to face the burden of providing all the capital.

• Angels that join in don’t have to select the start-ups if they trust the criteria of the
lead angel investors.

• Start-ups can get more money than usual, faster.

Series A
Start-ups that get to this stage have usually figured out their product, the size of the market
and need capital to scale, improve distribution systems or establish a business model if they
don’t have one yet. Typical Series A rounds range from S$2 to S$5 million and are led by
traditional Venture Capital firms that end up owning between 15 and 30% of the invested start-
ups.

Series A and previous stages are the riskier for investors, given the doubts surrounding the
start-ups, their products and their teams.

Series B
Series B investments are “all about scaling”. Successful start-ups at this stage tend to have an
established user base and a business model that is working.

Series B usually starts at S$6 million and can be has high as S$8 to S$10 million. Series B deals
are not as common in Singapore as in the US and tend to be led or include the participation of
US-based VC firms.

Series C
When companies reach this stage they’re fully mature. Business model is working -whether the
company is profitable or not-, user base is expanding and acquisitions might be in the crosshairs
of the executives leading these companies.

Financing rounds at these stages tend to range from tens to hundreds of millions. A clear
difference between Series C and other rounds, besides the amount being invested, is that at
this point private equity firms and investment banks tend to be the lead investors, with the
participation of large Venture Capital firms. From this stage on the outcome tends to be an IPO
or to get acquired by a much bigger company.

SOURCES OF FUNDING

An Angel Investor is someone who puts their own finance into the growth of a small business at
an early stage, also potentially contributing their advice and business experience. They might be
a wealthy, well-connected individual who’s taken a personal liking to your product, a group of
angel investors who club together to fund start-ups, or even a friend or member of your family
who’s decided to put some money in.

Angels make their own decision about the investment, and in return for providing personal
equity they take shares in the business. The amount they invest is flexible – it could be a small
amount to get you off the ground, or a larger amount. While they can provide insight and
advice about your business, their job isn’t to build up your company.

Venture Capital funding is a whole other level. For a start, rather than individual investors,
winning venture capital usually involves a whole firm – investors, board members, and people
whose job is to generally help your business develop. Venture capital firms are made of
professional investors, and their money comes from a variety of sources – corporations and
individuals, private and public pension funds, foundations.

Those who invest money in venture capital funds are called ‘limited partners’; those managing
the fund and working with individual companies are called ‘general partners’, and these are the
people who work with the start-up to ensure that it's developing.

The job of venture capital firms is to find businesses with high growth potential. The firm take
shares and have a say in the future of the company and its running, and in exchange for their
involvement venture capitalist firms expect a high return on investment. After a period of time,
often years, the venture capitalists sell shares in the company back to the owners or through an
initial public offering, hopefully making much more that what they put in.

Venture capital usually deals with very large amounts of money – rather than seed funding, it
can be multi-million deals. And while more and more start-ups are winning venture capitalism
investment, with the sums involved and the risk of investing in a start-up, businesses a bit
further down the line might be more likely to gain the trust and money of venture capitalists.

TERM SHEETS

erm sheets are non-binding agreements setting forth the basic terms and conditions under
which an investment will be made. A term sheet serves as a template to develop more detailed
legal documents. Once the parties involved reach an agreement on the details laid out in the
term sheet, a binding agreement or contract that conforms to the term sheet details is then
drawn up. A term sheet lays the groundwork for ensuring that the parties involved in a business
transaction are in agreement on most major aspects of the deal, thereby precluding the
possibility of a misunderstanding. It also ensures that expensive legal charges involved in
drawing up a binding agreement or contract are not incurred prematurely.

They generally cover the more important aspects of a deal, without going into every minor
detail and contingency covered by a binding contract. For example, a term sheet from a venture
capital company that is investing in an early-stage company may contain such details as the
amount of investment, the percentage stake sought, anti-dilutive provisions and valuation.

EXAMPLE OF TERM SHEET: https://kindrik.sg/template/se-asia-seed-investment-term-sheet-

2021-05-25.pdf?404=true
DEBT VS. EQUITY FINANCING
Debt Financing
Purchasing a home, a car or using a credit card are all forms of debt financing. You are taking a
loan from a person or business and making a pledge to pay it back with interest. Debt financing
for your business works in a similar way. As a business owner, you can apply for a business loan
from a bank or receive a personal loan from friends, family or other lenders, all of which you
must pay back. Even if family members lend you money for your business, they must charge the
minimum interest rate in order to avoid the gift tax.
The advantages of debt financing are numerous. First, the lender has no control over your
business. Once you pay the loan back, your relationship with the financier ends. Next, the
interest you pay is tax deductible. Finally, it is easy to forecast expenses because loan payments
do not fluctuate.


The downside to debt financing is very real to anybody who has debt. Debt is a bet on your
future ability to pay back the loan. What if your company hits hard times or the economy, once
again, experiences a meltdown? What if your business does not grow as fast or as well as you
expected? Debt is an expense and you have to pay expenses on a regular schedule. This could
put a damper on your company's ability to grow.
Finally, although you may be an Pte Ltd or other business entity that provides some separation
between company and personal funds, the lender may still require you to guarantee the loan
with your family's financial assets.
Equity Financing
The public does not understand equity financing as well as debt financing, because equity
financing involves investors. You could offer shares of your company to family, friends and
other small investors, but equity financing often involves venture capitalists or angel investors.



The big advantage of equity financing is that the investor takes all of the risk. If your company
fails, you do not have to pay the money back. You will also have more cash available because
there are no loan payments. Finally, investors take a long-term view and understand that
growing a business takes time.

The downside is large. In order to gain the funding, you will have to give the investor a
percentage of your company. You will have to share your profits and consult with your new
partners any time you make decisions affecting the company. The only way to remove investors
is to buy them out, but that will likely be more expensive than the money they originally gave
you.
EXIT STRATEGY
https://youtu.be/l5e76iKzHU8
The exit strategy is a way of "cashing out" an investment.

Examples include an initial public offering (IPO) or being bought out by a larger player in the
industry. Also referred to as a "harvest strategy" or "liquidity event”. It is a method by which a
venture capitalist or business owner intends to get out of an investment that he or she has
made in the past.

It's more difficult for a VC or entrepreneur to get money out of an investment because they are
generally dealing with private companies. When a firm is private, the shares cannot be sold
nearly as easily as when the firm is publicly traded on a stock exchange. So, even though a
private start-up firm could be worth millions of dollars, the VC/entrepreneur has little access to
this wealth.

You can think of the exit strategy as the first opportunity to trade an illiquid asset (shares in a
private firm) for a very liquid asset (cash).

Start-ups looking for angel investors or venture capital (VC) absolutely need an exit strategy
because investors require it. The exit is what gives them a return. And the rest of us, starting,
running, and growing a business, but not looking for outside investors, will probably need an
exit eventually; but there’s probably no rush. The exit strategy related to start-up funding, is
what happens when investors who had previously put money in a start-up get money back,
usually years later, for a lot more money than they initially spent.

Investor exits normally happen in only two ways: Either the start-up gets acquired by a bigger
company, for enough money to give the investors a return (as just happened with WhatsApp &
Facebook), or the start-up grows and prospers enough to eventually register for selling shares
of stock to the buying public over a public stock market, as happened with Facebook in 2012
and Twitter in 2013.

When investors sit for pitches from start-ups, they expect the start-ups to cover the exit
strategy. That usually means talking, in the pitch and in the business plan, about how similar
companies in similar markets have been able to exit via selling out to a larger company. The
more sophisticated plans and pitches will mention recent exits and offer information about how
the companies that exited were valued when they were bought. That usually ends up as
something like “[this similar company] was purchased by [that company] in [that year] for [that
amount], which was [that multiple] of its revenues.” The standard phrase in that context is “5X”
for an exit value of five times revenues, or “10X,” or whatever. And that should not be confused
with similar phrasing describing the investors’ exit: an exit at “5X,” for example, would be one
in which the investors received an actual exit amount, in money or shares they can sell, of five
times what they originally invested.

You can understand how investors feel about exit strategy if you consider what happens to
investors who don’t get exits. They don’t have a return. They put money into a company, but
they get nothing back. Having a minority share in a healthy, growing company, without any
prospect of an exit, is a terrible scenario for investors.
TYPES OF EXITS
An IPO
In an IPO, you sell a portion of your company in the public markets. You and your management
team typically remain in place for a period of years, your investors and managers may be able
to sell some stock, and your company continues to operate much as it has in the past.
However, your company will be subject to additional government regulations, and stock market
analysts and institutional investors will scrutinise your quarterly performance.
A Strategic Acquisition
In a strategic acquisition, another company purchases your business, either with cash or stock
in the acquiring company or with some combination of stock and cash. The acquirer may or
may not retain you and your management team, and may or may not make substantial changes
in your company's operations, staff, and business lines.
The benefit is typically liquidity because if you sell the company to a strategic acquirer you
might be able to sell most or all of your stock.
The disadvantage of this exit strategy is that "you are likely to lose operating control”.
A Management Buyout
If you decide to recapitalize and sell the company to the next generation of managers it is
known as a management buyout. This type of transaction is usually financed through some
combination of debt and/or private equity investment, with the debt collateralized by the
assets of the company. It provides immediate liquidity to the owner and early shareholders,
and allows the company to continue as a private enterprise.
The benefit is that you usually have a smoother transition. The founders most likely are not
managing the company on a day-to-day basis, ceding that to the management team, which is
now buying the company. This exit strategy marks a change of ownership, gets the
shareholders some liquidity, yet provides a seamless transition for the company and employees
and other constituencies.

LEGAL REQUIREMENTS
https://youtu.be/AcFQRg2QuxU
https://youtu.be/2WKiNg00Mpc

Intellectual Property [IP]

Intellectual Property [IP] is the ownership of ideas. Unlike tangible assets to your business such
as computers or your office, intellectual property is a collection of ideas and concepts.

There are only three ways to protect intellectual property in the United States: through the use
of copyrights, patents, or trademarks. A copyright applies to a written document; a patent to a
specific product design; and a trademark to a name, phrase or symbol. All three methods have
limitations, there's no one perfect way to protect an idea.

Copyright / Copyright Protection

A copyright will protect the following categories of works:

• literary works

• musical works, including any accompanying words

• dramatic works, including any accompanying music

• pantomimes and choreographic works

• pictorial, graphic and sculptural works

• motion pictures and other audio-visual works

• sound recordings

• architectural works

• computer programs (sometimes the graphical user interface) and websites

Copyright protection gives the copyright holder the exclusive right to copy the work, modify it
(that is, create "derivative works"), and distribute, perform and display the work publicly.

Ideas or concepts do not have copyright protection. Copyright protects the expression of the
idea, but not the ideas themselves. For example, if I ask you what a chair is, you get a picture in
your head; the picture I get in my head is different from the picture you get in your head and
probably also different from the picture Buffy gets in her head. These are the "ideas" of what a
chair is. However, if you were to draw the chair you envisioned in your head or use words to
describe that chair, it's an "expression" of the idea--and that's what's protected by copyright.
Generally, the only protection for ideas and concepts is through trade secret law and/or
confidentiality agreements, which provide a contractual remedy for misuse or disclosure of the
idea.

Patents

Patents protect processes, methods and inventions that are "novel," "non-obvious" and
"useful." If granted, a patent gives you a 20-year monopoly on selling, using, making or
importing an invention into the United States. The requirements for a patent are complex, but
here they are in a nutshell:

• Your work must be novel. This means it must not be known or used by others in
this country, or patented or described in a printed publication here or abroad, or
in public use or for sale in this country more than one year prior to the application
for patent.

• Your work must be non-obvious. This means it must not be obvious to a person
having ordinary skill in the pertinent art as it existed when the invention was
made.

• Your work must be useful. This means that it must have current, significant,
beneficial use as process, machine, and manufacture, composition of matter or
improvements to one of these. According to the Patent Office: "The word
'process' is defined by law as a process, act or method, and primarily includes
industrial or technical processes. The term 'machine' used in the statute needs no
explanation. The term 'manufacture' refers to articles that are made, and includes
all manufactured articles. The term 'composition of matter' relates to chemical
compositions and may include mixtures of ingredients as well as new chemical
compounds. These classes of subject matter taken together include practically
everything which is made by man and the processes for making the products."

Patent protection requires full public disclosure of the work in detail and therefore precludes
maintaining any trade secret protection in the same work.

Trademarks
A trademark is like a brand name. It is any word(s) or symbol(s) that represent a product to
identify and distinguish it from other products in the marketplace. A trademark word example
would be "Rollerblades." A trademark symbol would be the peacock used by NBC.

A trademark can be registered in three ways:

1. By filing a "use" application after the mark has been used.

2. By filing an "intent to use" application if the mark has not yet been used.

3. In certain circumstances in which a foreign application exists, you can rely on that.

The TM (™) mark may be used immediately next to your mark. The ® registration symbol may
only be used when the mark is registered with the PTO. It is unlawful to use this symbol with
your mark before receiving an issued registration from the PTO.

What qualities make for a strong trademark? The cardinal rule is that a mark must be
distinctive. The more distinctive it is, the easier your trademark will be to enforce. This is why
so many trademarked products have unique spellings.

Trademark rights last indefinitely if the company continues to use the mark to identify its goods
or services. When the mark is no longer being used, the registration is terminated. The initial
term of federal trademark registration is 10 years, with 10-year renewal terms.

Trade Secrets

There is a great deal of confusion regarding trade secrets. Many people think that a trade secret
is some type of protection provided by the government that allows them to seek recourse in
court should someone infringe upon their idea. However, unlike copyrights, trademarks and
patents, a trade secret is not registered with any government office to provide a verifiable
public record of any claims to the secret. You can, however, declare one to a patent lawyer in a
notarized and signed disclosure. In this manner the trade secret belongs to you forever--or until
someone leaks it.

Trade secrets refer to items such as recipes that are unique and provide a business with a
competitive advantage, but which cannot be safeguarded under current forms of idea
protection such as copyright, trademark or patent. The best form of protection for these items
is to keep them a secret. One of the most famous and best-kept trade secrets is the formula for
Coca-Cola.

The best way to secure the information for a trade secret is to restrict access to the secret and
have individuals and companies sign nondisclosure agreements with you should you enter into
a relationship with them which will require them to know some aspects of the secret. If
someone independently develops or reverse-engineers your trade secret, there's nothing you
can do. If someone does leak it, you can sue for theft. Suing, however, cannot stop the person
from using the leaked information. So although you may get money from the suit, you lose the
larger potential profits you could have made from the idea. Still, if your luck holds and your
trade secret remains secret, royalty income from it can last significantly longer than the patent
period.

Non-Disclosure Agreements [NDAs]

A Non-Disclosure Agreement (NDA) is a legal contract between two or more parties that
signifies a confidential relationship exists between the parties involved. The confidential
relationship often refers to information that is to be shared between the parties but should not
be made available to the general public. NDAs are also commonly referred to as a
confidentiality agreement.

NDAs often arise when two companies are about to do business together. The parties are
restricted from releasing information regarding any business processes of the counterparty
integral to the company's operations. NDAs also may arise between an employer and
employee. If the employee has access to sensitive information about the company, he may be
asked to sign an NDA when he is hired. This provides an incentive to the employee not to
release this sensitive information and avoid a costly legal headache. NDAs also sometimes arise
between a company seeking funding and an investor in the company or potential investors, as
NDAs are a very common way to protect company trade secrets. This information may include a
go-to-market strategy and sales plan, potential customers, a manufacturing process or
proprietary software. If an NDA is breached by one party, the other party may seek court action
to prevent any further disclosures and may sue the disclosing party for monetary damages.

ASSESSMENT: Propose a Business Structure for your business.

AN INVESTOR SUMMARY

What Is It?
The first thing the professional investor wants to see (and looks forward to) when evaluating a
possible investment is an executive summary of the project.

This is sometimes also called:

• Executive Summary

• Investor one-pager

• Investor executive summary

Unlike standard executive summaries that appear at the beginning of any business plan, this
document is different as it serves a completely different purpose. The purpose is primarily to
convince investors to ask for more information, and to convince them that your venture is
worth pursuing. Creating an executive summary is a matter of craftsmanship and experience
combined with the knowledge of the investor’s goals and thought process. This is an excellent
opportunity for you to create a great first impression, and we will be happy to help you.

Why Is It Important?
Venture capital funds and professional investors get dozens of calls and emails every week with
“investment opportunities”. They are very busy investing in many different companies and
typically only need five minutes to determine their stance on whether to invest or not. The
investor summary is a summary of the business plan and marketing proposal packaged in a
contextually and visually appealing way. After reading the executive summary, the investor
should receive positive answers to the following questions:
 • Is there a real problem in the market and is the market big enough?

• Is there a need and do you have the solution?

• Do you have a competitive advantage?

• Is the project going to make money?

• Will the team be able to carry out the plan?

A good investor summary is your way of attracting the attention of investors, and when
completed properly, it can bring a lot of financing to your startup.

What Should It Include?

Must Have:

• One line description of the project

• The problem

• The solution

• Market overview

• Competitors overview

• Competitive Advantage

• Business Model

Nice To Have:

• Marketing and go-to-market strategy

• Milestones and goals

• Budget – Sources and Uses

Example : One Page Investment Summary
Toolbox : One Page Investment Summary Template
PITCHING FOR INVESTMENT
What Is A Business Pitch?
A pitch is basically delivering a business plan verbally. A pitch typically takes the form of an
entrepreneur or group of entrepreneurs presenting or describing their ideas to prospective
investors.
An elevator pitch is simply a very short pitch that distills the idea into a short summary that
takes only as long as a short elevator ride. A video pitch is a pitch done via a short video rather
than in person.
Regardless of the means chosen to pitch, the aim is typically the same; describing a business
opportunity with the intention of securing funding to develop the idea further.
The Business Pitch Process
Typically, entrepreneurs commence the pitch with a request for a certain amount of funding in
return for a certain percentage of equity in the business. The presenter then describes the
opportunity and concludes with a Q&A session. If an offer is made by an investor and it is
accepted by the presenter, due diligence would then be undertaken to ensure that the
investment opportunity is as it was described and that the key financials stand up to scrutiny.
Business plan pitches are often presented with the aid of presentation tools such as Microsoft
PowerPoint. If this is the case for you, it is worth reading up on key presentation tips such as
Guy Kawasaki’s 10/20/30 rule. It is also worth providing the audience with a copy of the slide
deck so they can take notes. Finally, these handouts should contain an appendix with an
additional level of detail not covered by the main pitch.
Unlike most business plans, the pitch is not a physical (or virtual) document. A pitch should,
however, contain the same content as a business plan, with the main differences being the
breadth of material covered and the delivery method. Therein lies one critical problem.
For some entrepreneurs, business planning is ‘difficult’ and pitching is assumed to be a slightly
easier means to secure funding. This perception results in shortcuts and a dangerously myopic
perspective.
Preparation tends to be more limited and the results are all too predictable — the entrepreneur
is discomfited when the prospective investor asks the most rudimentary of questions. The
lesson is clear- a pitch is not a substitute for a business plan; it is simply a different, more
concise, delivery method.
PITCH FOR INVESTMENT
https://youtu.be/rhL03SdSjhE
Creating an Ideal Pitch
The optimum way to create an effective pitch is to start with a thorough investment summary.
Once this is written, the key elements of the investment summary can be distilled into a pitch.
One major benefit of this method is that while the process of creating a business plan can be
difficult, it is also rigorous and usually an exhaustive process. Hence it serves to equip the
author with the answers to typical questions they should expect from prospective investors.
Creating a pitch without the discipline of following the business plan process is fraught with
danger. While the presenter can describe the product or service in detail, those that pitch
without a plan tend to fall when asked to describe the market opportunity or their sales
forecasts in more detail.
The Investment
A primary aim of most pitches is to secure funding for an idea. The presenter needs to decide in
advance what the likely terms are for the investment. Like a business plan, a pitch needs to
describe the opportunity for the investor in clear terms so they can assess risk and return, and
how it sits within their existing investment portfolio.
Considering pitches along a continuum, at one end you have an idea (which is essentially
worthless) and at the other end a successful company generating significant free cash flows
daily. The point along the continuum where your company sits is hugely relevant in the context
of the investment opportunity. An idea that has not yet been commercialized and has no
customers is hugely risky and, as a result, any prospective investor is going to demand a
significant equity stake in return for their investments. For many the risk may even be too high
to bear as they may doubt the ability of the company to generate sufficient cash to cover day-
to-day operations, to say nothing of generating sufficient sales to support an exit for the
investor in due course. The equity you are prepared to give away and the value that you put on
that equity needs to be based on real metrics, such as existing sales. While the means to value
businesses are varied, the figures you are offering need to be plausible and realistic when
considered in the context of existing sales levels (as distinct from aspirational sales levels).

Summary
The key message to take away is that a pitch is simply a concise verbal manifestation of the
investment summary and is not to be considered as a substitute. Those who succeed with their
pitch objectives are those who present a viable opportunity, can answer questions from a
panel, and can convince these prospects that their pitch is worthy of investment. All the same
qualities that those looking to secure funding for a business plan should strive for!
PITCHING ESSENTIALS
https://youtu.be/WmorNKbymy4
TOOLBOX: VARIOUS
IMPROVE PRESENTATIONS : https://pitchdeck.improvepresentation.com/best-pitch-decks
PITCH DECK EXAMPLES: https://pitchdeckexamples.com
PITCHDECK: https://pitchdeck.io/
ASSESSMENT: Build a Pitch Deck for your business using no more than 10 slides, using
PowerPoint / Google Docs / Keynote.//FINAL DEMO
ENTREPRENEURIAL
FINANCE
ENTREPRENEURSHIP
CASH FLOW BURN RATE BALANCE RETURN OF STARTUP
SHEET INVESTMENT VALUATION
CASH FLOW

• Cash flow is the money that is moving (flowing) in and out of your
business in a month.

POSITIVE CASH FLOW

NEGATIVE CASH FLOW

BURN RATE

• BURN RATE indicates the rate at which your

company is consuming, or burning, its financing
or store of venture capital to support.

• BURN RATE IS A MEASURE OF NEGATIVE CASH FLOW

There are two good reasons
that burn rate matters.

• The first is that it tells you when you're going

to run out of money.

• The second is that investors look at a start-up

companies burn rate and measure it against future
revenues of the company to decide if the company
is a worthwhile investment.
2 Easy Steps to
Calculating Burn Rate
• Let's focus on a period, such as a quarter.
What's the difference in your cash
balance at the beginning of the quarter
and at the end of the quarter? So, if you
started with $10,000 "in the bank", and at
the end of the quarter you have $4000
you burned $6000.

• Divide by the number of months in the

period you selected. There are three
months in a quarter, so your company
burned $2000 a month.

• If you want to stay in business, sales must

rise to generate at least $2000 a month.
What Is A Balance Sheet?

• A Balance sheet is an
important financial
statement that summarizes a
company's assets (what it
owns) and liabilities (what
it owes). A balance sheet
is used to gain insight
into the financial strength
of a company
RETURN OF INVESTMENT (ROI)

To calculate it, you simply take the gain of an

investment, subtract the cost of the investment, and
divide the total by the cost of the investment. Or:

ROI = (Gains – Cost)/Cost

HOW TO CALCULATE
ROI
• An Example
• If an investor buys 20
shares of Your Company for
$10 a share, his investment
cost is $200. If he sells
those shares for $250, then
his ROI is ($250-200)/$200
for a total of 0.25 or 25%.
This can be confirmed by
taking the cost of $200 and
multiplying by 1.25,
yielding $250.
STARTUP VALUATION

• ECONOMIC PRINCIPLE OF SUPPLY AND DEMAND

The more scarce a supply, the higher the demand.

Stages of development

A start-up has an exciting business idea

A start-up has a stunning team of engineers and

a great business person

The start-up has a Minimum-Viable-Product (MVP)

with early adopters

The start-up has partners, a customer base and

a pipeline of prospects

Revenue growth and an obvious pathway to

profitability is shown.

Another way to look at the developmental
stages is by breaking it out
into four stages similar to the four years of
high school education. The stage you are
in is a key factor in determining your value
• Freshman: an idea, team and a prototype.
Bootstrap financed and raised $50 thousand
to $0.5M.
• Sophomore: MVP with early adopters. Seed
stage angels financed from $500 thousand to
$1.5 million.
• Junior: Experiencing user or revenue growth
and displayed a full proof of concept
around the start-up. Nearing up to $1
million in revenue. Series A venture
capital financed from $1.5 million to $5
million.
• Senior: Reached multi-millions in revenue
and ready to scale up with a capital raise.
Series B/C venture capital financed from $5
million to $50 million.
ASSESSMENT:

• Using the tools provided in the Toolbox, build a

3 Year Financial Plan for your business.

• TOOLBOX: STARTUP RUNWAY

• Startup Runway is a cash planning tool which

helps start-ups understand, manage and extend
their cash runway.
CREATE CUSTOMER
JOURNEY MAP
What is a Customer Journey Map?

• A customer journey map tells the story of the customer’s experience starting
from the initial contact, right through the process of engagement and
eventually into a long-term relationship
How To Present Your Customer Journey
Map

• There is no right or wrong way to produce a customer journey map.

Normally, it will be some form of infographic with a timeline of the user’s
experience. But it could just as easily be a storyboard or even a video.
Creating The Concept
Poster
Consider the following Questions:

• What are the strengths of the idea you selected?

• What are its weaknesses?
• What issues will need to be overcome?
• How could other ideas from your creative matrix be modified or recombined
and integrated into this concept to make it better?
• What are the key assumptions the concept is built around?
• What tests could you run to verify the veracity of those assumptions
CONCEPT POSTER

• The Concept Poster will help you answer many of these questions and
present a first draft of your concept to a viewer in a cohesive and
comprehensive way. The Concept Poster is comprised of three major
sections that capture your work and provides a roadmap for future thinking
CONCEPT POSTER

• Background and Insights

• Basic Concept
• Key Assumptions & Anticipated Issues
MINIMUM VIABLE
PRODUCT

MVP
PROTOTYPE
• Prototype: A replica of a product as it will be manufactured,
which may include such details as colour, graphics, packaging
and instructions.
One of the essential early steps in the inventing process is creating a prototype--which,
simply defined, is a three-dimensional version of your vision. But what exactly should a
prototype look like? First, it depends on your idea. Second, it depends on your budget
and your goals. If possible, it's great to start with a handmade prototype, no matter how
rudimentary. We've seen prototypes made from the simplest of household items: socks,
diaper tabs, household glue, empty milk containers--you name it. If it works for your
initial demonstration purposes, it's as good as the most expensive materials.
A prototype provides other
advantages, as well:
• 1. It enables you to test and refine the
functionality of your design. Sure, your idea
works perfectly in theory. It's not until you start
physically creating it that you'll encounter flaws
in your thinking. That's why another great
reason to develop a prototype is to test the
functionality of your idea. You'll never know the
design issues and challenges until you begin
actually taking your idea from theory to reality.
• 2. It makes it possible to test the performance
of various materials. For example, your heart
may be set on using metal--until you test it
and realize that, say, plastic performs better at
a lower cost for your particular application.
The prototype stage will help you determine
the best materials.
• 3. It'll help you describe your product more
effectively with your team, including your
attorney, packaging or marketing expert,
engineers and potential business partners.
• 4. It will encourage others to take you
more seriously. When you arrive with a
prototype in hand to meet any
professional--from your own attorney to a
potential licensing company--you separate
yourself from the dozens of others who've
approached them with only vague ideas in
mind. Instead, you'll be viewed as a
professional with a purpose, as opposed to
just an inventor with a potentially good
idea.
• https://youtu.be/fU1BFBLXG-s
Solution Validation : Example Questions
Main Goal is to understand which features
create value (if any)

• Does [X] solve your problem? Why not?

• Where does [X] fall short of your expectations?

• How does this product/feature compare to your current solutions? How do you evaluate alternative solutions
today?
• Will this be better than your current solution?

• Quantify “how much” better.

• Have you used something similar? What was the experience? Do you still use [Y] today? Why?

• What does [X] remind you of?

• Would [solution X] create new problems or pains for you? What needs to be before you would use [X]?

• Why will you not use this?

• What is the most remarkable element of [X]? What is the most critical/crucial feature of [X]? What can’t be left out? Why?

• Where do you start to use [X]?

• What do you like or dislike about [solution X]? Why?

• Why do you think this could be beneficial for other people? For whom? Would you recommend this to someone?
(Who? ask to confirm)
General Tips
• First validate whether you’re talking to a relevant user
(target segment).
• To verify real interest, ask for some commitment (pre-payment if
possible). e.g. ask for personal contact details for follow-up.
• Show the solutions when possible (even a sketch will do!).
• Make it clear that this solution is not final, anything can be
changed. Don’t explain how much effort went into this
project/solution. Avoid hypothetical questions about the
future.
• Don’t ask for a redesign or to come up with new features.
• Your main priority = to learn, not to sell.
Example: Low Cost MVPs
• https://youtu.be/y20E3qBmHpg

• Mobile app design

• https://youtu.be/k_9Q-KDSb9o

• How to make a cardboard MVP

TOOLS:MVP
Marvel App is an app that allows you to design and create prototypes of your own apps. It is a great
way to use your imagination and create your own apps.

With Just In Mind users can design from scratch clickable wireframes to completely interactive
prototypes with a full range of web interactions and mobile gestures to select from.

Oneweb.tech helps you build apps with a modular and service oriented approach. Comes with UX/UI,
Process and Page Designer and Run Time.

AppSheet allows you to create a mobile app for free without needing to code.

Miro is an online whiteboard app that allows you to build templates of samples and navigation steps
for your website or mobile app prototype.