ABOUT ME The life of many start-up InnovaHub The four S of Innovation 4 types of innovators Individuals that inspire through their wishes innovation.

ABOUT ME

The life of many start-up

InnovaHub

The four S of Innovation

4 types of innovators

Individuals that inspire through their wishes

innovation

Professionals that utilize their skills and knowledge to

propose innovative solutions for a prize.

Inventors or innovators that seek to to sell,

license, or fund their inventions.

Entrepreneurs, organizations, and investors that are looking

for new ideas, solutions, or inventions.

Seeders Solvers

SeekersSellers

InnovaHub

The 4 Personality Styles

• Amiable • Analytical

• Extroverted• Pragmatics

What You Need To Know About Raising Venture Capital

8

What Makes A Company Successful?

How you finance your company matters!

TeamTeam IdeaIdea FinanceFinance

9

Is VC Right For Your Startup?

Scalability of Business

Capital Required to Achieve Breakeven Cash Flow

HighLow

High

Low

VentureCapitalBuild a Giant Co

BootstrapOwn 80% of a Small Co

NotViable

Weak Barriers: Venture Capital

Strong Barriers:Bootstrap

10

Why VC Is Helpful?

Friends & Family Angels Venture

Capitalists

Capital

Advice

Connections

Low High

11

Are You Ready For VC?

Great Team

Huge Market

Product in Market

Seed($50K - $1M)

X

Series A(>$1M – 5M)

12

How Do You Get The Meeting?

Mutual ContactMutual Contact

LinkedInLinkedIn

Cold EmailCold Email

SpamSpam

Most Effective

Least Effective

DirectIntroductionDirectIntroduction

13

What Is The Objective Of The First Meeting?

To get the second meeting.

What is the objectiveof the first meeting?

14

How Can You Guide The Meeting?

Product?Product?

Market?Market?

Competition?Competition?

Team?Team?

Typical Non-Linear Meeting Set The Tone Up Front

• Product: Technology that solves…

• Addressable Market: $2.5B

• Competitive: Significant technology barrier

• Team: 35 years relevant experience

15

How Can You Maintain Momentum?

Industry NewsIndustry News

MilestonesMilestones

Internal MaterialsInternal Materials

your idea…

question

can you do an elevator pitch?

a stage…

and an audience…

to be inspired…

90 seconds

IMPOSSIBLE?

3 keywords and your name

describeyour idea

to

introduceyourself

and...

…your background

start with something catchy

a rhetorical question, a picture, a story, an example or any excitinginformation.

picture your idea

an effective elevator pitch is illustrative and tangible.

introduction 15sec

problem 30sec

vision 30sec

requirements 15sec

MAKE YOUR IDEA

UNDERSTANDABLE

be concise

An effective elevator pitch containsas few words as possible and does not go into

too much unnecessary detail.

be confident

have fun

show passion

show integrity

YOUR ATTITUDE

your pitch should be clearrather than being filled with …

APPEARANCE

dress as usual and feel yourself comfortable

Technique

keep your eyes shut while someone reads your text out loud

Your guide

10 Erogenous VC Zones

1. Elevator Pitch

2. The Problem

3. Your Solution

4. Market Size

5. Business Model

6. Proprietary Tech

7. Competition

8. Marketing Plan

9. Team / Hires

10. Money / Milestones

Money Shot Goes Here

Teaser ImageGoes Here

Business Model(How Do You Plan to Make Money?)

• Describe Top 1-3 Revenue Sources– Prioritize by Size, Growth, and/or Potential– Cite current market activity / customer behavior as proof

• Show How You Get to Break-even (or Profitable)– Ideally, on the current round of funding you’re raising

• Common Revenue Models– Direct: ecommerce, subscription, digital goods, brands– Indirect: advertising, lead gen, affiliate / CPA

Proprietary Tech / Expertise(What is your Unfair Advantage?)

• VCs *really* like unfair advantage– big market lead– experienced team– ex-Google PhDs– core / “breakthrough” tech– “defensible” IP / patents– “exclusive” partnership– great sales/marketing

Competition(+ why they all suck, why you’re different, yellow, better)

• List all top competitors – (especially top ones; we’ll find them anyway)

• Say how you’re better, or at least different– If not better or different -> “NICHE TO WIN”– position(-ing) matters

• 2-axis graph is trite, but still useful– see next page for example

• useful comparisons / differentiation:– simple vs complex– value vs cheap (tougher to prove tho)– cheap vs expensive (but careful you don’t race to bottom)– consumer vs enterprise– open vs proprietary (in this case, open usually better… but not always)

Economics of VC Firm• Management Fees (typically 2-2.5% of AUM)

– Charge a management fee to cover the costs of managing the committed capital.

• Carried Interest (typically 20-25%)– "Carried interest" is the term used to denote the profit split of proceeds to the

general partner.

• Example $100m fund – 4x return and 2 and 20%– $2m per year in management fee– (($100m x 4) - $100m) * 20% = $60m in carried interest

What do VC’s want• This depends on stage – let’s focus on early stage since that is

what we do.– Team

• Domain expertise with core technical strength and knowledge of given market opportunity

• History of collaboration and success• A willingness to allow VC’s to help build the team

– Market • Emerging and fast growing market• Bad markets make for bad companies

– Business model• How will you make money, how will you sell

– Technology • Defensible technology/IP that can be protected to form competitive barriers

over time

What Should Founders Expect: Reduce Prob. of Failure

• Codified best practices– FP&A/budgeting, KPI, templates, back office infra

• Acceleration– Shorten cycle time for hiring, partnering, selling,

PR, capital raising• Objectivity and Insight

– Sanity check, check and balance

Suggested Playbook• Be committed….• Hire a great Valley lawyer• Figure out what stage and sector you are• Identify 4-5 firms that focus on this stage• Identify which partner you think is most relevant• Get an introduction to that partner• Prepare a 1-2 page overview to send him/her• Prepare a 10-15 slide presentation to give in a 30-45 minute timeframe if

they ask you to present• Only goal of the first meeting is to get a second meeting.

What to Expect• 12-16 week process

– First meeting to close– 1st mtg diligence partner

meeting TS negotiation close• Prepare Investor Package

– Presentation– Financial Plan– Personal references– Customer references– Market references– Cap Table– Market research– Product documentation– Competitive Analysis

• Investors will seek:– 20-50% of the company– Valuation function of targeted raise,

ownership, and stage, – Preferred Equity securities, with key

terms:• BoD seat• Liquidation Preference• Anti-dilution Protection• Participation• Pro Rata rights• Protective Provisions• Vesting terms for founders and

employees

What to Consider• Is the idea sufficiently baked?

– Optimal time is 6 months of iteration• Pick your co-founders very carefully• Test fit with VC

– Personality, values, knowledge of market• Optimize for best deal not best price• Consider the downstream effects of the financing

– High-post moneys can by Pyrrhic victories if company misfires– Angel financing can be a mixed blessing – be careful

Approaching VC’s

• Investing is a people business, and getting a meeting is all about “who you know”

• Best way to approach a VC is some form of introduction– If you don’t know a VC, find someone who knows you who

does and get them to introduce you– Entrepreneur, professor, attorney…– Sending a plan to [email protected] is a waste of time

Tips• Don’t take rejection personally, the odds are against you.• Every VC is “interested” – force them to do work to test their

level of interest.• Don’t waste time trying to change the mind of someone who

says “no”.• Don’t shop to multiple partners in a firm if the first rejects

you.• Don’t ignore the junior partners – they can really help.• There are lots of VC firms, focus on a firm that has some

connection to you.

71

Better-For-YouMints

Decisions That Drive Product Success

What is the right attitude?What is the right emphasis?

Tagline

Custom pack - or will a standard form do? Which package type best fits the positioning?

Packaging

The team has generated dozens of names which have been narrowed to 18

Name

What is the right sentiment? Driven by convenience or throughout the day dosing?

Consumer Insight

What product line offerings combine to maximize appeal and support the concept?

Functional Variety

What product form best supports the concept? Traditional or new? Simple or special?

Product Form

What is best articulation and focus of the benefit? Convenience? Better than mints?, Boost when needed?

Umbrella Benefit

72

Tagline

Packaging

Name

Consumer InsightFunctional Variety

Umbrella Benefit

The Content MatrixThe Content Matrix

Consumer Insight3

Tagline2

Umbrella Benefits4

Functional Variety (show 3)5

Product Form6

Packaging7

Product Form

Name1

Name1

Consumer Insight3

Tagline2

Umbrella Benefits4

Functional Variety (show 3)5

Product Form6

Packaging7

Harmonies ImproveMints

Life Mints

Mints+Plus

OptiMints

ReplenishMints

Mint*Wells

NutriMints

ReinforceMints

TuneUps

AchieveMintsv1 AdvanceMintsv2

BetterMintsv3 Boostersv4

emBodyMintsv5 EmpowerMintsv6

EnhanceMintsv7 FitMintsv8

v9 v10

v11 v12

v13 v14

v15 v16

v17 v18

73

The Content Matrix

Tagline2

Tagline2

A fresh perspective on wellnessv1

better breath | better bodyv2

breath protection | body fortificationv3

Fortified confidencev4

Fresh breath and beyondv5

Fresh breath never felt so goodv6

Live tastefully wellv7

Mints that make a differencev8

The better-for-you mintv9

The mint with morev10

Consumer Insight3

Umbrella Benefits4

Functional Variety (show 3)5

Product Form6

Packaging7

74

The Content Matrix

Consumer Insight3

Consumer Insight3

I am happy to see that grocery products and restaurants are paying more attention to healthier ingredients. It gives me more options to lead a healthier lifestyle.

v1

I have a busy life. I wish there was a more convenient way to supplement my diet with a nutritional boost - when I need it, wherever I am.

v2

I like to think that I lead a healthy life. I'm sure I could benefit from getting more key nutrients in my diet, but who has the time to figure out a regimen, let alone follow one?

v3

I'm too busy to be a health nut. But, given easy options like drinking diet cola instead of regular, I'm likely to choose the healthier option.

v4

Little by little I am making small choices to lead a healthier life, like taking the stairs at the mall instead of the escalator. I believe these small choices can add up.

v5

They say small meals and healthy snacking throughout the day is better for your body. Then why do I take supplements only once a day?

v6

Umbrella Benefits4

Functional Variety (show 3)5

Product Form6

Packaging7

75

The Content Matrix

Umbrella Benefits4

Umbrella Benefits4

[name] are the most convenient way to get the fortified nutrients you want for specific wellness benefits.

v1

[name] deliver targeted nutrients to your body for specific wellness benefits throughout the day.

v2

[name] freshen your breath while delivering nutrients to help strengthen your body's systems when you need the support.

v3

[name] help support your body's critical systems while naturally freshening your breath.

v4

Unlike typical candy mints, [name] is fortified with targeted nutrients. It’s another smart choice you can make that leads to a healthier lifestyle.

v5

Why eat regular mints when you can get fresh breath PLUS wellness benefits from the fortified ingredients of [name]?

v6

Functional Variety (show 3)5

Product Form6

Packaging7

76

The Content Matrix

Functional Variety (show 3)5

Functional Variety (show 3)5

Antiox - a balanced blend of 7 key antioxidantsv1

Bones - Calcium, Vitamin D, and Soyv2

Calm - B Vitamins, Omega-3, St. John's Wortv3

Cardio - Vitamin E, Omega-3, Cranberry Extractv4

Dental - Green Tea, Calcium, and Xylitolv5

Digestion - Peppermint Oil, Ginger, and Chicory Rootv6

Digestion - Probiotics and Prebiotic Fiberv7

Energy - Vitamin B and Taurinev8

Immunity - Vitamin C, Zinc, and Ginsengv9

Skinny - Green Tea and Chromiumv10

Smarts - Gingko Biloba, Ginseng, Omega-3v11

Vitality - Vitamins A, B, C, D, and Ev12

Product Form6

Packaging7

77

The Content Matrix

Packaging7

Product Form6

Product Form6

Cubesv1 Dented Discsv2

Discsv3 Dropsv4

Flat Tacsv5 Gel Capsv6

Gel-Filled Dropsv7 Geometric Shapev8

Pillowsv9 Squaresv10

78

The Content MatrixPackage Form7

Sliding Tinv1 Hinged Tinv2

Small Hinged Tinv3 Blister Packv4

Plastic Tubev5 Paper / Foil Rollv6

Plastic Shakerv7 Paper Flip-top Boxv8

Plastic Compactv9 Square Plastic Tubev10

Packaging7

79

The Content Matrix (7.8 million concept alternatives)

80

The Content Matrix (7.8 million concept alternatives)

81

The Content Matrix (7.8 million concept alternatives)

82

Top ConceptsTop Concept 1 Why Not?

Place TC1 Image Here2.32 x 3.25

Top Concept 2 Nutrition

Place TC2 Image Here2.32 x 3.25

Top Concept 3 Easy Help

Place TC3 Image Here2.32 x 3.25

Top Concept 4 Smart Choice

Place TC4 Image Here2.32 x 3.25

+1. 410. [email protected]

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@alexmorlando , @innovahub n