WorkshopsWorkshopsWorkshopsWorkshops

Investor Repellers

“10” mistakes to avoid when

you present to investors

Andrea Baldini – Tomaso Rodriguez

WHAT’SWHAT’S THISTHIS??

WHAT’SWHAT’S GONNA GONNA HAPPENHAPPEN??

Short workshop on some things you should (NOT)

do when presenting to investors…do when presenting to investors…

…with a bit of humor and theatrics…

…for all the startuppers out there!

FORMAT: MISTAKE � RULE

� Presented to you by Junior Jedi 2

RULERULE # 0# 0

GOODGOOD COMMUNICATIONSCOMMUNICATIONS

It’s a story I want to believe in

4

5

RULERULE # # 11

EXECUTIVE SUMMARYEXECUTIVE SUMMARY

What are you going to tell me?

7

FIRST THINGS FIRSTFIRST THINGS FIRST

Golden rule:

Tell me what you are going to tell me,

then tell me,

then summarize (= tell me again)

8

RULERULE # # 22

IT’SIT’S THE THE PRODUCTPRODUCT, , STUPIDSTUPID!!

What is it? What is it for?

10

Source: https://www.apple.com11

RULERULE # # 33

BUSINESS MODEL FIRSTBUSINESS MODEL FIRST

Financials will come

13

BUSINESS MODELBUSINESS MODEL

Razor Blade

Reverse Razor Blade

14

SOME EXAMPLESSOME EXAMPLES

• Advertising

• Add On

• Razor Blade

• Freemium

• Low Cost• Low Cost

• Pay as you Go

• Subscription model

• Brick & mortar vs Digital Distribution

• Virtual goods

• …

15

BUSINESS CASEBUSINESS CASE

• New product/service � addressed needs

• Breakthrough innovation � nearest comparable

• Business case: the reasoning for switching from the

existing to the newexisting to the new

• Always consider:

– Laziness of people

– Fear of the unknown

Pros Cons

• ...

• …

• …

• ...

• …

• …BE

CONVINCING!

16

RULERULE # 4# 4

SUPPORTSUPPORT WITH WITH METRICSMETRICS

investors MANAGE risk

18

METRICSMETRICS

• Follow business model and strategy

• Financials should reflect them

• VCs love measurable things

– Make their job easier– Make their job easier

– Help in proving the value of a concept

– Can validate an idea that «sounds good»

19

METRICS FOR A WEBCO (OLD SCHOOL)METRICS FOR A WEBCO (OLD SCHOOL)

CAC

Customer

Acquisition

Cost

• SEM

• SEO

• Retargeting

• Affiliation

LTV

Lifetime

Value

• MWA

• Lead Lifetime

• Churn Rate

Cost• Affiliation

• Mob Ads

• …

Value

• Recurring Sales

• …

LTV > CAC ???

20

YOUR OWN STRATEGY, YOUR OWN METRICSYOUR OWN STRATEGY, YOUR OWN METRICS

• «old school» vs. start up � VCs don’t like

buying user bases

• Key: acquire quality users at the lowest cost

possiblepossible

21

RULERULE # 5# 5

EXECUTIONEXECUTION

So you got an idea? That don’t impress me much

22

EXECUTIONEXECUTION

• Idea is NOTHING without execution

• No plan = No money from an investor

• Go-to-market plan � coherent with strategy

• Measurable performance• Measurable performance

23

RULERULE # 6# 6

FINDFIND THE MARKET BEFORE IT THE MARKET BEFORE IT FINDSFINDS YOUYOU

How to segment and identify my segments

24

THE OLD WAYSTHE OLD WAYS

• segment = people with the same buying

motive

• Judging what people will buy based on:

– Job

– Salary– Salary

– Level of employment

• Largely irrelevant as:

– people do not conform to

stereotypes

– people from all classes and

occupations share similar aspirations.

© Prof. Paul Fifield

http://www.fifield.co.uk/25

THE NEW SCHOOLTHE NEW SCHOOLThe best (real) segments comprise people with the same needs &

motivations – these change depending on the time, place and event

People share the same

needs and motivations, not

because of who they are, but

what brings them together

© Prof. Paul Fifield

http://www.fifield.co.uk/26

HD AND THEIR BUSINESS DEFINITIONHD AND THEIR BUSINESS DEFINITION

© Prof. Paul Fifield

http://www.fifield.co.uk/27

“Product led” Company “Market led”

Big Boys’ Toys

Fashion Accessories

DIY = Do It Yourself

Entertainment

Jewelry

Motor Cycles

Watches

Electric Motors

Electronics

Watches

Harley Davidson

Swatch

B&D

Sony

Rolex

IN WHICH BUSINESS ARE YOU IN?IN WHICH BUSINESS ARE YOU IN?

Jewelry

“Hope”

The Third Place

The Art of Traveling

Parental guilt

Watches

Cosmetics

Coffee Shops

Leather/Luggage

Encyclopedias

Rolex

Revlon

Starbucks

Louis Vuitton

Britannica

Our Product? Our Company Our Business

© Prof. Paul Fifield

http://www.fifield.co.uk/28

MARKET ≠ ADDRESSABLE MARKETMARKET ≠ ADDRESSABLE MARKET

• Sector / niche

• Segmentation

• Geography

• Distribution• Distribution

• Legal constraints

• Competition

• Barriers to entry

• …

29

RULERULE # 7# 7

VALUATIONVALUATION

Where does taht number come from…

30

SHOW ME THE MONEYSHOW ME THE MONEY

• For VCs and investors valuation comes out of many

elements (strategy, focus, market, metrics, biz

model, etc., etc., etc.)

• Investors are (usually) in for the long term

• Market (usually) wins

• VCs reason BACKWARDS (exit and dilution)

• Incentives needs to be aligned

• CAVEAT: be certain to know what you are buying

with a certain valuation

31

RULERULE # # 88

BE BE TRANSPARENTTRANSPARENT

We are gonna find it out anyway…

33

SECURITY BY OBSCURITY IS NO GOODSECURITY BY OBSCURITY IS NO GOOD

• Be transparent on TEAM, don’t hide missing

pieces, be practical

• Be transparent on COMPETITORS, which

one keeps you awake at night?

• Be transparent on LOCK-IN, how you avoid • Be transparent on LOCK-IN, how you avoid

losing ground and user base or customers?

• Be transparent on anything, there is going

to be a Due Diligence if everything goes

well…

34

RULERULE # 9# 9

GETGET CHALLENGEDCHALLENGED BEFORE BEFORE PRESENTINGPRESENTING

Feedback is good, secrets are not

35

IRIDIUM CASEIRIDIUM CASE

• 66 low earth orbitingsatellites

• Allowing subscribers to make phone calls all over the world

• Cost of the project over • Cost of the project over $6 bln

• IPOed in June 1997 for $20 / share, in less thanone year price increasedto $ 72.19 / share

• In November 1998 the service was launched

36

IRIDIUM CASE (IRIDIUM CASE (contcont.).)

“We’re a classic MBA case study in how not to

introduce a product. First we created a marvelous

technological achievement. Then we asked how

to make money on it.”

• In May 1999 share price was just $ 3.06

• Bankruptcy in August 1999

Hey! Didto make money on it.”

Iridium Interim CEO John A.

Richardson, August 1999

Hey! Did

somebody tell

these guys

that the

product is too

bulky???

Source http://lfp-blog.com/how-the-

mighty-fall37

LESSONS LEARNED (AT HIGH COST)LESSONS LEARNED (AT HIGH COST)

Always get challenged,

feedback is good!

DON’T FALL IN LOVE WITH YOUR

PRODUCT/IDEA, OR YOU’LL SEE

ONLY WHAT YOU WANT TO SEE

38

RULERULE # # 1010

GETGET INFO ON INFO ON VCVC BEFOREBEFORE PRESENTINGPRESENTING

One size doesn’t fit all

40

GET INFO ON GET INFO ON VCsVCs BEFORE PRESENTINGBEFORE PRESENTING

• VCs will provide «smart» money for your business

• But every VC has its own expertise in terms of:– Geographies

– Sectors

– Network– Network

– Markets

– Stages of growth

– …

• Getting financed by a VC is like getting married, you have to choose accurately!

41

RULERULE # # 10+10+

DON’T BE (TOO) BULLISHDON’T BE (TOO) BULLISH

One size doesn’t fit all

42

THERE ARE NOT MANY GOOGLES AND THERE ARE NOT MANY GOOGLES AND

FACEBOOKS OUT THEREFACEBOOKS OUT THERE

Need of cash

€ 500 k

Planning to sell the company

at 15 x EBITDA in 4 years at

€ 1,2 B

43

COMPARISONS SHOULD BE FAIR ENOUGHCOMPARISONS SHOULD BE FAIR ENOUGH

Feature1

Feature2

Feature3

Feature4

Feature5

Feature6

Feature7

Feature8

MyProduct

44

ThankThank YouYou!!ThankThank YouYou!!

Investor Repellers

“10” mistakes to avoid when

you present to investors

Andrea Baldini – Tomaso Rodriguez

FrancescoFrancesco

InguscioInguscio

MatteoMatteo

ScarabelliScarabelli

TomasoTomaso

RodriguezRodriguez

AndreaAndrea

BaldiniBaldini

MatteoMatteo

FagginFagginMatteoMatteo

PanfiloPanfilo

EmilEmil

AbirascidAbirascid

GiusyGiusy

CannoneCannone

AnnaAnna

SargianSargian

AlessandraAlessandra

GiuffrantiGiuffranti

FedericaFederica FrancescaFrancesca PierantonioPierantonio MarinaMarinaFedericaFederica

PasiniPasini

FrancescaFrancesca

BresciaBrescia

PierantonioPierantonio

LuceriLuceri

MarinaMarina

CalcagnoCalcagno

UmbertoUmberto

De FeoDe Feo

RaffaeleRaffaele

MauroMauro

EugeniaEugenia

Di SommaDi Somma

http://www.juniorjedi.comhttp://www.juniorjedi.com46

Next workshop:Next workshop:

Finanziamento VC: capire un term sheetPierantonio Luceri , Matteo Panfilo

28 giugno 2012 @ StartMiUp

Register on EventBrite!

Q&AQ&A

49

GUERRILLA MARKETINGGUERRILLA MARKETING

Drastic

HumorousGoodwill

Guerrilla

Marketing

One shot

Completely

Unexpected

Cheap

50

EXAMPLE OF BAD EXECUTIONEXAMPLE OF BAD EXECUTION

• Ben-Gay is a cream to relieve

pains very successful in US

• When the company decided

to launch the Aspirin it was a to launch the Aspirin it was a

flop

• It was just a naming

problem… would you

swallow a Ben-Gay?

51