How to Write a Fundable Business Plan

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How to Write a Fundable Business Plan
Stanford Startup School
Investing in SoftwareAnn Winbladawinblad_at_humwin.
com
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Hummer Winblad Venture Partners

• First Fund Exclusively for Software Investing
• Founded September 1989
• 1B Under Management
• 8 investment professionals
• Fund V  420M (raised 2001)
• All Stages, focus on early stage including seed
• Usually Part of First Round of Venture Funding
• Usually Lead or Co-Lead
• 98 Investments to Date 16 IPOs, 31 Acquisitions

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Investing Steady State,Rational Exuberance

• 2005
• - 21.7B, 2,939 deals

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Hummer Winblad Active Investments
SUCCESS METRICS
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Software The Real Boom is Now
New Ira of Innovation
Economic Value of Each New Use Case
Architectures
New Uses
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Challenge for Founders
Product and Technology
Customer Understanding
Team
Unfair Competitive Advantage
Software Economics
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Starting your Software Business Plan

• What is your IDEA?
• Who are the CUSTOMERS?
• What is the SECRET SAUCE?
• Can you attract EXCELLENCE?
• Do the NUMBERS make sense?

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Hooked in 15 Minutes
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1. What is the Business?

• Voltage replaces Public Key Infrastructure (PKI)
  with identity based encryption
• VS.

Voltage Secures Anytime, Anywhere business
communications
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2. Do YOU understand the market?

• Its a billion dollar opportunity

UNMET CUSTOMER NEED GROWTH
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2. Is the Need Real?

• OR

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Market Timing

• Defining the Market
• OR
• Jumping Hurdles Already in Place

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2. Up and to the Right?
YOUR COMPANY HERE!
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2. Product or Company?
COMPANIES Do not live only in the PRODUCTS Tab!
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3. Will Customers Beg?

• There is an unlimited demand for our unreleased
  product

vs.
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3. What is the Secret Sauce?

• - Technology / IP
• - Business Process
• - Partners
• - Domain Knowledge

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4. Engineering Roadmap

• Can the product be built in less than one year?

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4. Can you Attract Excellence?
CEO
CFO
VP Eng.
Marketing
Sales
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4. Do you Know what you Dont Know?

• ?

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5. Do the s Reach Software Economics?

• 80/20

Gross Margin EBITDA
Revenue - Are services a major fraction? Capitaliz
ation Total lt 15M ? COGS Are COGS gt 30
? Sales Marketing Commissions and quotas in
line? Engineering Does the Eng. plan match the
Op. plan? G A Is the GA lt 10, is it
outsourced? P L Q over Q growth? Revenue per
employee? Model Enterprise vs. Salesforce
model Cash Flow How long does the initial
investment last?
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5. The Market Bats Last
I only swing at strikes - Warren Buffet

• Customers
• They believe in your product and team
• They have a budget
• There is a common problem
• You know how to reach them
• Venture Investors will dive deep with your
  customers

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What VCs Bring to the Table

• 3 Ps People, Partners, Process

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Business Plan?

• Why should I write a business plan nobody
  reads them anyways
• Why should I write a plan?
• How long should it be?
• Who will read it?
• Do I need an NDA?
• Do I need an exec summary?

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10 Slides to Cover the Basics

• Executive Summary
• (Problem Unfair Advantage)
• Team
• Market Analysis (Size, Position, Competitors)
• Secret Sauce Overview/Background
• Key Assumptions
• Customers (Potential or Reference-able)
• Product Plan
• Engineering Plan
• Sales Model and Marketing Outline
• Business Model / Financials/ Cash Flow

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Ann Winbladawinblad_at_humwin.comwww.humwin.com4
15- 979-9600