Startup Pitching Techniques: Get What You Want

1. Presents: Start Up Boot Camp for University TTO Professionals and Inventors Session 5: Pitching Techniques to Get What You Want

2. In Partnership With:

3. Your Panel of Presenters Moderator: Gerard Eldering is Founder and President of InnovateTech Ventures, specializing in venture creation based on inventions licensed from universities and research institutions. Since the company’s founding in 2007, InnovateTech has supported numerous mid-Atlantic universities and co-founded three start-up companies including AlphaDetect and Trilumen. Gerard has been working in the technology transfer community for more than a decade and is passionate about the creation of professionally managed and funded start-up companies. Prior to launching InnovateTech, he founded and served as Director of the Technology Transfer Office at The MITRE Corporation. He is an MBA and a registered patent agent. Presenters:Robert Okabe’s first involvement with startup ventures was as an angel investor. He has made 13 investments of his own funds since 1995, with one major liquidity event and three other positive returns of capital. He is also a co-founder of an angel group, helped organize an angel capital fund, and serves as a Director of the Angel Capital Education Foundation. During a 12 year career as an investment banker he completed over $25 billion in debt offerings, 7 equity IPOs, and participated in mergers and acquisitions with aggregate asset values over $14 billion while at BancAmerica Robertson Stephens, Lehman Brothers, and Kidder, Peabody. He is a co-founder of RPX Group, a firm focused on building startup companies from university innovations and has led many of the firm’s most successful engagements. Bob holds a Bachelor of Science in Finance and Organizational Behavior from the Boston University School of Management and has been a guest speaker on startups at the University of Chicago Booth School of Business, Kellogg School of Management at Northwestern University, MaRS Centre in Toronto and for the Organisation for Economic Cooperation and Development. Kef Kasdin is a general partner of Battelle Ventures and Innovation Valley Partners. Kef focuses on investments in cleantech and communication technologies, working closely with the national laboratories that sole limited partner Battelle Memorial Institute manages or co-manages for the U.S. Department of Energy around the country. Kef currently serves on the Boards of Directors of Aldis, Inc.; Ampulse Corp.; Planar Energy; and Rajant Corp. She also is an ImageTree Corp. board observer. Active in the venture community, she sits on the Board of Directors of the National Association of Seed and Venture Funds and is a coauthor of Inside the Minds: Green Venture Capital (Aspatore Books, Nov. 1, 2009). Kef has been involved in developing and executing strategy for high-technology companies for more than 20 years, including Sarnoff Corp. and 3Com Corp., where she was the company’s first Executive in Residence, Office of the Chairman. She became a technology start-up consultant in the late 1990s, a venture capitalist in 2000, and a founding member of the management team forming Battelle Ventures in 2003. Kef holds a B.S.E degree in operations research from Princeton University and an MBA from the Graduate School of Business, Stanford University.

4. Your Panel of Presenters Legal Expert: Paul E. Rauch, PhD, founder, Evan Law Group LLC, has prosecuted numerous patent applications in a broad spectrum of technologies, including biotechnology, pharmaceuticals, polymers, materials, semiconductors, microfluidics, software, business methods, electronics, telecommunications, manufacturing simulation and analysis, and consumer products. He was a postdoctoral research associate at the Max-Planck Institute in Stuttgart, Germany, and at Harvard University. Dr. Rauch counsels clients on maximizing the value of their intellectual property, including developing prosecution strategies and patent portfolios, as well as preparing validity, infringement, and freedom to operate opinions directed to a variety of products and devices, including pharmaceutical compounds covered by FDA “Orange Book” patents. He has counseled domestic and foreign companies on freedom to manufacture, import and market their products in the United States. His biotechnology practice includes cases involving the diagnosis and treatment of many different disease states, stem cell therapeutic reagents and methods, pharmaceuticals, and drug delivery systems. Dr. Rauch has impressive experience in prosecution of patents, including reexamination and appeals to the Board of Appeals and Interferences, often personally presenting cases directly to patent examiners. Prior to founding Evan Law Group LLC, Dr. Rauch was a Partner at SonnenscheinNath & Rosenthal, at Brinks Hofer Gilson & Lione, as well as Oblon, Spivak, McClelland, Maier and Neustadt. .

5. Today’s Agenda Techniques for Pitching to Angel and VC Investors • Preparation strategies - Timing, legal ramifications, NDA, confidentiality agreements, trade secrets, etc. • Content • How venue should impact the pitch • What investors are looking for • Key topics, words, and phrases – and common blunders • Delivery techniques • Striking the right balance between too much information, and too little • Getting results – closing and follow-up

6. Angel Investment - Expectations Frequency of Funding: Generically 1 in 12 Practically 1 in 30 Amount of Capital: Between $100,000 to $1 million per round $25K to $250K per angel Percentage of larger deals is rising Deal Timing: One to four months from term sheet

7. Angel Process - Tools • Executive Summary: • 3 pages or less, PDF format • Business Plan: • Under 30 pages, PDF or Word • Presentation Slides: • Cover in under 24 slides, PowerPoint • Financial Model: • Monthly calculations, annual summaries for 3-5 yrs, Excel • Other

8. Angels- Presentation Types Elevator Pitch: Your company’s “commercial” in about a minute Attention grabbers only, leave business card Speed Date: Verbal version of the executive summary in 5 minutes Tell the high level full story, provide executive summary Formal Presentation: Present the slide deck, leave bound copy Complete in 20 minutes or less, expect extensive Q&A

9. Angels- Contact Types • Casual Contacts: (conferences or social events) • Limit to elevator pitch • Be respectful of listener’s time • Trade business cards, agree to follow-up • Networking/Referrals: • Start with elevator pitch via phone or email • Follow up with executive summary, ask for a meeting • Multiple Presenter Events: (showcases, conferences) • Generally presenting slide deck • Offer business card, executive summary, maybe biz plan

10. Angels- Making Contact • Find the right referral sources: • Cold calling is better than a poor referral • Angel Capital Association

11. Angels- Presenting to Groups • Limit to one or two presenters: • CEO and technologist • Have an observer: • Typically CFO • Watches the audience, identifies interested and skeptical • Observer joins presenters for Q&A, directs traffic • Test the Technology!!! • Arrive 30 minutes early and check things out • Audio-Visual setup (Laptop/Projector/Clicker/Microphone) • Demonstration

12. Angels- Presentation Tips Lead with the opportunity, not the technology: Angels are experienced businesspeople Pictures speak louder than words: Show a demo or prototype if possible Emphasize track record wherever possible: Scientific (grants won, patents accepted) Product or Service (progress made, milestones reached)

13. Angels- Additional Perspectives • Angels as baseball players • Babe Ruth • The next James Bond movie • Vitamins versus Painkillers • Ocean’s Eleven • Guess Who’s Coming to Dinner

14. Process Considerations- Angel Protecting your Idea: Non-Disclosure agreements IP Protection Investor Demographics: Accredited Investors Number of shareholders and closings Documentation: Private Placement Memoranda Disclaimers

15. Process Considerations- VC Legal ramifications • Non-confidential disclosures that provide details coulddamage foreign rights if no patent application is yet filed NDA, confidentiality agreements, trade secrets, etc. • Don’t expect VC or angel to sign a confidentiality agreement • During first meeting or contact, focus on big picture, not details • VCs won’t steal your idea or take it elsewhere

16. VCs - Preparation Strategies Timing • A lengthy process that requires reasonable expectations • Previously 6-9 months, now 9-12 months • Funding cycle longer in later stages; early success (milestones) can accelerate process; to start up, rely on self funding or friends & family • Begin seeking angel/institutional funds a year before needed • Use capital efficiently: outsource, use consultants • Prepare pitch, hone in front of “critical friendlies” first • Continually fine tune pitch, biz plan based on audience feedback • Just as you get to Carnegie Hall: practice, practice, practice

17. VCs- Preparation Strategies Other considerations • Research targets and how to reach them — Identify VCs that invest in your sector and stage, and have interests aligned with yours — Determine those that make seed or other early-stage investments — Many don’t invest in pre-revenue businesses • Identify events to meet your targets — Conferences, trade shows, networking events — Check venture/business organizations’ Web sites for events open to public — Attend events or seek to present, as appropriate

18. VCs- Preparation Strategies Other considerations • Other initial contacts — While VCs accept introductory submissions via mail or by e-mail, few such contacts achieve traction • Try referrals through professionals; e.g., attorneys, accountants, investment bankers, research analysts, industry-sector business leaders

19. VCs- Content Key Topics, Words and Phrases • Marketplace pain, your solution: Value proposition • Technology, barriers to entry (patents, IP) • Management team/relevant experience • Market analysis/opportunity • Competition, perceived competition, competitive landscape • Business model, revenue stream(s) • Market adoption, go-to-market strategy • Use of proceeds/funds

20. VCs- ContentCommon Blunders • “Need only 1% of huge market” • Not knowing/understanding your market/customer targets • Not acknowledging competition or perceived competition. • Not recognizing that status quo is always an alternative • Not enough focus on management team/leadership • Not stressing relevant, industry experience • Not enough pitch preparation • Proactive: messaging, positioning • Reactive: Q&A • Knowing weaknesses and threats, as well as strengths and opptys • Not understanding VC perspective/role; unrealistic expectations of funding process

21. VCs- ContentStriking the Right Balance Striking the right balance between too much information and too little • Develop comprehensive Q&A document • Practice pitch and get feedback (ongoing process) • Hit key points briefly or in depth, depending on venue, audience and stage of contact/relationship • Topline information to whet appetite at informal or unscheduled contacts

22. VCs- How Venue Should Impact the Pitch Casual contacts of short duration • Elevator pitch - States your value proposition: Concise company description expressing your industry, the marketplace pain/problem and your solution - Just enough to whet appetites and desire to learn more via a call, email exchange or face to face - Provide business card Presenter at conference • Time limit informs level of details • Slide deck—few words, large type • Don’t read slides; read your audience, making eye contact • Hand out business card, company one-pager

23. VCs- How Venue Should Impact The Pitch Phone meeting • Determine phone agenda/process, time allowed, participants, materials to be sent in advance • Only audio cues—ask, “Any questions?” periodically • Stand up to keep energy up and audience engaged • Determine next steps before ending call In-person meeting • Tailor presentation to allotted time, allowing for Q&A • Bring key management team members to meeting • Prep team with Q&A so all can deliver messages • All team attendees must participate; predetermine roles, not just for presenting, but also for replies to questions • Hand out executive summary or other documents at end • Determine next steps before leaving

24. VCs- What Investors Are Looking For • Proprietary technology that solves a real problem • Management team with industry-relevant experience and successful track record • Large, growing, verifiable market • Motivation and likelihood for market adoption • Measurable milestones, timeframes, investment terms that support venture ROI requirements • Multiple exit opportunities at high returns • Potential acquirers identified at time of investment • Market fundamentals that support valuation upsides • Bottom line: The right product, the right plan, at the right time with the right team to execute

25. VCs- Delivery Techniques • Preparation. Practice. Passion. • Keep messages clear, concise, consistent, with team consensus • Make sure how you will make money doesn’t get lost in who you are, what you do • Practice before colleagues/advisers, incorporate feedback • At private settings, be flexible, allow for interaction • At public settings, define process: presentation, followed by Q&A • NEVER read slides. Use bullets as cues, elaborating on each • Keep tone conversational, but passionate; if you don’t believe what you’re saying, the audience won’t • Use analogies, anecdotes, current events, to help tell, illustrate your company’s ‘story’ and connect with your audience

26. VCs- Getting Results Closing • Reality check; understand the process — Multiple stages with each leading to the next — Business card  phone call  face to face • Anticipate VCs’ questions—understand their perspective • Don’t expect to leave with check in hand • Keep process moving forward • Not over ‘til the money’s in the bank Follow-up • Send updated materials as things change

27. Q&A Utilize the chat box to the bottom left of your screen to submit a question to the panel. Please address your question to a specific presenter. Or Press * 1 on your touchtone phone and this will place you into the phone queue.

28. Introduction to Session Six (July 8, 2010) Impact and Outcomes A. Tracking local job creation and economic impact B. Growth strategies C. Stakeholder outreach D. Later-stage funding E. Case studies of successful exits and war stories F. When and how to seek a buyer G. Considering an IPO H. Freedom to operate I. Marketing strategies J. Legal issues related to exit strategies