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Entrepreneurship101

Planning and

Communicating

your

Business ConceptFeb 13, 2007

Tony Redpath (with great thanks and acknowledgement to Andrew

Harrison, Northwater Capital)

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Presentation OverviewPresentation Overview

! Tools of the Trade

! Myths and Truths

! Overview of the Tools

The Elevator Pitch

The ‘One-Pager’

Executive Summary

White Paper

PowerPoint Presentation

The Business Plan

! Outlines and Content

! Advice

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Tools of the Trade

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Tools of the TradeTools of the Trade

! The ‘Elevator Pitch’ – 30 second outline of business concept

! The ‘One-Pager’ – 1 page overview of your business

! Executive Summary – 3-5 page overview of your business

! White Paper – Layman’s summary of your technology, product(s), the

uniqueness and the value

! PowerPoint Presentation – ~15 slide outline of your business

opportunity

! Business Plan – Detailed description of your business plan: product

plan, go-to-market strategy, management team and financials.

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Why do we need these tools?Why do we need these tools?

These tools are generally used to:

! Lay out a vision and plan for building the business

! Solicit investment - by communicating to investors why your idea is

good, how you will execute and what return they can expect

! Communicate to customers - why they should do business with you

! Communicate to partners - why they should do business with you

! Communicate to employees or potential hires – what is the mission

and plan is and what role they will play

These tools are used for planning and communication

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Communication vs. Business PlanningCommunication vs. Business Planning

! The primary purpose of these documents is to communicate the

value of your business idea – EXCEPT THE BUSINESS PLAN.

! Be conscious of the huge difference between communicating your

business concept and building your business plan.

! A business plan is an internal planning document seldom shown to

anyone outside the company

! The other documents are external communication documents used

to sell the value of your business idea to outside parties

Business plans are an internal execution tools

The other documents are external communications tools

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Keys to CommunicationKeys to Communication

! Know your audience:

! Institutional (Financial) investor, Strategic investor, Angel investor, Strategic partner, Customer,

etc.

! Speak to your audience in language that they understand:

! Institutional investor – do not speak ‘techie’, tie everything back to money

! Strategic investor – may be more technical; will be interested in your idea’s as they impact their

business

! Strategic Partner – mix of technical and business; understand how a relationship will be mutually

profitable to both parties

! Angel Investors - access their background; understand their interests

! Customer – understand their needs

! Give your audience the information they are looking for:

! Do not assume they want to see the depth of your scientific knowledge

! Speak to them with their interests in mind, not your interests in mind

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Myths and Truths

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Myths and TruthsMyths and Truths

Myths:

! That you only have 30 seconds to get a VC’s attention

! If you get develop your communication tools right, you will have longer than that

! That a VC will ask you for all of these documents

! That you should start by building your business plan

Truths:

! What you can provide depends on how far along you are in developing your

business concept

! The vision you are communicating must be grounded in reality

! You should be strategic about what you provide and when you provide it

! That your documentation should radiate professionalism – grammar, spelling,

diction, illustration, layout, etc.

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Overview of the Tools

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The Elevator PitchThe Elevator Pitch

! What:

! A 30 second overview of your business concept

! To a certain extent, an internet bubble invention – at least in terms of raising money

! Strangely enough - 60% of the worlds venture capital is in the bay area in low-rise office

buildings without elevators

! Why:

! To quickly communicate your business concept in a chance meeting or phone call

! When:

! In a cold call to an investor, customer, potential partner, etc.

! Good for networking at trade shows, networking events, etc.

! Dos and Don’ts:

! Do not spend forever practicing and refining this – should come naturally; may sound plastic

! Figure out a few key messages you would like to get across to use as a loose script

! Distribute key messages to outward facing employees – standardize message

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The The ‘‘One-PagerOne-Pager’’

! What:

! A concise one-page summary of your business concept and management team

! Why:

! A ‘teaser’ document meant to generate a request for more information

! To offer a very general non-confidential overview of your business

! When:

! When blasting out to many potential investors – select interested VCs from large list

! When you don’t want to offer any confidential details – chance encounter, potential

competitor,etc

! Dos and Don’ts:

! I’m not a big fan – Part of ‘shotgun’ approach to fundraising, not my preferred method

! Often just enough detail to say no

! Often adds an additional and debatably unnecessary stage to a process - VCs might sit on the

one-pager for a few weeks

! If you are going to build one, make it fairly non-contentious and allude to missing information

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The Executive SummaryThe Executive Summary

! What:

! A concise 3-5 page summary of your technology, product, sales plan, revenue path and

financial requirements

! Significantly more detailed but succinctly expressed, coherent and highly readable

! Why:

! Again, a ‘teaser’ document meant to generate a request for more information or a meeting

! VCs will want to get their head around the concepts quickly – short attention span

! Primer for a more detailed explanation of your product plan and business strategy

! When:

! When you have a ‘warm’ intro or an invitation to contact someone

! Integral first interaction with an investor

! Rides the line between confidential and non-confidential – some degree of trust

! Dos and Don’ts:

! This is a critical communications tool – imperative that it is strong and well written

! Has to have the right emphasis given the maturity of the business concept - Tech, Sales, Revs

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The WhitepaperThe Whitepaper

! What:

! A fairly concise layman’s summary of your technology, product(s), the uniqueness and the

value

! Why:

! Not all (or few) investors will be scientists, engineers or experts in your area of innovation

! You have to go easy on the technical details in the communications documents

! This is the place to fully display your technical knowledge and product vision

! When:

! After investors are curious or have bought into the big picture business vision

! Great to give to customers and partners to help them communicate internally

! General education of analysts, customers, potential partners, etc.

! Dos and Don’ts:

! Put the whitepaper on your website

! Stay high level - Don’t go so deep as to give away all of your secrets

! Keep it as short as possible and fully explain all acronyms

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The PowerPoint DeckThe PowerPoint Deck

! What:

! A ~15 slide outline of the key aspects of your business plan

! Why:

! Provide an overview of the business plan in point form

! Allows people to absorb a lot of key information in a short period of time

! Easy to adjust and adapt to a new audience

! When:

! Usually the second piece of information a VC will receive after the exec summary

! VC’s love these because they can flip through them very fast

! Medium to Highly proprietary – requires a greater degree of trust

! Dos and Don’ts:

! Critical document in the fundraising process –present a sound story; make it look good

! Practice speaking to it, preferably in front of friendly people who will ask lots of questions

! Use graphics as much as possible – max absorbance of information

! Tune emphasis given the maturity of the business concept

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The Business PlanThe Business Plan

! What:

! A rigorously prepared and executable description of how you will build your business

! Why:

! This is your roadmap for how you are going to build your business

! Describes roles and responsibilities for building various aspects of the business

! Outlines revenue targets, financial details and investment requirements

! When:

! When you have assembled enough solid information to write it

! Highly proprietary – requires a high degree of trust to give it out; later stages of diligence

! Wait for the VC to ask for it

! Dos and Don’ts:

! Often made a condition of financing or a board requirement – can provide after the fact

! Re-write with every major change in strategic tack

! Avoid the temptation to turn this into a sales tool – preserve its integrity as an executable

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Outlines and Content

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Executive Summary ~ 3-5 pagesExecutive Summary ~ 3-5 pages

! Company Description – 1 paragraph

! Basic Need and Company Solution - 1 paragraph

! Technology and Product(s) - 1 paragraph; diagram

! Value Proposition – couple of bullets

! Market Size and Growth - diagram

! Sales Plan - 1 paragraph

! Competitive Advantages – couple of bullets

! Management – detailed bullets

! Revenue Growth Projections - diagram

! Financing Requirements - 1 paragraph

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PowerPoint Deck ~ 15 slidesPowerPoint Deck ~ 15 slides

! Company Overview, Management and Vision – 2-3 slides

! Need and Existing Solutions – 1-2 slides

! Technology, Products and Product Rollout – 2-3 slides

! Market Opportunity – 1 Slide (Graphical)

! Competitive Overview – 1 Slide – (Largely Graphical)

! Sales Strategy and Channels - 2-3 slides

! Partnerships and/or Partnerships strategy – 1 slide

! Financials and Path to Liquidity – 2-3 Slides (Largely Graphical)

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The Business Plan ~ 30 pagesThe Business Plan ~ 30 pages

! Executive Summary

! Company and Opportunity Summary

! Product and Technology

! Market Size and Growth

! Sales and Marketing Plan

! Competitive Overview

! Operations Plan

! Management Team

! Financials and Investment Requirements

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Advice

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Advice from the trenchesAdvice from the trenches……

! Do not start by building your business plan

!You will not have the information you need

!You will examine issues out of priority

!You will expose lack of understanding

! Do not offer to supply a business plan off the bat

! Start dumping your ideas into the Powerpoint Deck

! Use the Powerpoint Deck as receptacle for all ideas and information

that comes to light – easy to manipulate, organize and adapt

! Build your executive summary and eventually your business plan

based on your Powerpoint deck

! Give investors your exec summary and offer to walk them through the

Powerpoint slides in person or on the phone

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More advice from the trenchesMore advice from the trenches……

! The main idea of all of this is to entice investors to take a deeper look

!Leave the details for diligence (except in the business plan)

! Do not assume that your audience is technically literate or savvy

! Investors predominantly come from a financial background

! Do not overload the documentation

!Try to get across a few key messages instead of telling the whole story

!Your audience will only absorb the key messages

!Do not make your information detail rich / noisy – Use graphics as much as possible

! Templates exist for all of these documents

!Don’t re-invent the wheel

!Surf the web or go to www.marsdd.com

!Email me: tredpath@marsdd.com

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Questions/DiscussionQuestions/Discussion

Tony Redpath

entrepreneurship101@marsdd.com

416-673-8189

www.marsdd.com