Proseed - Intel Business Challenge Europe 2012

BUILD BUSINESS FASTER!

5/2012

ISSN 2082-0062

Intel Business Challenge Europe 2012

TAKE YOUR

CHANCE

Register For The Competition!

Application Due Date 28 May, 2012

The Intel Business Challenge Europe is open to:

All active students (Bachelor’s, Master’s, PhD) of all accredited universities and colleges from:

Austria, Belgium, Bosnia, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Republic of Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom

Recent graduates up to 4 years after Bachelor’s or Master’s graduation.

All Participants must be between 18 and 34 years old and be citizens or legal residents with valid work or student visa in one of the eligible countries.

Participants may submit projects individually or as a team (multiple university teams are allowed).

Application due date: May 28, 2012

Proseed Magazine Is The Partner Of Intel Business Challenge Europe 2012 Proseed Magazine is interested in gathering together all possible external contributions. Proseed believes that technological business development needs a collective knowledge and experiences. External contributions to Proseed Magazine might take various forms. Essays, columns and analytical business papers on business strategies, models and trends are all equally suitable for publication in our monthly.

So if you wish to inspire other entrepreneurs, startupers and technology enthusiasts or simply share your business and technology experience, do not hesitate and contact Proseed editorial team at mblaszczyk@proseedmag.pl

Vision Anita Kijanka Execution Magda Błaszczyk Authors Konrad Bagiński Magda Błaszczyk Anita Kijanka Radosław Rejman Proofreading Ray Downing Business Development Magdalena Gawlińska mgawlinska@proseedmag.pl Advertising Ilona Szczerbowska reklama@proseedmag.pl DTP & Illustrations Joanna Kołacz-Śmieja Editor Kings Sp. z o.o. ul. Macedońska 16 02-761 Warszawa ISSN 2082-0062 © Proseed 2010-2012 All rights reserved Photos from pages 5,12,13,14 are property of YouNoodle

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This is one of the world's most important competitions for young scientists and technological entrepreneurs.

Their ideas change the world and make it a better place.

It is rewarding for us to be responsible for promoting the competition and finding promising Polish projects for the Intel Business Challenge Europe 2012 finals. Together with representatives of other European countries we are gathering applications from students, postgraduates and graduates whose ideas will accelerate the technological revolution. A year earlier, the Polish partner of the event was INVESTIN Advanced Technology Fund.

Currently, INVESTIN is responsible for the coordination of the competition in Europe.

Intel Business Challenge Europe is not a beauty contest that one can win for having beautiful eyes. The concept is also not enough. Established product or service must pass through a sieve of elimination, convince the jury and defend itself commercially.

This special edition you are reading is just a quick look at the way the Intel Business Challenge Europe changes the world and how the projects awarded in the previous edition of the contest are handled. The bar is set high.

A quick and inexpensive method of detecting serious diseases, finding a solution in helping disabled people in everyday life or a powder protecting against UV rays – these are not always projects to be called “cool” but we know they are "important."

See for yourself what are the prospects that Intel Business Challenge Europe provides. It is not about the prize in the finals, but it is about establishing business contacts, international promotion and prestige guaranteed by the nominations already.

Anita Kijanka

INTEL BUSINESS CHALLENGE

EUROPE 2012 06

Why should you participate?

Intel Challenge In Numbers

STATISTICS 08

INTEL CHALLENGE

EUROPE 2011 12

Polish Team: NeurON

13

Photo Genie

14 BUCKY'o'ZUN

INTEL GLOBAL

CHALLENGE 2011 16

Global Challenge Winners

INVESTIN 18

Interview with Władysław Halbersztadt, President of INVESTIN Advanced Technologies Fund

Attracting Investors With A Good Business Plan

KNOW-HOW 20

 NeurON

 Photo Genie

 BUCKY'o'ZUN | 5

REGISTER! a! e Id

Intel Business Challenge Europe 2012 Global technology business plan competition

Who can participate?

AGE

18-34 INDIVIDUALS

TEAMS

4 years after Masters graduation

What are we looking for?

Innovation technology business in functional prototype stage- areas:

Why should you participate?

Cash prizes will be awarded to the best three projects:

1st prize of

$25 000

2nd prize of

$15 000

3rd prize of

$10 000

Register now and try your chances!

Statistics

Intel Challenge In Numbers

• •

•

The Intel Global Challenge is an international technology business plan competition for university level students and recent graduates.

It was founded in 2005 with the goal of contributing to the entrepreneurial movement by helping to generate interest and development of technological projects with a business potential. The Intel Global Challenge is a joint project of Intel Corporation and the Lester Center for Entrepreneurship at UC Berkeley that brings together entrepreneurial teams from world class engineering and business schools.

To enter the competition, teams can either apply through one of the regional Intel Challenges or through their partners competitions, or by nomination and sponsorship from one of the Intel Challenge partner institutions. The regional competitions are: • Intel Business Challenge Europe – a regional business plan for university students (The Intel Challenge Europe developed from previously held Eastern Europe Competition leading to Intel Global Challenge);

8 |

•

•

•

Start-Up@Singapore – a national business plan competition and enterprise launcher; BIT – brings together students and researchers from leading Russian technical universities, scientific-research institutes, and business schools; The Arab Technology Business Plan Competition – a regional Technology investment competition; “Intel Cup” China College Student Technology Entrepreneurship Business Plan Competition – a national business plan competition in China; Intel Latin America Challenge – a competition of technological entrepreneurship projects focused on the Latin America university sector; ASTEM Student Technology Prototype Competition, Japan.

Every year the finalists of the Intel Global Challenge win $100 000 $ founded by Intel Foundation.

Prize Structure for the Intel Global Challenge is: The grand prize winner: $50,000 Second place team: $20,000 Third place team$10,000 4 special awards: $5,000 each (People's Choice, Social Innovation, Emerging Market and Young Innovator) Prize Structure for the Intel Challenge Europe 2011: Eastern Europe: 1st place US$ 20,000 2nd place US$ 10,000 Western Europe: 1st place US$ 20,000 2nd place US$ 10,000 29 teams from 22 countries participated in 2011 Intel Global Challenge.

Statistics - Intel Challenge In Numbers

128 teams applied to the Intel Challenge Europe 2011. 58 students from 13 countries got through to the European Finals.

The percentage ratio of male to female participating in Intel Challenge Europe 2011 was disproportionate with 86% of men and only 14% of women.

The competition attracted 387 teams in Latin America comprised of 815 entrepreneurs, including participants from 14 different countries.

Gender of Participants

Apart from monetary rewards, participants who advance to the second round of the competition get the opportunity to receive advice from experts, mentors, and to meet other entrepreneurs, and receive feedback from the jury. In 2011, mentors spent over 300 hours with finalist teams and provided constructive advice on the students‘ business ideas.

The majority of Intel Challenge Europe 2011 startup entries was still in the early stages, with only 10% indicating that they were Growth or Profitable companies. It proves that the competition is reaching its target of early stage companies, while is also helping them to grow and become profitable.

Startup stages

Gender

% of Participants 2011, N=78

% of Participants 2010, N=61

Male

86%

82%

Female

14%

18%

% of 2011 European Challenge Participants

by Country (N=300): Denmark

31%

United Kingdom

11%

Hungary

9%

Israel

8%

Stages

% of Startups 2011, N=126

% of Startups 2010, N=44

Germany

7%

Just an idea

26%

27%

Poland

5%

Prototyping

40%

26%

Others

29%

Beta

25%

30%

Growth

8%

7%

Profitable

2%

N/A

Statistics - Intel Challenge In Numbers

| 9

Artur Kurasiński, Revolver Interactive with Photo Genie Team, Israel

Judyta Pasińska, Katarzyna Pomorska P&P Team, Poland

WeCook.fr Team, France, with mentors

DobreTech Team, Denmark

Paweł Przybyszewski INVESTIN Advanced Technologies Fund with Pikeman Team, Turkey

Vooxl Team, Netherlands

Szymon Kurzyca, Lewiatan Business Angels, Tomasz Grzybowski, Lewiatan Business Angels and Magdalena Jackowska, Vice-president of INVESTIN Advanced Technologies Fund Avner Barr and Yaron Rechter from Photo Genie Team, Israel

Joanna Jackowska interviewing the Pikeman Team, Turkey

Ahmet Orkun Tomruk from Pikeman Team, Turkey

Henryka Bochniarz, President of Polish Confederation of Private Employers Lewiatan, Jerzy Buzek, President of the European Parliament

All participants and organizers of Intel Challenge Europe 2011

Jerzy Buzek, President of the European Parliament presents an award to BUCKY'o'ZUN team – Sara Naseri and Emilie Kjeldsen, Denmark

Jerzy Buzek, President of the European Parliament

Władysław Halbersztadt, President of INVESTIN Advanced Technologies Fund, Jerzy Buzek, President of the European Parliament and Henryka Bochniarz, President of Polish Confederation of Private Employers Lewiatan congratulate the NeurON Team.

Winners of the Intel Challenge Europe 2011

Polish Team

NeurON The team of Polish engineers and entrepreneurs working on a project called NeurON won the second prize of Intel Challenge Europe 2011 in category: Eastern Europe. They also had a chance to take part in the World finals held in Berkeley, USA.

NeurON is a software product that runs thanks to a EEG headset and special Augmented Reality glasses. NeurON lets present virtual content on glasses/ LCD monitors and controls this content by human thoughts, emotions or facial expression.

The tool comes as an effect of combining two types of technology: electroencephalography and augmented reality. Thanks to such integrated system one can control virtual, 3D objects by the use of thoughts. What are the possible usages for such an invention? Intelligent ads, devices for disabled people who can't move their arms or legs and practical tutorials for engineers and constructors, to name a few.

The NeurON team consists of 4 men running a company called ARound. Łukasz Miądowicz is a CEO and Strategic Director, Mateusz Kuszner – Vicepresident dealing with finance and funding, PhD Eng. Bartosz Reichel is a CTO, software developer and electronic geek and Aleksander Lech – enterprise software developer and mobile developer. They decided to take part in Intel Business Challenge

12 |

spontaneously. Preparing a draft of the project to be presented to the judges, which only took them 30 minutes. The inspiration came from the memory of EEG examination of Miądowicz's nephew diagnosed with ADHD. – Our main motivation was to optimize the time and process of training workers in big companies in heavy industry – claims the project's CEO. Special EEG helmet can be used to scroll the virtual manual screened in front of engineers' eyes simply by using their thoughts or blinks – explains Miądowicz.

The team has been now working on the NeurON for one year. – First we built our own augmented reality software engine – tells Miądowicz. – Then we created a software prototype for controlling devices or virtual content using human thoughts and facial expressions.

Since the IBC success the project has been constantly evolving. The product is almost finished and the team is preparing to talk to potential clients. – We are looking for investors to finance the final stages of the project – says the CEO. Intel Challenge helped NeurON focus more on business aspect of the project. – During the finals in Berkeley, USA we had an opportunity to improve our business model. We also had several meetings with potential business partners – explains Miądowicz.

Polish Team - NeurON

Intel Challenge Europe 2011

Photo Genie Last year, the Intel Business Challenge Semi-finals and Finals took place in Sopot, Poland. 33 semi-finalist teams arrived to first receive a day of coaching before pitching to an international panel of judges.

Only nine teams were selected to compete in the Finals held the next day. The judges selected 1st and 2nd place winners for Eastern and Western Europe.

Photo Genie received the first price in the category for Eastern Europe. The project was developed by three engineers from Computer Science Department at Technion - Israel Institute of Technology.

Before taking part in the Intel competition the team hadn't had any experience in business matters. IBC let them enter the world of entrepreneurship. Yaron Recher, one of the Photo Genie founders recalls: – Up until that moment, we only knew how to write an executive summary but at the time we hadn’t met any people with real experience in the field. I mean the mentors and the other groups as well.

The three Israelis had started working on the project just three months before joining Intel Challenge. Their invention was a supplementary software/hardware technology that applies computer vision and image processing algorithms to photos of people, making everyone look their best. While modern photo improvement programs are not in-

Intel Challenge Europe 2011 - Photo Genie

tuitive and Smartphone applications although easy to use, lead to poor results due to lack of computational strength Photo Genie is a professional solution made simple and easy to use. It is compatible with every digital camera, computer or mobile device. For low-end devices Photo Genie is provided as a cloud service and for the high-end it is fully builtin. Photo Genie is about getting a great shot, in one click, without being an expert in photography.

Today, one year after their success in Sopot, the authors of Photo Genie: Yaron Recher, Aviv Gadot and Avner Barr continue working on the project.

They built a good prototype as a proof of concept that won the IBC judges in September 2011. Thanks to their participation in the competition the Photo Genie team had a chance to meet mentors who helped them with further project development. Yaron Recher says: “We are currently during the first round of fund raising and hopefully will get the investment soon”. The money they won was spent on the project development and hiring their first employee.

At the moment three engineers are preparing a beta-release of their product. They have set-up a company and work on professional and functional tool. To see how they are doing visit: pa-ya.com.

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Intel Challenge Europe 2011

BUCKY'o'ZUN The percentage ratio of male to female taking part in Intel Challenge Europe in 2011 was disproportionate with 86% men and only 14% – women.

Sara Naseri and Emilie Riis from Aarhus University in Denmark convinced the judges with their BUCKY'o'ZUN project. Two young inventors from Aarhus University run a company whose product relies on a new, natural compound providing continuous protection against 99.99 % of all UVradiation. The BoZ compound is in the format of a powder and consists of buckyballs (a.k.a. fullerenes or C60) with enclosed ozone molecules, O3.

The BoZ compound absorbs the UV-light through a photochemical reaction where the ozone is decomposed to dioxygen and a radical oxygen. During this reaction a 99.99 % reduction of the solar UV-radiation is possible. This technology is revolutionary in many aspects and it can be added to sun lotions, anti-aging creams, and hair-care products, helping to protect humans from the damaging effects of the sun. It can also extend the life of paints, car coatings, plastics, awnings, clothing, leather, and other products by helping to prevent fading and decomposition caused by solar radiation.

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The BUCKY'o'ZUN project was initiated to cure skin cancer when the two inventors were still in high school. The complexity of their aim however drove the team to the decision to work on preventing, not curing, the disease. The idea soon turned into a serious business with external financing, patent applications, and contacts with researchers around the world. To supplement their competencies Sara Naseri (CEO) and Emilie Kjeldsen (COO) have partnered up with advisers and built an Advisory Board that holds the expertise.

Apart from winning the first prize at Intel Challenge Europe ($20 000), BUCKY'o'ZUN received The Young Innovator Award at the 7th annual Intel Global Challenge at UC Berkeley.

Intel Challenge Europe 2011 - BUCKY'o'ZUN

Aula Poland is a non-profit initiative aimed at fostering a culture of technological entrepreneurship. Its founders believe in the potential of Polish entrepreneurs and innovators, and, thus, support their development. The Aula team is convinced that entrepreneurship should be taught, preferably through the practice and transferring the experience. Free of charge meetings are held two times a month and attract 130-160 participants every time.

80 meetings

3

95

total number of meetings

270

hours of meeting

320

speakers

425

presentations

meetings

4

meetings

6 7 2150 3200

panel discussions

aula roadshows

eaten pizzas

total number of volunteers meetings

8500

invited guests

7000

participants

80%

average attendance

Intel Global Challenge 2011

Global Challenge Winners The winning projects from regional competitions organized or partnered

by Intel get the chance to participate in the Intel Global Challenge at UC Berkeley, a leading producer of new ideas and knowledge in technology and business.

Participants in the Intel Global Challenge showcase global business opportunities for new technologies. The IGC partners with the best research institutions around the world to find new technologies and teams that can have the greatest impact on society.

Winners of the 2011 Intel Global Challenge – Gaitu The winning project of 2011 edition was Gaitu from China. The team won $50,000 founded by the Intel Foundation. Gaitu is an integrated e-commerce platform for the Chinese market. It matches customers who have image processing needs with designers who provide desired services. Customers upload photos to the website, and designers do the rest. Gaitu also provides image-sharing services and taps into the derivatives market by enabling people to turn their edited photos into oil paint-

16 |

ings or have them printed on mugs etc. The project offers design services, such as business card and logo design, and integrates printing and logistics resources to provide online printing.

Gaitu is a Chinese word for Forward. The winning team consists of three student entrepreneurs from Wuhan University in China. Gaitu.com website was created by Yu Wei, a PhD student at the Computer Science department. gaitu.com

Second place – Maxygen Second place and $20,000 was awarded to Maxygen team from Russia for inventing a low-cost, portable DNA test solution that can be used to identify thousands of infectious diseases, genetic predispositions and hereditary conditions in 10 minutes.

Up to 60% of medical diagnosis in the US and EU are based on DNA tests. But laboratory equipment is expensive – a small-sized DNA testing laboratory is worth about $500K. For small clinics and private doctors, not to mention hospitals in developing countries, the only opportunity to perform DNA tests is to send samples to centralized facilities. The consequence is there are added costs and delays in test results. Maxygen has developed a low-cost, fast DNA test solution that can be used at the point of care (POC) – in private medical practices, small and mediumsized medical centres, rural sites, etc. Previous POC DNA-based devices have proven expensive

Intel Global Challenge 2011 - Global Challenge Winners

and difficult to use, and required 40 minutes or more to yield results. The Maxygen solution incorporates several innovations in both device engineering and DNA testing chemistry that make it portable, inexpensive and easy to use. Medical personnel simply place the biological sample in a disposable cartridge, and load the cartridge into the Maxygen test device. The device automatically performs all tests and displays the results within 10 minutes.

“Maxygen” was founded by three alumni of Moscow State University. The CEO, key developer and a co-founder of Maxygen Ltd. is Valery Ilinsky, graduate of Virology Department. maxygen.ru

Third place – NanoDiagX $10 000 for the third place went to NanoDiagX team led by Dr. Hassan Azzazy from Egypt. The project provides treatment for hepatitis C virus (HCV) infecting 200 million people worldwide.

Early identification and treatment of infected patients is critical to reducing transmission of the disease, but conventional detection of active HCV generally requires two tests. Using gold nano-particles, NanoDiagX has developed the HCV nanogold test, which detects the disease in less than an hour at one-tenth of the current commercial tests' cost. The nanogold test can notably improve global efforts to combat the spread of HCV in developing countries such as

Intel Global Challenge 2011 - Global Challenge Winners

Egypt where resources are limited and 0.5 million people get infected every year. The company plans to adapt its technology for detection of other infectious agents such as tuberculosis and cancer biomarkers. The invention can contribute to significant time saving as the patient will bypass the lengthy process of screening using antibody tests then confirmation using molecular assays. This assay would also open a new market segment consisting of individuals who are considered to be at risk for HCV infection but refrain from testing due to the high cost of the current methods. Another potential market are blood banks, which could also benefit from this assay to screen donated blood rapidly and at a lower cost, thereby increasing blood safety and making blood readily available for transfusion.

Assay offers molecular detection of HCV with comparable performance (sensitivity of 92%, a specificity of 89%, a detection limit of 50 copies/reaction) to the currently available assays at 1/10 of the price.

The NanoDiagX team consists of Dr. Hassan M. E. Azzazy (coordinator), Tamer M. Samir, Sherif Mohamed Shawky, Mai M. H. Mansour and Ahmed H. Tolba. facebook.com/pages/NanoDiagx/206395046100425

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Investin – Intel Challenge organising partner

Interview with Władysław Halbersztadt, President of INVESTIN Advanced Technologies Fund 19 March 2012 saw the beginning of accepting project entries for the seventh edition of Intel Business Challenge Europe, a competition addressed to young scientists and entrepreneurs. This year’s event rests on three solid pillars – the Chief Sponsor, i.e. Intel Corporation, the Strategic Partner, one of the largest European non-governmental organisations, that is Junior Achievement Young Enterprise (JA-YE Europe), and the Organising Partner, INVESTIN Advanced Technologies Fund.

We speak about Intel Business Challenge Europe 2012 to Władysław Halbersztadt, President of INVESTIN Advanced Technologies Fund.

What is Intel Business Challenge Europe?

Intel’s competition is one of the most interesting initiatives of this sort, not only in Europe but also on a global scale. It is addressed to young people, firstly and fore mostly students, who are involved in scientific research on an everyday basis but wish to translate their passion into a manner of making considerable sums of money. Commercialisation of new technologies is no easy trick but it is possible, and this Competition proves it very tangibly. The entrants are also given an opportunity of trying themselves and their ideas: what is its market value? How to sell it?

Every Competition stage allows them to gather experience and, consequently, acquire new skills.

What challenges will the Participants face?

This year Intel Business Challenge is organised following a formula allowing for simultaneous recruitment all over Europe. It has been divided

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into three stages, two of which will be conducted on the HiTechPlant.com internet platform recently launched by INVESTIN. At the first stage, Participants will submit a preliminary description of their project. Following an analysis conducted by our specialists, 100 entries will be selected and their authors will be asked to prepare business plans. We will not leave them to themselves, as with the aid of the tools available on the platform they will be able to use an e-learning course on compiling professional business plans. Those will be evaluated by an international panel of experts who will decide on the composition of the final group. The third stage will be the Final of Intel Business Challenge, to be held in autumn, during which the authors will personally present their ideas. 20 best projects will participate – those which, in the experts’ opinion, have the greatest business potential and stand the greatest chance of market success.

So what comes next, after winning the final?

Winning Intel Business Challenge means substantial financial awards, i.e. USD 25 000, USD 15 000 and USD 10 000, combined with an opportunity for further competing, this time in the final of Intel Global Challenge, to be held in November at the University of California in Berkeley.

At the same time, just participating in the Competition, even without winning, constitutes a value in itself. Apart from the possibilities of getting acquainted with the whole road to be travelled by the future entrepreneur, the Competition

Intel Challenge organising partner - Interview with Władysław Halbersztadt

also provides a unique opportunity for meeting specialists and experts. Those are practitioners familiar with the market situation, knowing best what awaits the young people hoping to transfer their technology into business, as they have done the same once. This is also a chance of being spotted by a potential investor. Investment managers and analysts of funds such as INVESTIN are among the specialists evaluating the projects. Not everybody can get the first prize but this does not mean that the other projects stand no chance of market success.

Why did INVESTIN get involved in the competition?

Commercialisation of knowledge and new technologies constitutes the core of our operations, these are the issues we deal with on an everyday basis. Organising the Competition will provide us with an opportunity of observing European-scale trends as well as evaluating the overall level of these projects and a chance for promoting the best among them. We were involved in the Competition last year. We organised the final, which was held in Sopot as one of the elements of the European Forum for New Ideas created by the Polish Confederation of Private Employers Lewiatan. This year we are responsible for all Competition stages, which will be conducted on our HiTechPlant platform. The platform will also serve as a tool facilitating everyday cooperation between the representatives of science and business. This is also a continuation of our cooperation with Intel, which is effected on many different levels and planes.

Why Intel?

Intel Corporation has an extended programme of operations related to promoting entrepreneurship as well as propagating the use of new technologies in different aspects of life. They show that technology may make our lives easier and that it can be used not only for constructing a space shuttle but, for instance, for creating educational platforms.

Both promotion of such attitudes and modern technology itself are close to us, so it could be claimed that both us and Intel strive for the world to be more “user friendly”.  WŁADYSŁAW HALBERSZTADT President of INVESTIN Advanced Technologies Fund. Originator of the KOMBINATORIUM incubator, founder of the Foundation for Advanced Technology.

Develops projects and companies at the seed and startup stage. Has extensive experience in valuation and financial analysis of enterprises, including innovative technology companies. He successfully carried out the private placements on the NewConnect. Co-founded the Association of NewConnect Authorised Advisors.

He worked as an investment analyst in Internet (e-commerce) and IT (systems management) projects.

INVESTIN Advanced Technologies Fund develops and commercialises projects in advanced technologies, combining the functions of an incubator and a fund investing in projects at an early development phase. Projects based on unique technological ideas and inventions are provided with capital and substantive support as well as access to an international network of contacts. Advanced technology projects are transformed into products ready for competing on a global market.

Intel Challenge organising partner - Interview with Władysław Halbersztadt

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Know-how

Attracting Investors With A Good Business Plan Is drafting a business plan an obligatory equipment for every entrepreneur seeking success in business?

The answer is – no. According to a survey used by Stockholm School of Entrepreneurship in their curriculum, approximately 70% of successful business ventures start without any formal business plan.

The advantage of having your approach to business – something you have surely meticulously hammered out in mind - additionally laid out in paper might seem debatable to you, especially when it means a trade-off between time spent on business planning and on business development. However, once entrepreneurs choose to raise external finance of whatever sort i.e. capital or loan for their business, it is time when they meet investors and from that moment on it is better that they understand their expectations towards business planning. In a world where both too much and too little information is wrong, it is worth understanding what this expectation is about. This is also exactly what this paper aims at, although we will refer to advantages of formal planning as such, too.

Attracting investors to finance development of a venture that has hit a ceiling of further internallyfinanced growth is of clear value. However, on the cost side it involves, apart from paying dividends or interest and sharing power, also the obligation to provide investors with information. Investors need

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information about the venture provided in their language and format to understand what the venture’s risk-and-reward profile is in order to make or continue with the investment. If they do not understand the risks and rewards, they might walk away from the table. Thus, sharing proper information with investors should be viewed in the absence of any belief in the other advantages of having a good business plan as a non-monetary price for external finance. What are the other advantages we are referring to? Well, as controversially as it may sound, it might be beneficiary even for most experienced and talented entrepreneurs to set out their implicit assumptions, priorities, action plans etc. in the form of a business plan because it gives them a unique chance for a comprehensive, critical look at what you are going to do and how to possibly improve the intended course of action. Think about it as a parallel to your next big holiday - you might just embark a plane and handle your vacation as it goes, or do some planning beforehand to revisit the back-ofyour-head assumptions of what, where and when to do, allowing to make some useful reservations.

In most general words, in order to satisfy your investors’ informational needs as well as perform an effective self-check regarding your business undertaking, you should put up a “story” of how the venture will further develop and reveal, also to yourself, the structure of your thinking. Without this “story”, the business plan will be a mere bunch of facts but not a coherent recipe for success. Without the structure, the business plan will fail to assure that its key elements were derived based on sound logic and

Know-how - Attracting Investors With A Good Business Plan

thus will be aptly adapted when conditions change or prove different then expected. In trying to dot down the business plan, you might like to think of

it as a sum of the following sections, which answer specific questions that put together tell a coherent story of your venture's inevitable success:

Section

Question/aim Set out the structure of the document

1

Introduction

Provide Executive Summary Specify key limitations to forecasts that you present

Offering (pro2 duct or service) Customer

What is the value-to-customer of your offering as compared to its competitive alternatives?

Who is your customer and how they make their purchasing decisions?

How are you going to organize the provision of your product or service and protect its competitive edge?

3

Operations Go-to-market strategy

How do you estimate unit costs?

How are you going to crush the market entry barriers to start selling?

How does expected growth translate into sales and revenue (incl. pricing and segment analysis) forecast?

How are you going to promote your products or services?

4 Team

5 Financials

Who is going to execute the plan and what experience to-date makes their success probable?

How does all the information provided translate into P&L, balance sheet and cash flow?

What exit options for investors do you foresee?

Please note that nowhere in the recommended structure for a business plan does product description as such appear. Even though it may sound shockingly disappointing for techy entrepreneurs, the product itself and its features are not the centrepiece of a business plan - it is the entrepreneurs'

Know-how - Attracting Investors With A Good Business Plan

ability to make money with this product that draws readers’ attention. Going into some details, you might like to further observe the following dos and don'ts when drafting your business plan:

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SECTION OFFERING, CUSTOMER DOs

DON'Ts

1

Demonstrate to what customers at all distribution List all the features of the product instead stages what value will be generated of describing its value to customer BUZZWORDS: value-to-customer

2

Compare the value to customer created to the alterna- Emphasize the proposed solution’s tive solutions available advantages rather than thoroughly and objectively compare it with alternatives BUZZWORDS: value-to-customer available

3

Explain pricing policy including the price model i.e. what is priced per unit, price levels, segmentation and Use vague terms as „competitive prices”; distribution margins assume prices constant in time BUZZWORDS: pricing

4

5

Explain the decision making process of end customers –why they will choose to grab the value in the proposed Explain the proposed solution’s innovativeway i.e. the proposed solution vs. alternatives, buy vs. pay ness and superiority without clear link to the expected customer behaviour towards the per use etc. proposed solution in the market BUZZWORDS: buying process Identify purchasing power directed to the present and future market for the proposed solution i.e. including the precedent solutions, the alternative solutions and realistically assess the revenue stream expected for the proposed solution

Cite a multibillion estimate for a “market” – a very broad and ambiguous term – instead of a detailed bottom-up and topdown market (revenue) model

BUZZWORDS: market share, market potential

SECTION OPERATIONS, GO-TO-MARKET STRATEGY DOs

1

DON'Ts

Demonstrate the understanding of the intended sequence of events (and their robustness), including resource Present projected topline growth acquisition, training, product development etc., required as your growth strategy without the to enter the market means that will get you there BUZZWORDS: go-to-market strategy, action plan

22 |

Know-how - Attracting Investors With A Good Business Plan

2

Set out the understanding of operations required for the proposed solution to successfully function, once introduced to the market i.e. inbound logistics and purchasing, service rendering or product manufacturing, sales force organization (incl. sales channels, number of sales reps, geographical coverage, incentive scheme), outbound logistics and distribution (incl. number of POS served), customer after sales service

Argue merely that the business model will be „customer oriented”, have a „lean structure” etc. without explanation how it will actually function and whether it will be efficient

BUZZWORDS: operations, efficiency

3

Provide a detailed calculation for the development of variable unit cost in time and, separately, overhead cost Provide just a bullet unit cost figure mark-up BUZZWORDS: unit cost calculation

4

Explain communication and promotion policy inclu- Give only a promotion budget figuding budgets, channels and targeted audience re without explaining how the promotion should be organized BUZZWORDS: promotion

5

Give grounds to believe that the proposed solution is feFail to identify and present risks to asible to introduce to the market the proposed solution as it will be to BUZZWORDS: technological feasibility, your business plan’s disadvantage market entry barriers

6

Present the sequence of capital expenditure: initial, necessary to go to market with a given product or service scope at a given capacity, and (a) later round(s), required Fail to explain how the capacity and/or to broaden the product or service scope as well as raise offering scope will rise along with capital expenditure capacity BUZZWORDS: scalability

7

Justify that, once in the market, the proposed solution Talking about sustainability, focus solely will not be copied or cease to be valuable to customer in on intellectual property protection rather another way and its economic value will disappear than taking also account of possible market transformation trends or alternative ways of BUZZWORDS: IP protection, competitive advantage delivering a comparable solution

Know-how - Attracting Investors With A Good Business Plan

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SECTION TEAM DOs 1

DON'Ts

Demonstrate (also in non-business endeavours) team members' dedication and entrepreneurial spirit Stick to declarations without examples BUZZWORDS: drive, overcoming difficulties

2

3

Focus on the market perspective of the business idea BUZZWORDS: customer orientation

Focus on the product perspective

Show understanding of the basic management concepts: leader-manager-specialist roles, management Give the impression that things will be by objectives, shareholder value, analysis-diagnosis- handled in a non-standard, or random, -planning-execution-monitoring way BUZZWORDS: managing an organisation

4

Show understanding what human resources are mis- Give the impression that the team will do sing among key personnel everything on their own BUZZWORDS: competence gap

5

Demonstrate (also in non-business endeavours) efficient leadership and project management skills Stick to declarations without examples BUZZWORDS: leadership, efficiency

6

Clearly and concisely formulate point of view; show Endlessly discuss everything; hover aro„top-down” and „bottom-up” thinking abilities und resting on general argumentation BUZZWORDS: communication, structured thinking

SECTION FINANCIALS DOs

1

DON'Ts

Present a revenue model that derives from operating models or assumptions incl. sales volume, average Show figures that cannot be critically veunit price, capacity utilisation rified BUZZWORDS: revenue model

2

Present a cost model that derives from operating models or assumptions, incl. headcount in groups, varia- Show figures that cannot be critically veble unit cost rified BUZZWORDS: cost model

24 |

Know-how - Attracting Investors With A Good Business Plan

3

Present a CAPEX model that derives from operating models or assumptions, incl. the relation between Show figures that cannot be critically veCAPEX and capacity rified BUZZWORDS: CAPEX model

4

5

Integrate all models into P&L and cash flow forecast, Fail to preserve adequate links between allowing for evaluation of different CAPEX stages projected financial statements BUZZWORDS: financial modelling Present your business valuation, incl. different CAPEX scenarios (if applicable) Fail to define your approach to valuation BUZZWORDS: valuation

6

Present an outline of an exit strategy BUZZWORDS: exit strategy

Last but not least, while composing a business plan it is by all means worth putting a lot of attention to clarity - clear language free of typos, easy-to-read graphs and figures. Well-formatted tables go down very well with investors contemplating whether or not guys having put forward a particular investment invitation will be attentive enough to take good care of their money. In closing remarks, we would like to powerfully note that investing should be treated by all means as art, not science, and therefore any prescriptions for a good business plan should be treated as subjective and, therefore, with a reasonable dose of own judgement. There is no universal recipe for doing it right or good enough to convince the otherwise unconvinced. As a good example for this reservation might serve a case of Skype, the IP telephony company. Although the quality of its original busi-

Know-how - Attracting Investors With A Good Business Plan

Fail to commit yourself to organising exit opportunities for investors

ness plan with which it had approached first investors is not known, it is widely known that numerous professional investors turned it down before the first eventually decided to give it a go, a decision which led him later to some of the highest returns on investment in venture capital history.

ď Ž RADOSĹ AW REJMAN Warsaw School of Economics and CEMS Master in International Management graduate. Economist and manager. Asset management and private equity experience since 1999. In 2007-2011, executive board member with OPERA TFI, a fund management company. Coach and jury member in 2011 Intel Business Case Challenge. radoslaw.rejman@gmail.com

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