KEN BERKUN, PRESIDENTLABELS THAT TALKBERKUN@SOUNDPAPER.COM

Perfecting the Pitch

Includes notes. (Slides labeled as notes are for previous slide.)

•Me• Experienced entrepreneur• Technical background• Successfully raised both Angel and VC funds• 1 Successful exit• Working on startup #2 now

•You• Who is in the audience

Introduction

• Fundamentals of Being in Front of a Group• Presentation Techniques• Prep Work• PowerPoint Tips• Props• Demos• Investor Pitches in particular

Topics

•Forbidden Words•Face the audience •Speak slower•Speak clearly•Empty your pockets•Never lie / Never make up an answer• It is fine to say “I don’t know”•You can always say “I’ll get back to you”

Fundamentals

Introduction

Presentation

QuestionsNext Steps

Next Presentati

on

Meaningless Diagram

• Verify in advance that the right A/V gear will be available

• Arrive Early/Set up early• Bring your own gear as back up• Sweet talk the admin• Bring your cards• Have your partner take notes• Dress appropriately• Be polite – no matter what

Prep

Presentation ChecklistLaptop √Memory card with presentation √Presentation is on LaptopHandoutsBusiness CardsNotepadPenIf you have a Mac then video cablePropsDemo GearExtension CordSpecial Cable 1Special Cable 2

Meeting Checklist

• Understand exactly why you are there• Establish how much time you have• Take control of the room• Bring a clock you can easily read• The founder MUST present• Never interrupt each other

More Fundamentals

Practice

Practice Some More

• Limit and manage the questions and answers• Only jump slides if you have complete mastery of PPT

• Don’t get lost trying to find the right place

How to Handle Questions

When Asked At The End

1. Tell them what you are going to tell them

2. Tell them3. Tell them what you

told them

The Classic Approach

Practice

•Use Guy Kawasaki’s “10/20/30 Rule of PowerPoint”• Ten Slides• Twenty Minutes• Thirty Point Font

•All pictures• No Text

PowerPoint Notes

http://blog.guykawasaki.com/2005/12/the_102030_rule.html

10 Point20 Point30 Point36 Point

36

Century GothicArialTimes New RomanCalibri

•Animations are controversial• Keep them to a minimum

•Video has a tendency to break•Audio is dangerous•None of these work on paper, on Slideshare, Webinars or anywhere else.

Special Effects

• NDA• Buzzwords• Never apologize

• Tons of text• Read the text• Looking at the screen not

the audience• Lots of animations• Annoying transitions• Constant fussing and

backing-and-forthing of slides

• Lots of fonts

What NOT to do

• Passion• Stealth• Curated• Ecosystem• Drinking the cool aid• Traction• User Experience• Killer App• Cloud• Disrupt• MVP• Drill Down• Action Items• Hockey Stick• Game Changer• Reach Out/Ping/Circle Back

• Patent pending • First mover advantage• All we have to do is get 1% of the

market• Pivot• Gamify• Viral• Epic• Crush it• Leverage• 800 pound gorilla• Fremiumum• Social Media• Open the kimono• Lean• Agile

Buzzword list

•What you say is far more important than its appearance

•Nonetheless, don’t be an amateur •Keep it simple and uncluttered

Design v. Content

Always credit your sourceshttp://www.behance.net/gallery/Good-Design-Bad-Design/5466385

Why Design is Important!

• Never ever read• You know your story – so tell it

• If you don’t then you are not ready

• Notes in your hand are bad

Memorization

ON

• I say make it funny• Stories are better than jokes

• Not everyone would agree• Cartoons are generally good• Keep it non-controversial• Always leave them laughing

Humor

But in any case, keep them entertained

Doing Without

•Demos always break•Screenshots are much safer•Never ever count on an internet connection

•Nonetheless, nothing kills like a demo• If you do:

• Short and Sweet• Show just the salient points

Demos

• Do a trial close• Set the next steps• Start on Time and End Early

• Know how much time you have• Ask

• Know your audience - ask• Listen and react• Tell a story• Ask questions of your

audience• And listen to the answers

• Vary your voice level• Stay on topic

Things You SHOULD Do

•You can’t say “I have passion”•You must demonstrate it• It is OK to show some emotion•But it is not enough

About the “Passion” Word

Passion never cut a pay

check

The Investment Pitch

•This is about the presentation• I assume you have

• A business plan• A great team• A competitive edge (moat)• A great product or service

•All you need is a little money…

A Few Points

• Information• Contacts• Funding• Sometimes all you want is access to the right people

Know Your Goals

Flattery is always good• Done right

1. Problem2. Your solution3. Business model4. Underlying magic/technology5. Marketing and sales6. Competition7. Team8. Projections and milestones9. Status and timeline10. Summary and call to action

10 to 20 Slides

http://blog.guykawasaki.com/2005/12/the_102030_rule.html#ixzz2fZR0curu Lifted from Guy Kawasaki

•Two types of problems1. Need2. Want•How do you prove it?

Problem

Nobody knew we needed an mp3 player

•Your product or service•Screen shots or demo

• But I don’t recommend demo•Customer quotes•Props

Solution

• How do you Make Money• Clear business proposition• >= 40% margins• Advertising is tough

• You have to prove you have a huge audience• Freemium has a terrible conversion rate

Business Model

We follow the Adobe Acrobat model – anyone can read Soundpaper for free, we charge a small amount for printing the barcode.

•You ALWAYS have competition•Even if it is just the status quo

Competition

•Key positions only•Board or Advisory Board•Prior Successes•Pictures are optional

Team

Founder Berkun receiving the Governors Innovation Award in 2008.

•A little more about the product/service

•Secret Sauce/Moat/Competitive Edge• IP

Underlying Magic/Technology

• Patent pending techniques for handling partial scans/missing data

• Missing audio is easily filled in by our brains

•Marketing or Sales?•Understand the difference•Simply put:

• Marketing is promotion• Sales are the deals themselves

Marketing

•Have a realistic Plan•Cost to acquire customers•Average sale size•Margin

Marketing and Sales Plans

Viral is not a marketing plan

•Product Status•Traction! Sales! Contracts!•TRUTH!•Promise less deliver more

Milestones

•Projections:• Not too big and not too small• Probably includes a hockey stick• State your assumptions

• And your willingness to defend and adjust them• You MUST have model/spreadsheet

• Of course it will be wrong but it is a starting point

Projections

•What is the raise?•Simplified terms•Dates•Lead Investor•Trial Close

Summary and Call to Action

Investment SummaryValuation:

Current Capital & Debt Structure

Founder(s): $850,000

Other Investors: Friends, Family and Angels

Debt: $100K

Sweat Equity: 8 Years

Pre-Money Valuation: $8 Million

Post-Money Valuation: $12 Million

  

General Information:

Name: Labels That Talk (LTT)

Amount: $4 Million Series A

New Securities Offered: Common

Prior Rounds: Convertible Debt

Lead Investor(s): None   

Expected Return 

Expected Company Values

12 months: $33 M

36 months:$80 M

60 months:$170 M  

  

Special Terms or Conditions: None

Bogus Numbers

•Every audience is different•Do your research•How does your product help the people in this room

•Stay at the appropriate level• 10,000 Feet

Customize the Presentation

http://navfund.com/blog/the-angel-bubble-or-why-i-would-rather-be-a-vc

Dealing With SpreadsheetsPro Forma Balance Sheet

AssetsCurrent Assets Year 1 Year 2 Year 3 Year 4 Year 5Cash $ 58,205 $ (477,452) $ 3,431,674 $ 5,740,072 $ 12,454,939 Accounts Receivable $ - $ 98,775 $ 391,217 $ 785,479 $ 1,465,313 Inventory $ - $ - $ - $ - $ - Other Current Assets $ - $ - $ - $ - $ - Total Current Assets $ 58,205 $ (378,677) $ 3,822,891 $ 6,525,551 $ 13,920,252

Long-term AssetsAccumulated DepreciationTotal Long-term Assets $ - $ - $ - $ - $ -

Other AssetsGoodwill $ 1,200,000 $ 1,200,000 $ 1,200,000 $ 1,200,000 $ 1,200,000 Total Other Assets $ 1,200,000 $ 1,200,000 $ 1,200,000 $ 1,200,000 $ 1,200,000

Total Assets $ 1,258,205 $ 821,323 $ 5,022,891 $ 7,725,551 $ 15,120,252 $ (197,953) $ (287,888) $ (377,256) $ (509,088) $ (735,921)

Liabilities and CapitalCurrent Liabilities $ - $ - $ - $ - $ - Accounts Payable $ (42,047) $ (104,655) $ (194,889) $ (273,318) $ - Current Borrowing $ - $ - $ - $ - $ - Other Current Liabilities $ - $ - $ - $ - $ - Subtotal Current Liabilities $ (42,047) $ (104,655) $ (194,889) $ (273,318) $ -

Long-term Liabilities $ - $ - $ - $ - $ - Total Liabilities $ (42,047) $ (104,655) $ (194,889) $ (273,318) $ -

Investment $ 340,000 $ 640,000 $ 3,640,000 $ 3,640,000 $ 3,640,000 Paid-in Capital $ 1,440,000 $ 1,440,000 $ 1,440,000 $ 1,440,000 $ 1,440,000 Total Invested Capital $ 1,780,000 $ 2,080,000 $ 5,080,000 $ 5,080,000 $ 5,080,000 Retained Earnings-beginning $ - $ (281,795) $ (866,134) $ 515,036 $ 3,427,957 Annual Earnings $ (281,795) $ (584,339) $ 1,381,169 $ 2,912,922 $ 7,348,216 Total Owners Equity $ 1,498,205 $ 1,213,866 $ 5,595,036 $ 8,507,957 $ 15,856,173 Total Liabilities and Capital $ 1,456,158 $ 1,109,211 $ 5,400,147 $ 8,234,639 $ 15,856,173

Key ratios Year 1 Year 2 Year 3 Year 4 Year 5Return on Equity -19% -48% 25% 34% 46%Return on Assets -22% -71% 27% 38% 49%Profit Margin n/a -115% 32% 31% 40%

Tempting, but don’t do itPro-Forma Projected Annual Profit & Loss

2012 2013 2014 2015 2016Year 1 Year 2 Year 3 Year 4 Year 5

Revenue 0 508,875 4,307,458 9,548,532 18,411,220 Marketing 6,500 156,630 498,439 986,887 1,076,717 Sales 8,850 116,670 259,300 510,650 755,800 Engineering 210,000 628,400 1,277,050 1,763,661 2,635,296 G & A 56,445 191,514 686,249 1,805,917 2,638,459

         

Sub-Total: Operating Expenses (281,795) (1,093,214) (2,721,038) (5,067,115) (7,106,272)

         Income (281,795) (584,339) 1,586,420 4,481,418 11,304,948

State and Federal Tax 0 0 (205,250) (1,568,496) (3,956,732)

Income after Tax (281,795) (584,339) 1,381,169 2,912,922 7,348,216

Net Profit Margin 32% 31% 40%

Select Just One or Two Charts

2012 2013 2014 2015 2016

(5,000,000)

0

5,000,000

10,000,000

15,000,000

20,000,000 Pro-Forma Revenue & Income

Revenue Income

$18,411,220

Bad Chart! Naughty Chart!

http://www.biostat.wisc.edu/~kbroman/topten_worstgraphs/ http://lilt.ilstu.edu/gmklass/pos138/datadisplay/badchart.htm

•The Valuation•Future Rounds•The Exit

Dangerous Topics

2013 2014 2015 2016Year 2 Year 3 Year 4 Year 5

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

Proforma Investment Value

3 times earnings5 times earnings10 times earnings

•Strictly optional•Now it is typical to email the presentation

•Provide at end not earlier•Use PPS file and PDF not PPT or DOC

Handouts

•1- to 15 Minutes is perfect•But sometimes you only have 3

• Or 2•Practice your time

• Then practice some more•Know what is important and what you can drop• It’s probably not as important as you think

Time

• Sales• Beta Customers• Contracts in negotiation• Money raised already• Money of your own• Quit your day job• Your Board or Board of Advisors• Publicity• Website• Registered Copyright on your name

Proof of Commitment – Prior to Pitch

•Sit down• Or stand up

•Start and manage the discussion•Know what you want and ask for it•Ask lots of questions•Don’t be afraid of tough questions

• Make sure you have answers• Never dodge the question

After the Pitch

•How does that sound to you?• Is this the kind of deal you do?• If I could do that for you, would you invest?• If I can fix that problem for you would you be interested?

• Is this deal size appropriate for you?• It looks like you really like this. Is that true?

The Trial Close

•Trial Close•Next Steps• I will provide you with…

Wrap Up

•Yup. Yes it is.•Tough. No one ever said it was easy.•The odds are NOT with you.•But mostly everyone is rooting for you

This is a lot of stuff to learn

• Toastmaster• Incubators• Mentors• Founders Institute• Meetup.com• Dale Carnegie

• “How to Win Friends and Influence People”• Edward Tufte’s books (any)• Nice write up of Buffer’s journey here:

http://open.bufferapp.com/the-slide-deck-we-used-to-raise-half-a-million-dollars/

Resources

Slides are Available on Slideshare:

http://www.slideshare.net/kenberkun/perfecting-the-pitch-with-note-slides

Thank You