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W HITE & L EE LLP Soup to Nuts 2001 A Brave New World January 20, 2001

W HITE & L EE LLP Soup to Nuts 2001 A Brave New World January 20, 2001. Bruce W. Lichorowic. Soup to Nuts 2001 PACKAGING THE COMPANY AND PREPARING FOR FUNDING What can you expect?. Bruce W. Lichorowic. Background…BWL. Focus Solutions for troubled companies Issues

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W HITE & L EE LLP Soup to Nuts 2001 A Brave New World January 20, 2001

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  1. WHITE& LEELLPSoup to Nuts 2001 A Brave New World January 20, 2001 Bruce W. Lichorowic

  2. Soup to Nuts 2001 PACKAGING THE COMPANY AND PREPARING FOR FUNDING What can you expect? Bruce W. Lichorowic

  3. Background…BWL Focus Solutions for troubled companies Issues Funding, operational, marketing Partners VC’s, Angels, Board, Entrepreneur 20+ years Turnarounds

  4. Funding Environment“So what’s going on?” • 210 Start-Ups…shut down* • $1.5B in venture capital • 60% in Q4, ’01 • Dot com lay-offs…~15,000 • Investors are nervous * Reuters, 1/17/01

  5. Smart $ Became Dumb $… • Before Mega-funds • VC’s had time to work with their companies • Be active board members • Make strategic introductions • Contribute to the success

  6. Smart $ Became Dumb $… • After Mega-Funds • VC Partner must invest more $ • Carry more Deals • Sit on more Boards • Spend less time with their Companies

  7. We Live in Interesting Times“If your looking for $” • VC’s Activity • 1 year ago…. 4-5 financings a week • Today… ~4-5 financings a month • Taking Care…Current Portfolio • Funds being returned…LLP’s • Institutional Investors…On Hold • Possibility of economic recession • Reminders of early 80’s

  8. What does this all mean? “B2B” • Back 2 Basics • Strong…“addressable” market • Strong Technology…”secret sauce” • Strong Team…no OJT • Business model…that makes sense • Strong business propositon! • Rethink Quickly • Don’t throw everything out!

  9. Preparing for Funding…Today • Market… • Identified the Problem your Fixing ID • Technology • Does it work? • Team • Right People • Business Model • Holds Water…

  10. Early StagesFinancing • Need to Identify your Stage • Seed • Series A • Series B • Series C

  11. Seed Round0-6 months • Market/Marketing • Markets Identified, Web Site • Technology • Whitepaper • Team • Founders • Business Model/Plan • One pager Executive Summary • Fundraising • Founder/Angels

  12. 1 0 1 1 1 1 0 0 1 0 1 1 0 1 0 1 0 Rethink… Technology • “Secret Sauce”… Core Technology • Underlying technology behind the products • Meet customers needs and applications Internet Personalization Technique Adaptive response to on-line users Dynamic segmentation of on-line users Cooperative Multi-Agent Search

  13. Series A6-18 months • Market/Marketing • Analyst Approval • VP Marketing, Core Message, PR Launch • Technology • VP Engineering, Proof of Concept, Alpha • Team • Development, Marketing • Business Model/Plan • Basic Executive Plan • VP Business Development • Fundraising • Lead VC with Existing Angels

  14. Rethink… Cash Required Breakeven TOTAL CASH REQUIRED BREAKEVEN

  15. Series B12-24 months • Market/Marketing • Customer Approval • Technology • Beta or FCS • Team • CEO, VP Sales, Marketing Professionals • Business Model/Plan • Detail Plan • Strategic Partnerships • Fundraising • Syndicate of Investors, Lead VC

  16. Rethink… Product Roadmap Q2 2001 Q3 2001 Q4 2001 1H2002 2H 2002 Product #1 PRO 1.0 PRO 2.0 2.0 1.0 Product #2 PRO 1.0 PRO 2.0 1.0 Product #3 2.0 1.0

  17. Series C18-24 months • Market/Marketing • Key Message…”why are customers buying?” • Technology • FCS with milestone releases • Team • CFO, Audit Firm • Business Model/Plan • Polished Presentation, Focus Plan, Reference Sites • Fundraising • Syndicate Investors with VC Lead or • Mezzanine if IPO is imminent

  18. Rethink… Revenue Sources • Licenses • Hosting • Professional Services

  19. Rethink… Annual Cash Required

  20. Rethink… Cash Detail

  21. Rethink… Marketing Strategy • No Hat-Tricks • True sustainable pipeline • No big splash • Don’t announce before the product is ready • Build on yourself • Marketing should grow with the company • Keep in Balance • Marketing vs Engineering

  22. Rethink…Channel Strategy Channels Market Segments Direct Sales • Seed Accounts • Early Adopters • Major Accounts Integrators Indirect Sales • Mid-Market • Vertical Markets Business Development Technology Integrators Marketing Partners

  23. Rethink…Team • Clear roles and responsibilities • General management experience • Morph… functional skills President President Sales Marketing Product/Service Development Operations Finance & Administration

  24. Top 10…Must Haves 1. One Page Business Brief 2. Value Proposition…10 words 3. Stay 6-9 months ahead…burn rate 4. Hit your established milestones 5. Get a reference customer site…ASAP 6. Calculate to the month…breakeven 7. Accurately describe…use of funds 8. Hire a respectable management team 9. Business Integrity* 10. Strategic Partnerships*

  25. Top 10…Personal Checklist 1. Don’t fall in love with the product or the company 2. Funding is a full-time job 3. Don’t assume VC’s are going to Help 4. Constantly rethink your Plan 5. Watch out…quick fix consultants 6. Check your ego at the door 7. Plan on 3 near-death experiences 8. Always tell yourself the truth 9. Know where the “Exits” are 10. Trust your instincts

  26. Bruce W. Lichorowic Specialist for Distressed Companies

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