notes on financial projections (svase event)

More notes on another Silicon Valley event:

- VCs want to see if you understand the business you are in. You need to establish your credibility and your pitch must be interesting and reasonable.

-On the first meeting, VCs will want to know if that’s the kind of product that can really grow. Be superficial, too much detail distracts. Talk more about the operations plan and prove you know the business.

- Do you know the primary drivers of customer acquisition and the costs behind that?

- Justify monthly sales. Who are the clients that are going to come each month, seasonality…

- Practice your pitch and ask yourself if someone listening is going to buy.

- Do not have an exit strategy slide. It’s VC job to worry about that. They want you to care about the business. But be ready to answer that question.

- Be realistic, “we are going to be partners in that business“. Know and admit weaknesses: “That’s where I want to go and that’s how, but I’m not sure if I can get there alone. I need a CEO/CFO…“. Also, there are ratchets where if you miss your objectives, VCs own more of your company.

- Important –> Revenues. That’s what they are investing in, in an early stage.

- Any $$ you raise has to be linked to a milestone. Milestones = external validation of the company.

- Do not do a deal without a lawyer or someone that understands what matters and what doesn’t in the negotiation.

how to pitch to a VC

Great video every entrepreneur should watch before pitching to any investor. He says things we have herd many times but all together, fast and organized. Good way to check if we have everything. 

(From TED: “Ideas worth spreading”)

Single most important thing the VC is going to be investing in: YOU  

You need to prove:
- Integrity
- Passion
- Experience
- Knowledge
- Skill
- Leadership
- Commitment
- Vision
- Realism
- Coachable     

How to structure the pitch:
Do’s:
- Logical progression
- Things I know or understand (examples)
- Validations (somebody else says this make sense)
Dont’s:
- Things that are no true
- Things I don’t understand
- Thinks that make me think
- Internal consistence
- Typos, errors

Look at our betters: Steve Jobs
- Good: short, short bullet points
- Better: just headline
- Best: only images   

Include:
- Company logo
- Quick business overview, 1 sentence
- Management team
- Market
- Product
- Business model
- Strategic relationships
- Competition
- Barriers of entry
- Financial overview
- Use of procedures
- Capital & valuation
- Final pitch   

5 + tips:
- Use presentation mode
- Use remote control
- Hand outs are not your presentation
- Don’t read
- Never look at the screen 

we don’t read executive summaries either

More advice in executive summaries. Here is a summary but the post by Frank Peters is worth reading: 

1. It can only be 2 pages ( no cover page, no confidenciality, yes contact info)
2. We don’t read executive summaries either: inlude a lot of lots of eye candy: bullets, graphics…
3. Get right to the point and cover all the bases. What? How? Competitors? Create paragraph headings
4. Who are you? Name, position, company name; that’s all the room you’ve got. And that’s all you need. Got an advisory board? We’re often impressed if you do
5. Revenue, units sold, cost of goods, show us a few lines of detail, but keep it simple
6. Ask for the money. I can’t read your mind.  Leave the pre-money valuation for a follow-up meeting unles you’ve been already working with angels or sophisticated investors
7. Expect feedback and incorporate suggestions