Apply online by November 20

1
University Business Plan Competition

• Apply online by November 20
• www.EntrepreneurshipFoundation.org
• By answering 19 questions
• You can paste from a word doc
• Answers limited to 1500 characters/spaces
• Start-up Grants 1000 - 1000 - 10,000.
• Winner pitches to CT Angel Investor Guild
• Cost No entry fee

2
Early Stage and University Venture Fair

• Apply online
• www.Back-Offices.com/VCFair 
• 225 including two attendees
• Three-minute PowerPoint presentation plus exhibit
  table.
• 100 700 pm
• New Haven Lawn Club
• 30 Companies/ 30 Investors

3

• Evaluating Business Opportunities
• North Bridge Venture Partners
• Signal Lake Ventures
• Connecticut Angel Guild
• Connecticut Venture Group

4
The Deal Scorecard
1
10
1. Management
2. Market
3. Competition
4. Product/Technology
5. Ability to Forecast Results
6. Capital Intensity (Risk/Reward)
5
Management
10
1
Senior Team Proven Record
No Operating Experience

• Good Teams have
• Done their jobs before (no OJT)
• Experienced ramp from startup to big company
• Relevant industry experience contacts
• Specialized expertise and insight
• Ability to adapt to change
• Brains and hunger

6
Management

• A Good Incomplete Team
• Vision
• Energy and hunger
• Efficient (Not a drain on capital)
• Appropriate role for each person
• Acknowledges management gaps

7
Market
10
1
gt 1 Billion Growth capacity gt 30
Stagnant

• Attractive Markets
• Big (50,000,000 potential)
• Target users adopt new products quickly
• Customers feel real pain
• Customers can be reached economically
• The time is (will be) right

8
Competition
10
1
Potential for Leadership
Several Established Players

• Leading Companies
• Typically first to market
• Leaders define Market
• Leaders get market share
• Market share critical to success

9
Product/Technology
10
1
Clearly Superior Providing Leverage
No Advantage

• Difficult to replicate
• Special technical skills required
• Special user knowledge required
• Proprietary technology (patents)
• Many man-months to develop (time, )
• Improves rapidly with customer feedback

10
Ability to Forecast Results
10
1
High
Low

• Great companies create and execute operating
  plans
• Plan is financial expression of strategy
• Defines business model
• Shows interrelation of timelines, functions,
  hires
• Reflects detailed understanding of the business

11
Capital Intensity
10
1
Low
High

• A function of
• Start-up and working-Capital needs (Risk)
• Gross margins (Reward)
• Sales and marketing expenses (Potential to
  deflate margins)

12
No Single Recipe
A
B
C
1
10
1. Management
2. Market
3. Competition
4. Product/Technology
5. Ability to Forecast Results
6. Capital Intensity
13
Real World Feedback

• Interview
• Customers, Analysts, Potential hires,
• Potential partners, Other CEOs
• Where is the pain?
• Would you buy?
• How many?
• At what price?
• How do you buy?
• What could we do better?
• Listen for what you dont want to hear

14

• Venture Capital Financing Today
• Innovation and Entrepreneurship Panel
• University of Massachusetts at Amherst
• 24 October 2009

15
Venture Funding in theCurrent Environment

• Early stage companies that require relatively
  small amounts of capital to reach positive cash
  flow, with low valuations are getting funded

16

Objective of Investors

• LENDERS
• No Risk
• Low Return
• EQUITY INVESTORS
• Low Risk
• High Return

17
Roers Continuum
18
Variables Affecting the Curve
External factors Economy Capital available
Confidence Competition Internal Factors Hot
New Tech Serial Entrepreneur Mega
Potential
19

A 1 Million Investment

After Year _at_ 40 IRR _at_ 60 IRR
1 1.4 MM 1.6 MM
2 2.0 MM 2.6 MM
3 2.7 MM 4.1 MM
4 3.8 MM 6.6 MM
5 5.4 MM 10.5 MM
20
CAPITAL SOURCE Amount Pros Cons
Bootstrapping with Savings Small but critical No dilution Limited amounts
Credit Card Debt Up to 100k Easy access Interest can balloon
SBIR Funded Research www.ctinnovations.com 125-700K Dont have to pay back
Equity Angel Investors www.EntrepreneurshipFoundation.org 250k-1MM Industry connections - Dilution - Partnership
Connecticut Innovations www.ctinnovations.com 500k-1mm Accessible
Venture Capital Fund www.CVG.org 1 - 100M - Experience - Deep pockets - Difficult to meet profile - Will want 10-50
Bank Loans Limited to assets No dilution Guarantees personal liability
Leasing Varies Reduces capital needs Interest Cost
Strategic Corporate Partner 1m Unlimited Access to markets Loss of Control