Assignment Business%plan% Financial%model% Finance
Post on 23-Mar-2022
2 Views
Preview:
Transcript
11/27/12
1
1
Finance Econ 138, UCSC
2
1. Announcement & news 2. Assignment 3. Business plan 4. Financial model 5. Funding
Finance
Agenda
4
Assignment 8 PresentaEon
5
• Create a PowerPoint presentaEon showing your business model • 10 slides (max.) • 3 minutes (max.) • All required informaEon should be on the slides or in the ppt notes, so that we can verify completeness outside of class
• Give presentaEon in secEon • Get the TA’s sign off
• PracEce your presentaEon • Email me your slides by 6 a.m. on Monday, 12/3 • Hand in a paper copy before you present
Assig
nmen
t 8
Create and give presentation
6
1. Title Logo, company name, your names 2. Team Names, relevant background 3. Original business model Problem and soluEon 4. Market validaEon Interview & landing page results 5. Revised business model Problem and soluEon 6. Revenue model Main revenue stream, pricing 7. Market size Target customer, TAM 8. MarkeEng plan Channels, engine of growth 9. CompeEEon CompeEtors & comp. advantages 10. Thank you Logo, name, email, your names
Assig
nmen
t 8
Presentation deck
7
Criterion Weight
Content 75%
Has Etle and team slide 5%
Problem and and iniEal soluEon well explained 10%
Lessons learned from interviews and landing page clearly explained 10%
Revised problem and soluEon reflect lessons learned and well explained 10%
Revenue model and pricing reasonable and well explained 10%
Target customer defined and market size esEmated 10%
Channels & customer acquisiEon strategy reasonable and well explained 10%
All compeEtors idenEfied and key differenEators well explained 10%
Presenta2on 25%
Professional looking slides with correct grammar and spelling 15%
PresenEng without looking at slides 10%
Finish on Eme (-‐5% for every 10 sec. past 3 min.) 0%
PresentaEon emailed on Eme (-‐10%) 0%
Handed in paper copy (-‐10%) 0%
Assig
nmen
t 8
Presentation criteria
11/27/12
2
8
Business plan Finance
10
Business plan
• Wriden descripEon of what a new business plans to accomplish • Dual-‐use • Helps employees operate in sync
• Argues that firm is good investment
Busin
ess p
lan
11
1. Cover page 2. Company purpose 3. Problem 4. SoluEon 5. Why now 6. Market size 7. CompeEEon 8. Product 9. Business model 10. Team 11. Financials Bu
siness p
lan
Sequoia Capital: WriEng a business plan
Outline of Business Plan (12-‐20 slides)
14
Do you need a business plan?
• You don’t need a 40-‐page Word document • Most business plans don’t survive
the first customer contact • A plan is staEc, a model is
dynamic • You need a 12-‐page PowerPoint presentaEon for • hiring first employees • gehng early customers • raising money
• You need a financial model • Shows you’ve done your
homework and your assumpEons • Use for fundraising and internal
monitoring and prioriEzaEon
Busin
ess p
lan
Steve Blank: Love/Hate Business Plan CompeEEons; Mark Suster: Are Business Plans SEll Necessary?; Vivek Wadhwa: Ditch the Biz Plan, Buy a Lodery Ticket
15
Busin
ess p
lan
15 16
Financial model Finance
11/27/12
3
17
“Pro%it in a business is like gas in a car. You don't want to run out of gas, but neither do you want to think that your road trip is a tour of gas stations.”
Mod
el
Tim O'Reilly
hdps://plus.google.com/107033731246200681024/posts/iZvW7pgcy6m 18
Financial planning
• Sales forecast • Random for startups • Assume 0 for 1st year
• Forecast of costs • Project headcount and other expenses
• Determine burn rate and length of runway
Mod
el
19
Financial model
• Monthly plan for the first 24 months, annual plan for year 3, 4 and 5 • Revenue • How big the market is • What share you’ll get • AssumpEons
• Costs • COGS • Customer acquisiEon costs M
odel
Mark Suster: Are Business Plans SEll Necessary? 20
Funding Finance
22
Bootstrapping • Low growth • Unproven management
Debt • Strong cash flow • Good management
Equity • High growth • Proven management
Fund
ing
How to fund your business
23
Fund
ing
Kauffman FoundaEon: Money Game (3:34)
Where do entrepreneurs get their money?
11/27/12
4
24
Sources of funds
Owner Equity 46%
Owner Debt 19% Insider
Equity 3%
Insider Debt 7%
Outside Equity 3%
Outside Debt 22%
% of firms
40,536
15,765
44,956
47,873
354,540
128,706
0 200,000 400,000
Owner Equity
Owner Debt
Insider Equity
Insider Debt
Outside Equity
Outside Debt
Average amount ($)
Fund
ing
Kauffman Firm Survey: hdp://www.nber.org/papers/w16272 25
Sources of funds for high-‐growth Jirms
Fund
ing
hdp://www.1000ventures.com/venture_Funding/business_angels.html
26
Fund
ing
hdp://en.franceangels.org/Business-‐Angels/The-‐Funding-‐cycle
Typical amount raised for high-‐growth Jirms
27
“Bootstrapping has forced us to focus on what works, and on gaining traction. The right time to take money is when you have something that works and you want to blow it out of the water with explosive growth.”
Fund
ing
Pointabout team
Vivek Wadha: Advice From Founders Who Bootstrapped Their Way to Success
29
How to bootstrap
• Founders & employees • Minimize personal expenses • Crowdsource & outsource • Hire interns • Pay with stock
• Customers • Charge them • Obtain payments in advance
• Rent • Work from home • Share office space
• Equipment • Save on furniture • Buy used, not new equipment • Pool funds and buy bulk food • Get whatever you can for free • NegoEate everything • Lease instead of buying Fu
nding
Maple Buder: 10 bootstrapping / startup-‐life-‐hacks we’ve learned (so far) 30
Sources of debt Jinancing
• Leasing • Credit Cards • Friends and family • Peer-‐to-‐Peer lending • Commercial banks • SBA guaranteed loans • Strategic partners
Fund
ing
11/27/12
5
31
Peer-‐to-‐Peer lending networks
Fund
ing
www.prosper.com, www.lendingclub.com
Prosper Lending Club
32
Small Business Administration (SBA) guaranteed loan program • Apply for a SBA-‐backed loan at your local bank • SBA guarantees repayment • 50% of US banks parEcipate • You qualify only if you are not able to get credit elsewhere
• Size and types of loans • SBA guarantees up to 85% on loans up to $150,000 and 75% on loans over $150,000
• Loan can be used for almost any business purpose
Fund
ing
U.S. Small Business AdministraEon
33
Strategic partnerships
• Share the costs of product or service development • Gain access to parEcular resources • Facilitate speed to market
Fund
ing
34
FFF Crowdfunding Incubators
Business Angels Venture Capital IPO
Fund
ing
Sources of equity Jinancing
35
Crowdfunding
• Online pooling of money to support efforts started by others
• House passed bill on 11/3/2011 • Exempt companies raising up to $2 million from SEC registraEon.
• No individual can put up more than $10,000 or 10 percent of annual income, whichever is less
• Investors will not count toward the 500-‐shareholder cap
Fund
ing
Kent Hoover: House Passes Crowdfunding Bill 36
Incubators and accelerators
Fund
ing
Wikipedia: Business incubator
• Programs designed to accelerate development of startups • Access to mentors, angels & VCs
• Business training • Constant feedback • Deadlines
11/27/12
6
37
Fund
ing
www.accelerato.rs
One form to rule them all
38
Fund
ing
hdp://www.incubatorincubator.com/
Incubator of incubators
39
• hdp://www.startupchile.org/ • Accelerator program created by the Chilean government • US$40k of equity-‐free seed capital • Live in Chile for 6 months • ApplicaEon deadlines • Round 1: Scheduled for March, 2012 • Round 2: TentaEvely scheduled for July 2012 • Round 3: TentaEvely scheduled for October 2012
Fund
ing
Start-‐Up Chile
40
Fund
ing
hdp://www.techstars.com/ (3:33)
TechStars
42
Business angels
• Individuals who invest their personal capital in start-‐ups • $10,000 -‐ $500,000 per deal • Provide contacts and advice
Fund
ing
43
Fund
ing
What’s The Real Deal With AngelList?
AngelList
11/27/12
7
44
Fund
ing
Ron Conway & Mike Maples : What Does an Angel Investor Do? (2:35)
What does an angel investor do?
45
Venture capital
• Money invested by venture-‐capital firms in start-‐ups with great growth potenEal • 650 VC firms fund about 2,600 firms per year • Limited partnership • $75-‐ $200 million per fund • Invests in 20 -‐ 30 companies over 3-‐5 years
Fund
ing
46
VC terms
• Term sheet • Cap table • Series A/B/C • Pre-‐money & post-‐money valuaEon
Fund
ing
The 500 Group: Glossary of venture capital terms; VERI: Understanding term sheets 47
Fund
ing
47
48
How much VC money should you aim for?
Fund
ing
Mark Suster: What is the Right Amount of Money to Raise at a Startup?, Do You Really Even Need VC?; Vivek Wadhwa: Startups: Poverty is Underrated. Be Glad That You’re Not Rich; Paul Graham: How to fund a startup
Probably nothing But if you do • “When someone’s passing you the hors d’oeuvres tray always take two. But don’t take the whole tray.”
• Raise 12-‐18 months’ cash, but not 24
• Add a buffer
• VCs want big outcomes • Preserve your opEons • Pressure to bring in “grown up” supervision
• You lose control • You spend less Eme thinking about customers and more about your board
• VCs get their investment back first in any sale
49
You won’t get angel or VC money anyway
• Venture Economics database • <5% of venture capital goes to startup/seed-‐stage companies
• Survey of 549 successful companies • Only 9.2% had received angel funding
• Only 10.8% raised venture capital at any stage Fu
nding
Vivek Wadhwa: Ditch the Biz Plan, Buy a Lodery Ticket; PricewaterhouseCoopers MoneyTree report, Q3 2011
$ (million)
11/27/12
8
50
Fund
ing
www.thefunded.com
But if you do, pick the right VC
51
Fund
ing
Foundry Group: I’m a VC (5:56)
I’m a VC
52
Initial Public Offering (IPO)
• Raise equity capital • Raise firm’s public profile • Lets investors cash out • Creates currency for M&A
Fund
ing
53
Fund
ing
Guy Kawasaki: Funding Choices (1:42)
Funding choices
top related