Director of Investment Services Business Plan and Equity Funding October 7, 2017 David R Clark Director of Investment Services

Remember, you are looking for equity funding. Pop Quiz I want to start a new venture because: My invention/discovery will help mankind. I want to build a company dominant in the market. I want to get rich. All of the above Remember, you are looking for equity funding.

This show is entertainment but: Not far from the truth Hard questions Business focused Common format Deal on the spot not realistic

Valley of Death 80% Failure Rate © 2004

Why a Business Plan that nobody reads? Business Strategies Product/Service Development Sales & Marketing Financial Other issues Management in sync (Equity Funding World) Sell the venture Due Diligence

Begin with the Problem Statement Briefly describe the problem that your product/service is going to solve Objective is to “capture” the reader 8 – 12 seconds attention span average adult reads: 200 – 250 WPM 12 sec X 21 WPS = 252 words Sets up the remainder of the business plan

Equity Funding 101 Technology Technology What is the Product/Service? Note the word “product” Technology What is the Product/Service? What is the value proposition? Is there protected Intellectual Property? What stage of development? Are there barriers to development success? Technology

Equity Funding 101 Market Technology Market What is it? How big is it? Is there independent evidence of demand for your Product/Service? Who are the competitors? What is the differentiator? What are the barriers to entry? Market Technology

Equity Funding 101 Management Management Technology Market Who are you? What domain expertize? What entrepreneurial experience? How much “skin” do you have in the game? Management Market Technology

The Management Team Version 1.0 Product/Service Inventor Marketing Finance

The Management Team Version 2.0 Chief Executive Product/Service Development Finance Sales & Marketing Big Four

Attractive Investment? Equity Funding 101 Attractive Investment? What is the deal? When do I “cash out” and how? What are the key milestones? What is the funding strategy? Attractive Investment? The “exit” Management Market Technology

Integrated Timeline ($K) Year 1 Year 2 Year 3 Alpha Beta Product/Serviceion Development Hire Sales Sign 1st Distr 1st Sale Sales & Mkting Continued Sales $20 $110 $15 $205 $120 $90 $135 Cash Balance $150 $350 Investment “Dry powder”

What really happens Read the first paragraph Look at the financials $ Revenue line Look at Management Team Is there a ‘hook’? How much & 20X N5? Can they pull this off?

Biggest Mistakes by Entrepreneurs Talk too much about the product/service and not the business. Cannot articulate assumptions driving revenue and expenses. Failing to involve former entrepreneurs. No independent validations (1% fallacy; “no competition”) ( of course you think it works) Failing to realize that investors want to ‘cash out’ - not get a share of profits. Not understanding IP issues.

Tell a Story You know, Barbara, there is a big problem . . . . . But the good news is, Mark, we have a solution to that problem . . . . Further, Kevin, there are a lot of people that have this problem . . . . Also, we have the team that can pull this off . . . . Lastly, most importantly, there is a lot of money to be made here . . . .

Do you want to be rich? or Do you want to be King?

David Clark Director Investment Services T3DC 210. 558 David Clark Director Investment Services T3DC 210.558.3915 dclark@t3dc.org