Building Your Venture Capital Pitch

Building Your
Venture Capital Pitch

Stephen N. Davis
“Partnering With Clients to Drive
Sustainable Profitable Growth”

Guidelines

 Goal of the first meeting is to get the second meeting
• Increase receptivity and find your champion
 Focus
• Value proposition – not technology
• No more than 12 – 15 slides
 Personalize the story
• To fit the potential VC partner’s investment criteria and focus
 Efficient use of time – You have 15 minutes
 YOU are the real story
• Don’t hide behind slides – don’t just read them
• Don’t overload slides with text
• Recommend black text on white background
 Order of slides will depend on your situation
• Order for most compelling story
 CEO or Founder gives the presentation

2000 - 2011 © CXO Advisory Group

The Slide Titles

 Title Slide
 Overview
 The Problem – What’s the Pain?
 The Solution – Your Value Proposition
 Technology – Your Secret Sauce
 Opportunity and Market
 Competitive Landscape
 Go to Market Strategy
 Financial Overview
 Funding Needs and Uses
 The Management Team
 Current Status
 Summary


Title Slide - Content

 Name of your firm
 Date
 Appropriate graphics (logo, etc.)


During the title slide…

 Begin by introducing yourself and the team
• Names and titles only
• Save team detail for later
 Recommended:
• Hook ‘em - Start with a 1 to 2 compelling minute story
• Make it compelling and memorable
• Tie the story to your overall message
 PRACTICE, PRACTICE, PRACTICE!!!


Overview

 This is where you use your elevator pitch.
• Elevator pitch is one of your most important elements
• This is the essence of your business
• You have 10 to 20 seconds to grab their attention
• Then 20 to 40 seconds to expand the Business Value
Proposition
• Most entrepreneurs don’t spend enough time developing
their pitch
• Two to five high level bullets
• Go into more detail later
• Refer to key points to keep attention for the rest of the
presentation
 You’ve got to get their attention here or your lost


The Elevator Pitch

 Forces you to focus
 Cover these Points
• What market are you in?
• The customer pain you are solving?
• What is the size of the opportunity?
• Why you’ll win?
• Market validation
 Show passion and enthusiasm
• You’re NOT Speedy Gonzales
 30 to 60 seconds
 Don’t use jargon
 Use powerful analogies to help them “get it”
 Make sure your mother can understand it in less than 15 seconds


It Takes a Long Time to Write Something
Short
 24 hours minimum – 4 months maximum
• 8 hours to develop prioritized list
• Problems you’re solving
• What you’re offering
• What makes you different from competition
• Why you’ll win
• 4 hours to write first draft
• 4 hours testing your first draft with key individuals, advisors, etc. and
incorporating feedback
• 6 hours testing revised draft on larger group
• 2 hours to revise and incorporate feedback
 But this isn’t the end
 You’ll eventually have multiple elevator pitches for various
audiences
• Investors, different customer types, strategic partners, etc.


Example

We provide a flexible, interactive and
personalized system for delivery of medical
test results from a dedicated, comprehensive
content library.

We streamline the reporting of clinical lab
test results from the physician to the
patient in language that patient’s can
easily understand.


The Problem: What’s the Pain?

 Compelling problem(s) you address
• What’s the pain and who is suffering?
• revenues, costs, time, market reach
• Emphasize the inability of existing methods, procedures,
competitors to satisfy need
 Include validating quotes from
• Customers or Analysts to validate pain
 Problem must suggest a large market
• Suggest market opportunity size
• ie: specific cost of problem to the market


The Solution – Your Value Proposition

 Describe your business, product or service in terms of
compelling benefits
• “Must-haves” not “nice-to-haves”
• Cost saving, time savings, personnel savings, process
improvements, etc.
• Illustrate your solution graphically if possible – Make it simple
 Include quotes from customers using product
• Validate business value proposition
 Add a slide or two, if necessary to show solution and
where it fits
• Focus on the value proposition
• Explain the technology
• Don’t go overboard on technology


Technology – Your Secret Sauce

 Concentrate on essential value proposition!!
 Best to use graphics
• Before and after diagrams often work well
 Translate key points from business to technical domain
• Show how it fits into customer operation
 Patent Status


Opportunity and Market

 Market details
• Define ideal target customer
• Who decides? Who pays?
• Use specific example if possible
• Size and growth rate for five years
• Validated sources
• Focus on your segment(s) of the target market
• Market challenges
 Does it justify a $50M to $100M+ run rate opportunity in
five years?
 Demonstrate defensible % of market share
• How will you get there? Can you get there?
• Typical sales cycle that will justify ramp up


Competitive Landscape

 Discuss current and potential competitors
• Focus on top 3 competitors and why you will win
• Demonstrate knowledge of market and operational landscape
• “no competition” an unacceptable answer
• SWOT table works well here
 Differentiate yourself
• Use customer-centric attributes and dimensions
• Reinforce your unique competitive advantages
• Differentiators that would compel customers to buy from you
• Relationships, intellectual property, new insights, domain expertise
 Customer Quotes
• What do they say about your competitors?
• Why would they rather buy from you?
• What do they say about your competitive advantage?


Go to Market Strategy

 Who are the key players?
• Profile the customer
• Discuss critical sales and strategic partner relationships
• In place or in process
 Revenue Model
• How and what do customers buy?
• Discuss high level pricing
• Describe what the customer will get –Typical sale
 Marketing and sales plan
• Explain sales cycle and how you acquire customers
• Compare and contrast to other firms
• Sales channel strategy – who will sell?
• Cost to acquire customer and sales channel partners
 Current customers and sales pipeline
• Customer quotes can provide external validation


Financial Overview (in thousands)
2005 2006 2007 2008 2009
Revenues ($K) $500 $2,325 $7,000 $24,000 $60,000
Expenses ($K) $2,250 $5,000 $10,000 $22,000 $49,000
EBITDA ($K) ($1,750) ($2,675) ($3,000) $2,000 $11,000
Breakeven Q3 2008
Customers 1 5 35 150 275

 Be prepared to discuss and key financial assumptions
• Should be forecast based on receiving funding
• Revenue analysis – market ramp up, pipeline
• Bottom up better than top down
• Expenses
 Have detailed proforma backup


Funding Needs and Uses
 This is where you tell them
• How much you need
• What you will use the funds for

 Example: Series A: $5,000,000
• Hire CEO, VP Sales & Marketing, CFO – Fill gaps in management team
• Launch product into the market
• Bring on additional sales, marketing & engineering resources
• Develop initial key referral accounts
• Expand number of field test sites
• Develop initial OEM channels
• Continued Engineering
• Build support organization
• Additional patent protection

 Example: Series B: $5 Million in 12 to 18 months
• Expand marketing & sales nationwide
• Promote company & its products for maximum visibility
• Start development of international markets
• Introduce follow on products


The Management Team

 Purpose to build confidence
• On one slide only
• That team can build and manage the business
• Previous relevant accomplishments that can grow the business
• Expose skill experience gap
• Discuss your hiring plan to fill key slots
 Provide list of key advisors or members on BOD
• Only if they add substantial weight or credibility
• Can be on separate slide
 If you’re not qualified to be CEO
• Be honest with yourself
• Turn it into positive
• State that you want to bring someone in with when funding is
completed


Current Status

 How much money have you previously raised
• Sources of funding
 What have you already accomplished with other
investors’ money?
• Key milestones
• Product completion, first sales, patent pending
• Key customers, Strategic relationships
• Logos and testimonials
 Timeline format can be useful
 Show you are in position for some key future milestones
• What are they?


Your Summary
 Your call to action
 Summarize your strongest points
• Why you’re different & why you’ll win
• Memorable sound bites
 Anticipate exit strategy question
 Ask for feedback
• Will highlight there concerns
• Show where you need to improve Pitch or rebuild story
 Ask about the process
 Ask about next step(s)
• Determine conditions for second meeting
• If possible, set up follow-up meeting
 If no interest then
• Ask for referral to other funding sources who’s profile you fit


Questions


Contact Information:

Stephen Davis
Interim COO/VP Sales & Marketing |
Business Consultant | Sales Channel and
Business Development Expert | Author &
Speaker

“Partnering With Clients to Drive
Sustainable Profitable Growth”

Phone: (508) 528-7571
Email: sdavis@cxoadvisorygroup.com
Website: www.cxoadvisorygroup.com
Linkedin: www.linkedin.com/in/stephendavis
Twitter: twitter.com/stephendaviscxo

Driving Profitable Growth

We help companies optimize business
development and marketing; accelerate
sales; and seize the most attractive
growth opportunities.


The CXO Advisory Group

 CXO Advisory Group is a strategic operations advisory
and management firm comprised of proven C-level
executives with both breadth and depth of experience.

 CXO Advisory Group Team members have achieved
success in positions ranging from: President/CEO to
COO, and VPs of Sales, Marketing, Corporate
Development and Human Resources.

 Has proven success in business development and in
building US sales and distribution channels


How Can CXO Help You?

Business Strategy Services
• Audit business practices and organization
• Evaluate product and pricing strategies
• Evaluate effectiveness of sales channel
• Assess effectiveness of existing sales and marketing
programs
Market Entry Program
• Analyze competitive landscape
• Market launch strategy and plan
• Channel strategy and programs
• Establish sales channels
• Generate sales and manage relationships
• Identify and develop strategic partnerships



Sales Channel Management
• Review and revise sales channel strategies
• Channel partner identification, prospecting and recruitment
• Eliminate channel conflict
• Channel contract development and negotiation
Interim Management Resources
• Interim CEO, COO, CMO, CSO
• Interim VP of Sales and Marketing
• Consultant on staff
• Launch team coaches



Venture Advisory Services
• Fine tune operations, business strategy and market entry
• Assist with due diligence
• Strategic business assessment of portfolio companies


Driving Profitable Growth


Building Your Venture Capital Pitch

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