1.Apply online by November 20 – – By answering 19 questions – You can paste from a word doc – Answers limited to 1500 characters/spaces 2.Start-up Grants: $ $ $10, Winner pitches to CT Angel Investor Guild 4.Cost: No entry fee Page 1 University Business Plan Competition

1.Apply online – – $225 including two attendees 2.Three-minute PowerPoint presentation plus exhibit table. 3.1:00 – 7:00 pm 4.New Haven Lawn Club 5.30 Companies/ 30 Investors Page 2 Early Stage and University Venture Fair

Evaluating Business Opportunities North Bridge Venture Partners Signal Lake Ventures Connecticut Angel Guild Connecticut Venture Group

The Deal Scorecard 1. Management 2. Market 3. Competition 5. Ability to Forecast Results 6. Capital Intensity (Risk/Reward) Product/Technology

Management Good Teams have: Done their jobs before (no OJT) Experienced ramp from startup to big company Relevant industry experience & contacts Specialized expertise and insight Ability to adapt to change Brains and hunger Senior Team Proven Record No Operating Experience 10 1

Management A Good Incomplete Team Vision Energy and hunger Efficient (Not a drain on capital) Appropriate role for each person Acknowledges management gaps

Market > $1 Billion Growth capacity > 30% Stagnant 10 1 Attractive Markets: Big ($50,000,000 potential) Target users adopt new products quickly Customers feel real pain Customers can be reached economically The time is (will be) right

Competition Potential for Leadership Several Established Players 10 1 Leading Companies: Typically first to market Leaders define “Market” Leaders get market share Market share critical to success

Product/Technology Clearly Superior Providing Leverage No Advantage 10 1 Difficult to replicate Special technical skills required Special user knowledge required Proprietary technology (patents) Many man-months to develop (time, $) Improves rapidly with customer feedback

Ability to Forecast Results High Low 10 1 Great companies create and execute operating plans: Plan is financial expression of strategy Defines business model Shows interrelation of timelines, functions, hires Reflects detailed understanding of the business

Capital Intensity Low High 10 1 A function of: Start-up and working-Capital needs (Risk) Gross margins (Reward) Sales and marketing expenses (Potential to deflate margins)

No Single Recipe 1. Management 2. Market 3. Competition 5. Ability to Forecast Results 6. Capital Intensity Product/Technology ABC

Real World Feedback Interview: Customers, Analysts, Potential hires, Potential partners, Other CEOs Where is the pain? Would you buy? How many? At what price? How do you buy? What could we do better? Listen for what you don’t want to hear

Venture Capital Financing Today Innovation and Entrepreneurship Panel University of Massachusetts at Amherst 24 October 2009

Venture Funding in the Current Environment Early stage companies that require relatively small amounts of capital to reach positive cash flow, with low valuations are getting funded

LENDERS: –No Risk –Low Return EQUITY INVESTORS: –Low Risk –High Return Objective of Investors

Roer’s Continuum

Variables Affecting the Curve External factors: Economy – Capital available – Confidence – Competition Internal Factors: Hot New Tech – Serial Entrepreneur – Mega Potential

Page 19 A $1 Million Investment … After 40% IRR 60% IRR 60% IRR = 1 $ 1.4 MM $ 1.6 MM 2 $ 2.0 MM $ 2.6 MM 3 $ 2.7 MM $ 4.1 MM 4 $ 3.8 MM $ 6.6 MM 5 $ 5.4 MM $ 10.5 MM $ 10.5 MM

CAPITAL SOURCEAmountProsCons Bootstrapping with SavingsSmall but critical No dilutionLimited amounts Credit Card DebtUp to $100kEasy accessInterest can balloon SBIR Funded Research $ KDon’t have to pay back Equity ”Angel” Investors Foundation.org $250k-$1MMIndustry connections- Dilution - Partnership Connecticut Innovations $500k-$1mmAccessible Venture Capital Fund $ M- Experience - Deep pockets - Difficult to meet profile - Will want 10-50% Bank LoansLimited to assets No dilutionGuarantees = personal liability LeasingVariesReduces capital needsInterest Cost Strategic Corporate Partner$1m – Unlimited Access to marketsLoss of Control