the essentials of a business plan

1. the essentials of a business plan Eric EngineerSevin Rosen Fundseengineer@srfunds.com

2. what are investors looking for?

3. your fundraising toolbox

4. CONCISE & CONSISTENT

5. get it down to less than 15 slides Slide 0Title + intros + back story Slide 110,000 foot view Slide 2problem definition Slide 3how you uniquely solve the problem Slide 4product demo / case study Slide 5market analysis + sizing Slide 6competition + sustainable advantage Slide 7market traction + GTM plan Slide 8team bios Slide 9unit economics + financial projections Slide 10company status + funding needs/uses Slide 11exit potential Slide 12summary + next steps Appendixlots of back-up slides

6. 0: title + intros + back story Build credibility and rapport in the first five minutes by providing context andfinding common ground: • Do homework on the investor (past investments, common contacts, past employers, familiarity with space) • Start with a reminder on how you met or why/how you were introduced • Provide quick bios of your founding team; focus on experiences that are relevant to your startup • The “founding story” is often a good segue into the slide presentation

7. 1: the 10,000 foot view • “Tweet” pitch: summary of your summary • Problem you solve and for whom • Market positioning / advantage / opportunity • Top 1-2 accomplishments to date • Initial strategy as part of a long-term vision • How much you are raising

8. 2: the problem definition • What problem do you solve?And for whom? • How do you know it’s a real problem? • How are customers handling problem today? • Do you speak your customer’s language? • Is there adoption friction? • Aware of the problem? • Urgency? Feeling pain? Medicine or Vitamin? • Willingness to pay? Existing or new budget?

9. 3: how you uniquely solve the problem • How does your offering solve the problem? • Offering = product +go-to-market strategy • What’s your secret sauce? • How much better/unique/different? • What evidence do you have?

10. 4: product demo / case study • Demo is NOT a features and functions walk through • Illustrate the customer problem and your unique solution to that problem • Build your demo around a “case study” • Provide context before starting • Focus on 1-2 core “use cases” that create value and differentiate your product • PRACTICE, PRACTICE, PRACTICE • Consider a video if you are not good at demos

11. 5: market analysis + sizing • Big picture description of market dynamics • Why now? Why a startup? • Graphics are useful • Define and segmentyour market • Identify low-hanging fruit • Short-term vs. long-term • Market size estimates • SAM vs. TAM • Bottoms-up vs. tops-down • Consider changes over time • “sanity check”

12. 6: competition + sustainable advantage • No competition = no market • “doing nothing” / “good enough” substitutes • What is the basis of competition? • How does your advantage grow over time? • Economies of scale • Network effects • Data scale • Brand • Distribution • Virtuous cycles • Patents are nice to have but not enough

13. 7: market traction + GTM plan • Evidence of “product/market fit” • B2B: adopters, customers, partners, press/analyst • B2C: users, virality, engagement, monetization • Go-to-market plan • Product Definition + Positioning • Marketing + Distribution + Sales Plan • Business Model + Pricing

14. 8: team bios • Why are you the best team to capture this big opportunity? • Focus on relevant experiences • Don’t exaggerate or be too verbose • Be open and honest about your gaps and weaknesses; have a plan to address them • Avoid title inflation; think of the future • Recruit advisors to build credibility

15. 9: unit economics + financial projections • Demonstrate unit economics of business model • Pricing, acquisition costs, churn, lifetime value • Data points supporting your assumptions • 3-5 year financial forecast • bookings, revenues, gross margin, key operating expenses, cash needs • Overlay with key stages, milestones, metrics • # customers, product releases, new channels, cash-flow break even, financing rounds, etc • Nobody will believe your numbers! • Mechanics and key assumptions are what matters • Clearly identify key assumptions and why you feel confident in them • What drive revenues, margin, and expenses? • Is it consistent w/ market sizing and GTM plan • If you’re taking a SWAG be up-front about it and explain how you will learn more over time

16. 10: company status + funding needs/uses • Think of financing as a series of experiments where you learn more at each stage  reduces risk + increases value of your company • Each stage should have clear value-creating milestones • How are you going to use the funding in this stage? In future stages? • How much money do you need to get to cash-flow breakeven? • Do you have enough buffer if things don’t go according to plan?

17. 11: exit potential • Where is sustainable value being created? • Customer base / traffic / engagement • Partner / distribution network • Data / content / “real estate” • Unique technology / capability • Revenues / EBITDA • Who are the likely acquirers and why? • Are there analogs from the past?

18. 12: summary + next steps • Similar to “10,000 foot view” slide but more focus on momentum, potential, & fundraising schedule • Do not leave meeting without defining some clear “next steps” : • Setting up next meeting (i.e. visit to your offices to meet other team members, meeting with other members of the firm, more in-depth product demo, meet after key milestone completed, etc) • Sending due diligence materials • If “too early”, then define what investor would need to see to consider investing in the future • Understand the VC firm’s “process” and make sure you’re talking to the right person in the firm • Add investor to “status update” emails to “friends of the company” (no more than one per quarter)

19. Appendix • Don’t be afraid to include several more slides with lots of detail • Group and label Appendix slides based on topic areas (product, market, financials, etc) • Use these slides to answer questions that come up during/after the presentation • Create a second version without appendix (or with subset of appendix) for “emailing” and “printing”

20. CONCISE & CONSISTENT

21. Q&A