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 Assignment 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 Assignment 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% Assignment 8 Presentation criteria
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11/27/12
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Finance Econ 138, UCSC
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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
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Business plan Finance
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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
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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)
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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
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Busin
ess p
lan
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Financial model Finance
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“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.”
“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
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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
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
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Strategic partnerships
• Share the costs of product or service development • Gain access to parEcular resources • Facilitate speed to market
Fund
ing
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FFF Crowdfunding Incubators
Business Angels Venture Capital IPO
Fund
ing
Sources of equity Jinancing
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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
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Fund
ing
www.accelerato.rs
One form to rule them all
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Fund
ing
hdp://www.incubatorincubator.com/
Incubator of incubators
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• 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
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Fund
ing
hdp://www.techstars.com/ (3:33)
TechStars
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Business angels
• Individuals who invest their personal capital in start-‐ups • $10,000 -‐ $500,000 per deal • Provide contacts and advice
Fund
ing
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Fund
ing
What’s The Real Deal With AngelList?
AngelList
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Fund
ing
Ron Conway & Mike Maples : What Does an Angel Investor Do? (2:35)
What does an angel investor do?
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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
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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
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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
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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)
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Fund
ing
www.thefunded.com
But if you do, pick the right VC
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Fund
ing
Foundry Group: I’m a VC (5:56)
I’m a VC
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Initial Public Offering (IPO)
• Raise equity capital • Raise firm’s public profile • Lets investors cash out • Creates currency for M&A