2016 Andrew Chung Investor Pitch Clean Tech Academy · 3 Clean Tech Open Confidential Information...

Fundamentals of an Investor Pitch

Andrew Chung | 1955 Capital

Founder & Managing Partner

@achung

2 Clean Tech Open Confidential Information

For Starters…


• Launched 1955 Capital in late 2015 with 1st close on $200M, among the largest single-‐partner VC firm debuts ever

• My areas of interest: “Save the World”

– Energy, food, agriculture, educaRon, health

• 1 of 6 general partners at Khosla, led China acRviRes

• Launched Lightspeed Ventures’ cleantech pracRce

• Bain Capital, TL Ventures, Bain, Trilogy, Wharton, Harvard

• Ex-‐IT entrepreneur: founded startup, sold to public co.

AC: At a Glance


A good pitch…

! Is memorable

! Makes an emoRonal connecRon

! Causes viewers to talk about it

! Evokes curiosity & greed vs. fear

! Rises above the crowd


Prep for your mee>ng

! Do your homework -‐ be obsessive

! Apply 3 coats of polish

! Rehearse with tough audiences

! Be clear with presentaRon roles

! Assume the first interacRon could be your last


Delivering the performance

! Make a connecRon

! Manage your Rme

! Be concise

! Listen to quesRons

! Have confidence

! Improvise if needed


What to present to a VC?

! Opera>ons ! Sales pipeline ! DistribuRon ! Policy/regulatory issues

! Financials ! ProjecRons ! Fundraising needs

4

5

! Mission statement

! Management team

! Market

! Technology ! Overview / value prop ! CompeRRve differenRaRon ! Economics ! Development Rmeline

0

1

3

2

For each sec>on, we’ll discuss:

What I'm looking for

Common issues

Sample slides


A few caveats before we dig in…

• Not all VC's look for the same stuff

• Cleantech is vast, so different sectors require different emphasis

• Sample slides are illustraRve and most use dummy data

• PresentaRon order will depend on you


Management Team


! Is there a balanced skillset across team?

! Deep technology experRse

! Industry execuRon experience

! Entrepreneurial experience

Common issues

! Homogeneity

! Theory over substance

! Lack of clarity about recruiRng needs and Rming (emphasis on CEO, VP-‐level hires)


Management Team (Sample)

! Tom Cruise – President & CEO ! 30 years of execuRve management and startup experience

! C-‐ or VP-‐level at 5 startups, 3 successful exits (AAA, BBB, CCC) -‐ cumulaRve value of $300M ! MBA, Wharton School; B.S., Materials Science, UC Berkeley

! Jack Nicholson, Ph.D. – Founder & CTO ! 20 years at Sandia NaRonal Labs: Photovoltaics Team Lead ! Professor, Materials Engineering, Stanford University ! Ph.D., Materials Science, M.I.T.; B.S.E., Electrical Engineering, University of Washington

! Demi Moore, Ph.D. – VP of Engineering ! Applied Films: Head of Engineering, led commercializaRon of 5 thin-‐film producRon lines ! Unisolar: ProducRon Manager, Employee #25 ! Ph.D., Electrical Engineering, University of Toledo; B.S.E., Electrical Engineering, Northwestern

! Kevin Bacon – VP of Business Development ! Complete Phase II of development ! MBA, Duke University; B.S. Electrical Engineering, Stanford

! Technical Team: First Solar, Miasole, SunPower, Stanford, Harvard, MIT, Berkeley

! Key Hires Needed: COO, CFO, materials engineers

Management Team


Market


! Does this market support a $1B+ company?

! Massive end-‐markets ($1B+)

! High-‐growth markets

! PotenRal to dominate

! Ability for startups to compete

Common issues

! Too much Rme spent explaining a familiar market

! Lack of clarity on targeted segments and true addressable market (it’s all about TAM)


Market (Sample)

The U.S. solar market has grown at 70% CAGR since 2000


Market (Sample)

Target Industry: Key Addressable Markets

1-‐2 years

3+ years

Time-‐to-‐market

Note: Dummy data used

Category Share

Market S

hare


Tech: Overview


! What is the product or service that you’re offering?

! Concise, but sufficient background

! Technology that is IP-‐rich and defensible

! Clear value prop to customer

Common issues

! [25 mins into your presentaRon] “What is it you do again?”

! Not tailoring the technical depth for your audience and stage of meeRng


Tech: Overview (Sample)

Courtesy: GreatPoint Energy’s Web site


Tech: Overview (Sample)

Courtesy: GreatPoint Energy’s Web site

! Produces methane in a single step and in a single reactor ! Pipeline grade product ! No need for external water gas shis reactor ! No need for external methanaRon reactor

! Produces CO2 as a valuable sequestraRon-‐ready byproduct

! Significantly reduces opera>ng temperature ! Lower cost reactor components ! Lower maintenance costs and higher reliability

! Eliminates costly high termperature cooling

! U>lizes steam methana>on ! Eliminates costly air separaRon plant

! High efficiency ! 65% overall efficiency ! Thermally neutral reacRon process ! No need for integrated power plant

Process Advantages


Tech: Differen>a>on


! How is your offering different?

! Tech approach ! Product performance

! Cost economics ! Stage of development

! Thoughuul understanding of compeRRon

Common issues

! Another “me too” technology

! Assuming your approach is unique


Tech: Differen>a>on (Sample)

Energy Storage Compe>>ve Landscape

Increasing Power Density

Increasing Ene

rgy Den

sity


Our Company


Tech: Economics

What I'm looking for Common issues

! Does your product/service make economic sense? ! ProducRon costs

! Capex

! Are there solid economics at different levels of scale?

! Is there a low “minimum ante” to get to breakeven?

! Are there unfair customer acquisiRon economics, scale economies?

! Industry costs are moving targets

! Not understanding sensiRviRes associated with feedstock price changes, subsidy changes, etc.


Tech: Economics (Sample)

Our costs will be compe>>ve with exis>ng chemicals

Feedstock

Processing


Our technology

Cost level with current tax credit

Note: gge = “gallon gasoline equivalent”

Exis>ng fuels


Tech: Economics (Sample)

Broad markets to pursue as we improve cost & performance


Market / product extensions

Prod

uct m

argi

n / p

erfo

rman

ce /

tract

ion Cars

ROW Trucks

Power gensets - ROW

Construction

Farming

Cars China Trucks

ROW

Power gensets - China


Tech: Development Timeline


! What is your future development roadmap?

! Technical progress made to date

! Key future milestones and risk assessment

! Key capital equipment required and scale-‐up needs

! IP poruolio development plan

Common issues

! Long Rme-‐to-‐market (3+ years)

! Lengthy “design-‐in” Rme requirements

! Dependence on other emerging technologies


Tech: Development Timeline (Sample)

2016 2017 2018

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Development Roadmap

! Sub-‐10% ! 10-‐25% ! 25-‐50% ! 50-‐95%

Yield

Capacity Scale-‐up

! 5L pilot ! 20L pilot

Commercializa>on

! 10K L produc>on ! 100K L produc>on


Ops: Sales and Distribu>on


! What is your go-‐to-‐market strategy?

! Review of sales pipeline and notable customers

! PotenRal engagement with relevant channel partners

Common issues

! Sales cycles that are too long (esp. for uRliRes or local governments)

! Long payback Rme / limited ROI for end-‐customers

! Fragmented customer base


Ops: Sales and Distribu>on (Sample)

Current Sales Pipeline

Alpha Energy $2,000,000 Med

Beta URlity $1,000,000 High Gamma Industrial $800,000 Med Delta Energy $750,000 High Epsilon URlity $600,000 Low Pi Industrial $500,000 Med

Theta Energy $300,000 High Nu URlity $300,000 Low Rho Industrial $300,000 High Sigma Energy $200,000 High Tau URlity $150,000 High

TOTAL POTENTIAL $6,900,000

In discussion with key distribu>on partners

Target Customer Poten>al Deal Likelihood


Ops: Policy/regulatory Issues


! What key government policies or regula>ons drive your business? ! Subsidies

! Tax credits

! Emissions credits

! Compliance laws

! Understanding of how they will evolve over Rme

! Associated risks and sensiRviRes

Common issues

! Business models dependent on: ! Short-‐term policy windows

! Pending legislaRon


Financials: Projec>ons


! What does your financial plan look like?

! Any recent historical results

! 3-‐5 year forward projecRons ! Simple P&L

! Headcount

! Timing for cash flow breakeven

! Any debt assumpRons

Common issues

! Too aggressive

! Too conservaRve

! Not knowing how sensiRve financials are to externaliRes


Financials: Projec>ons (Sample)

Opera>ng Margin Revenue Gross Margin %

Financial Plan

6 10 15 25 45 75 120 -‐1.5 -‐3.5 -‐5.3 -‐7.0 1.2 7.7 17.2

Headcount Cash Flow ($M)


2016 2017 2018 2019 2020 2021 2022


Financials: Fundraising Needs


! How much do you need to raise and why?

! Funding history

! Total target raise

! Amount available for new VC’s

! Use of proceeds and achievable milestones

! Board seat expectaRons

! ValuaRon expectaRons

Common issues

! Large iniRal rounds with limited proof points

! Lack of flexibility in round structure


Financials: Fundraising Needs (Sample)

! Funding history ! Seed (6/14): $500K – angel investors ! Series A (6/15): $2.5M – Alpha Capital, Beta Ventures

! Series B financing: $12-‐15M target equity, $2-‐5M add’l debt ! Insiders to take $2-‐5M ! Expect 2 investors (1 financial, 1 strategic), each with board seat

! Targeted milestones ! Complete Phase II of development ! 2 MW pilot line completed ! Secure iniRal distribuRon partners ! Recruit top-‐Rer CEO ! Carry company through end of 2017

Series B Financing


Now it’s your turn…

! Opera>ons ! Sales pipeline ! DistribuRon ! Policy/regulatory issues

! Financials ! ProjecRons ! Fundraising needs

4

5

! Mission statement

! Management team

! Market

! Technology ! Overview / value prop ! CompeRRve differenRaRon ! Economics ! Development Rmeline

0

1

3

2

Par>ng thoughts: Be passionate

Be confident

Be open to new ideas

Andrew Chung | 1955 Capital Founder & Managing Partner [email protected] | @achung

GOOD LUCK!

2016 Andrew Chung Investor Pitch Clean Tech Academy · 3 Clean Tech Open Confidential Information...

Documents

Transcript of 2016 Andrew Chung Investor Pitch Clean Tech Academy · 3 Clean Tech Open Confidential Information...