4th November i had a workshop with
Tomas Seo, more known in HYPERISLAND
as the China man, guess why!
His lecture was very interested because he had exactly what it take to succed with a business idea, he killed, without closing his eyes, all the ideas we could come up with, making us question our own believes before stepping forward!
So what i want to remember from this
First when you want to pitch the idea for a group of venture capitalist, they will be whom you go to bed with, so you better be sure you love them, and you need to make them fall in love with YOU! So commit yourself, embrace your idea, shw some pation and proud of it.
BZ Business Plan
1.Executive summary (abstratct)
.Clear language, this is so fitting in some portfolio's companies
NOT BEGING!!
.don't count on people reading more than the blurb to make a decision
.grab attention without hard selling rhetoric, good solid, not tell about art (they don't fucking care) never to VC investers, venture are more keen to invest in business ideas (Mckenzie)
.Venture have an area of expertize, hardware rather then software, biotech, cleantech, pharmacy, medical.
.They just invest with stuff connected to their portfolio, they are more nitch based so they invest in related to their portfolios idea/concept
BACKGROUND
.the setup
.this is why you do this
.what's your ah moment? (oh yeah!this is never heard before!! it's a great idea, there's a nitch need for this that wasn't before..)
.why will this work?
YOUR TEAM
.this is the reason you are the only one with this idea that should get the cash
.what is your weakest competences, can you add it?
.if you don't have the competence you need and you show it, they will not invest in you!(you can contratct some one to do what you can't do!!)
.in intreviem you have to wanswer any question but what they are looking is the chemistry between us & them
FAMILY FRIENDS & FOOD
.this is the team - this is the potential
.they have to believe, trust & see your potential, if you know someone you can add so you look like you have stuff behind.
SHOW ME THE MONEY
.where is the revenue?
.who will buy what for how much?
.how do you know that?
.show that someone has bought at least one client to show that this is trustable!
.if you want to talk about what you're going to sale, you have to tell about the clients, WITH NUMBERS! like: "2000 people bought this product for 1 kr, in the future we forecast a sale of 5000...."
GIVE THEM SOME NUMBERS!
4Ps of Kotler (markting basics)
Product
Placement
Price
Promotion
MARKETING
.how to reach the potential buyers?
.how will this translate into sales?
they invest in people rather that in ideas!!!
COMPETITORS
.don't write that you have no competitors because you do!
.really disruptive business models rarely get capital, because it's so hard to predict
if you have a very small marketing idea like: i've been showing this idea to a group of people and they really liked it . costumer base!
"ESTIMATE YOUR MARKET"
there are business angels, that can invest in another way then venture, they will invest with other reasons because they already won some venture money.
futuristic institute and singulariy institue invest in inovation, VC don't!
Where are you in the value chain?
if you have a basis and you know how to argument with the business guy, you have chances to succed!
VALUATION
.you want to value based on what it will be worth
.VC values what you are worth now
.if it was your money would you invest?
.so why don't you?
MARKET RESEARCH
.believable statistics
.macro trend report
ALIVE PROTOTYPE
the only way to know if someone will pay
PREDICTIONS
build a believable story, concrete numbersof future predictions - value of market size, NEVER write down a concrete number, like this will be the amoount of money we will make!
HOW TO CALCULATE A MARKET SIZE?
compare with competitors numbers
.start with an estimation of potencial users, but don't write that number down!-find something else to compare to
GROWTH PREDICTION
so what are the facts?
how much have you sold?
.is there a trend in sales?
CASH FLOW PREDICITIONS
.do some scenarios
.you don't need to specify small posts but with that in mind try to be specif
.add them as attachments and refer to them.
So you have a business plan, but beside that how do you attract investors?
.what does a hot vc look for
.think about what other people have done before, don't fall in doing the same again&again what already has been seen so many times
CAN YOU PROVIDE
do you have earning potential?
.IRR 50% (according to SVCA) (raw returning investment)
.the potential of 10x the money they invested in 5 years i.e.
.do you want to share this risk?
.or are you just a gold digger?
what does a VC look for in a potential mate?
.solid business model
PATTENTS
what you gonna do when they come to you
.if you have no pattents what will happen when your competitors enter?
.old companies may be slow but they are well funded when they decide to move
EXPANSION
head line is your business plan
.where are you at this year?
.how much staff do you need next year?
.when will you expand in to other countries?
.when will you expand into other products?
they have to believe that when you grow you can handle it!
SCALABILITY
.optimal fixed cost for first year is zero!
.optimal fixed cost for second year is zero!
.optimal fixed cost after break even should be lower then variable cost
MEME POTENTIAL (any idea is like a virus)
.great ideas take 10 years to spread
.good and free ideas spread eventually
.silly ideas spread quikly then die
SERVER AND OPERATION COSTS
PLATFORM
rails, django, php, W, amazon webservices
Less features - the necessary features to do the same, focus on getting clients
focus on sales staff
.who will bring in the bacon
FAIL FAST
WHAT'S NEW USP?
.is it different?
.is it cheaper
.i it more efficient
.that's new, show me
PROOF OF CONCEPT
do i believe that this will work?
WHAT'S IN IT FOR ME?
.if i can't see an angle for why you came to me specifcally is it then a deal for me?
WHAT WILL YOU DO WITH THE MONEY?
.you want the money to do something specific
.VC are used to know what things cost, don't try to take a cut for yourself
DO SCENARIOS
.what if you don't get the money, how could you boostrap it?
.why should you need mre just because you can?
.do a worst case, what would that cost?
PRICING
.what's the laternative to use your service?
.how much does that cost?
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