Get Funded - Structuring Your Start Up Documents

Get Funded Structuring Your Start Up Documents

emagine group   

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Founded in 2003 Global venture development firm with investments in 15 countries across multiple industries Group made up of:  emagine consulting – Consulting and Research  iMedia – Graphic Design and Web Development  tesla communications – Technology Planning and Management  Wicked Code – Software Development  4SquarePeg – Human Resources We are venture catalysts We work with entrepreneurs in every stage of business development from brainstorm to private equity investment

Our History In Venture Capital 

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In the past 5 years  We have heard over 600 elevator pitches  We have received over 400 executive summaries  We have read and assessed 100 business plans  We have invested over USD 400 million in industries ranging from technology to fashion and publications Our current investment portfolio stands at USD 700 million As a result, we have a special understanding of entrepreneurship and how to get businesses funded

Our Funding Process Brainstorm

Internal Business Plan

~50 – 150 pages

Teaser

1 – 2 page introduction

Elevator Pitch

~5 minute quick pitch

Pitch Deck

~15 – 20 slides

Business Plan

20 – 30 page plan

Executive Summary

~2 page introduction to Business Plan

Why Do Entrepreneurs Need Business Plans  

Written summary of a proposed business venture Helps us understand an opportunity and how to best exploit it

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Gives a blueprint for the operational and financial viability of a business venture

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Explains marketing opportunities, go‐to‐market strategy and post launch promotional plans Identifies key personnel’s skill sets and experience

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Increases the chances of business success or elimination of a business idea based on feasibility Specifies the potential risks to the venture’s success Provides a baseline to compare projected vs. actual results

Why Do Venture Capitalists Need Business Plans 

Helps us to see that the entrepreneur has thought out the business idea

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Shows us that the entrepreneur has done their homework on how to bring the concept to market

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Provides us with the financial requirements for start‐up, production and operations Defines the return on investment to the VC

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Sets a timeline for launch, growth and expansion

6 C’s of Business Plans      

Complete Clear Credible Compelling Customer Focused Concern for the Investor

Do You Know What You’re Getting Into?

Benefits and Challenges

What You May Not Know

Elements of A Business Plan

Well Structured Business Plan         

Executive Summary Mission Statement

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Business Description Industry Analysis Business Strategy Customer Analysis Product/Service Offering Marketing Strategy Promotional Strategy

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Competitor Analysis Team Composition Operational Plan Technology Plan Research & Development Financial Forecasts Investment Strategy Supporting Appendices

Executive Summary 

“The Elevator Pitch” that summarizes the business plan into 2 pages

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This should be written last to assure that all key elements are explained first in the business plan and then related into a strong Executive Summary If the Executive Summary isn’t strong, the business plan will never be read

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Mission Statement    

Entrepreneur’s Vision What is the business?

What will it become?

What will it stand for?

Business Description 

Introduce your business and explain it  Legal Structure  Locations  Market Need (Pain) ‐> Solution  Business Goals and Objectives  Overview of Unique Advantages  What Benefit Will It Provide The Customer  Professional Services  Attorney  Accountant  Consultants  Insurance

Industry Analysis      

Current industry position and trends Potential trends that can be leveraged for business success Total size of the market ‐> How much can you serve?

What need do your products/services solve?

Entry barriers SWOT analysis

Marketing and Strategy Principles

Business Strategy     

How will you gain competitive advantage?

What makes you unique?

How will you meet your goals and objectives?

What is the company brand?

What will it cost to enter the market, establish position and maintain it?

Customer Analysis  

Who is the target customer?

What is the profile of the customer?  Demographic and psychographic breakdown  Customer Need Analysis  Buying criteria  Value proposition

Product/Service Offering 

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Tell us about your product/service  Key Features  Unique Advantages What does it do/What need does it satisfy?

How will people use it?

Where does development stand currently?

Are there any patents, trademarks or copyrights that will affect product development?

How will technological changes affect product development?

What are the shortcomings and how do you plan to overcome them?

Marketing Strategy        

Prove that a profitable market exists Demonstrate customer interest How will you build awareness?

How will you position your product/service and brand?

What is your pricing strategy?

What is the Go‐To‐Market strategy?

What is the sales and distribution strategy?

Is there a service plan and, if so, how will it be implemented/ followed?

Promotional Strategy        

Advertising Public Relations Personal Sales Websites and Social Media Direct Marketing Telemarketing Articles and Publications Budget?

Competitive Analysis   

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Information on competitors’ market share, products and strategies What are your advantages over the competition?

How else can your solution be achieved?  Competitor response What will it take for customers to switch to your offering?

How will competitors respond to your market entry?

Team Composition 

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Breakdown of key personnel  Education  Skill Sets  Professional Experience  Direct relevant industry experience  Accomplishments and track record (P&L responsibility)  Experience of the team working together  Status and Nature of Commitment Additional roles to be filled Talent Acquisition Strategy Board of Advisors Board of Directors

Operations Plan     

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Detail the daily operations Structure, Ownership and Legal Form Organization Chart with responsibilities Leases and agreements necessary to operations?

How will the offering be produced?  Required resources  Capital expenditures  In‐house and/our Outsourced production Post Startup Production Expansion Costs Supplier Agreements Required Licenses and Permits

Technology Plan 

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How will your venture use/utilize technology?  Cut costs?  Increase revenues?  Streamline production/product delivery?  Obtain more clients/customers?  Business Information Systems?

How will it help to achieve business goals and objectives?

What will be the costs to implement, maintain and upgrade?

What are the training costs?

Research & Development Plan  

Does your offering require on‐going research and development?

How will it be funded and carried out?

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What indicators will be used to determine where the research and development should be directed?

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How will it be implemented into product/service development and management?

How will the research ownership be controlled?

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Financial Forecasts  

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Capital Expenditures Sales Forecast  Will you sell on credit?  What will your policy be?  What will it cost you?

Breakeven Analysis 3 Sets of Forecasts  Optimistic  Most Likely  Pessimistic Monthly Proforma for Year 1 Quarterly for Years 2 – 5

Investment Strategy     

Amount of required capital Personal investment Use of funds Return on Investment Exit strategy

Appendices 

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Resumes  Owners  Shareholders  Key Personnel Financials  Start Up Expenditures  Income Statement (1 year)  Cash Flow Statement (12 months)  Balance Sheet (1 year)  Personal Financial Statements Competitor Weaknesses

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Risk Assessment Required Business Equipment with Quotations Market Research Studies Industry Studies Research & Development Key Agreements Technology White Papers Advertising Materials (if available)

How Do We Decide Who To Fund?

Three Tests 

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Reality Test  Does the market really exist for the offering?  Can you build it within the costs defined in the plan?

Competitor Test  Company position relative to key competitors  Management’s ability to create a company that can give a competitive advantage over rivals Value Test  Will it make money?  Will it cover operating expenses?  Does it give investors an attractive rate of return or a high probability of repayment?

Things That Keep Us From Funding         

Lack of logic in the development of financials Unrealistic financials or lack of detail Lack of planning for variables for business Underestimating upfront marketing & advertising costs Location! Location! Location!

No research on upfront costs, purchases and expenses No allowances for A/R and A/P Forgetting to include a reasonable salary Pie In The Sky Projections

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No quotes for required products, services and equipment

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Failing to relate to a real need/ requirement

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Trying to be all things to all people No Go‐To‐Market strategy

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“We have no competition” Business plan too long or too technical No risk analysis Poorly organized business plan Badly designed or un‐proofread business plan