Investor Pitch Pointers Page 1 of 6 "Successful Entrepreneurship" S. Watowich (UTMB)

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1 Investor Pitch Pointers Page 1 of 6 "Successful Entrepreneurship" For the Successful Entrepreneurship class, the "Investor Pitch" must be limited to <8 minutes, thus ~8 slides. This is the only RULE since we are time limited, what follows are suggestions! Since most class projects are very early (pre-seed) companies, assume the "investor" panel is an angel group looking to invest $100K-$500K in early stage biomedical company. Investor Pitch Pointers (these are suggestions, not rules) Typical pitch deck for a rapid presentation 1. Intro - includes company name, founders, define product in a single sentence 2. The Market Need & Opportunity - the Pain specific to your product; include realistic market size) 3. Solution - how do you solve the pain; including Target Product Profile; do not stress technology only what technology will accomplish and how this solves market pain 4. Business Model - including value proposition, revenue stream, and exit strategy 5. Product Development Path - include timeline with next 3 Key Value-Added Milestones [KVAM] that de-risk and add value to your product, include funding requirements & sources to reach next 3 KVAMs, regulatory path 6. Competition - identify key competitors; state and validate the differentiators of your planned product (as defined by your earlier Target Product Profile) 7. Team & Expertise - including Key Opinion Leaders and Advisory Boards; relate to development path and how this team can execute on next KVAM; investor capital will likely be used to also make key next hires, so highlight this 8. Ask - what capital do you need from the investor panel to reach next KVAM; this should match the Product Development Plan and the panel s investment level Points to remember with the above pitch deck the web contains examples of good (and bad) business pitches, many from business plan competitions (reach out to Gary Cadenhead for past presentations from the UT McCombs business pitch competition) - web contains a host of ideas on how to make a good pitch - you decide what works best for you (above is an example that works for many people) Guy Kawasaki has a number of entertaining and useful web videos that discuss making good pitches (however, after watching a few of these, they start repeating the same points) o o keep your slides simple and FOCUSED the pitch is about you connecting with the investors - they need to like and trust you (they do not want to read your slides or listen to you read the slides) a successful pitch demands clear presentation of an opportunity (big pain + big market), your solution, why you (and your team) can deliver the solution this is a sales presentation - you are selling yourself and our plan for a company keep in mind, always, what the investors' want (a profit) you MUST connect with, and excite the investors by slide 2 - done with tackling pain with a large market dress for success (business casual is fine) be prepared to discuss key assumptions slide 1: simple sentence, simple words that state your company's purpose, product, and market

2 Investor Pitch Pointers Page 2 of 6 "Successful Entrepreneurship" need after slide 1, the investors should understand the basic company and its focus (this should be contained is one concise sentence) slide 2: state the problem; why has it not yet been solved? how is it currently addressed? what is a realistic market size and your realistic market share (be prepared to back this up with facts)? how is the market growing? you need both a problem and a market to have a need for your company slide 3: a good spot to reference your IP and freedom to operate slide 4 - who are your key customers (this will likely never be end consumers, but existing pharma that will buy your company or license your technology once it has been de-risked) - search for recent similar deals in your biotech space - make sure you know what companies are interested in your solution; focus on a single revenue stream; be sure you can justify the assumptions in this model slide 5 - be realistic with your projected costs - you have to pay salaries, rent, equipment, etc for some period of time - this costs money - make sure each milestone moves your product forward along a regulatory path; make sure your development path meshes with your business model and shows exits or revenue streams slide 6: works well using a competitive quadrant matrix that reflects market requirements and product features (list competitors vertically and 4-6 columns of strengths and perhaps weaknesses) - your product should hit all the strengths and have no weaknesses; your competitors should have weaknesses and/or not have all your strengths slide 7: when discussing the team, note hiring plans that will be undertaken with investor money - how do these hires add value to company and help accomplish next milestone slide 8: the "Ask" should match the monies needed to reach your first KVAM in slide 5 Realize that you might have a great idea, but that you might not have a business address 2 pivotal questions: 1. what is the market potential? (this is where QuickLook is useful) o $B market - then you could interest large VCs o $100M market then you could interest angel investors and small VC firms (depending on the time frame and investment necessary to produce revenues) o $10M market you might interest small angels, friends (depending on time frame and investment necessary to reach profitability) 2. can you protect your technology and freely use your technology? Presentation points - please take to heart (these are adapted from a number of sources) Don t speak the way you write. I help individuals, couples, and families make sound financial plans so that they don t outlive their money may read well on a website, but doesn t sound the way people really talk. When speaking, you might start with, I m a financial planner, and I make sure my clients don t outlive their money. Much more compelling, genuine and even fun. Utilize common vernacular (i.e., use the simplest language possible). Your company's mission statement may talk about serving the growing population of at-risk adolescents but most people would say kids who are at risk in regular conversation. So say that. Turn your pitch into a question. Try utilizing questions in your presentation. Asking a question can act as an attention grabber, it gets the investors engaged. Ask more than yes/no questions. Ask a question that gets them thinking what they can accomplish if your solution actually works.

3 Investor Pitch Pointers Page 3 of 6 "Successful Entrepreneurship" Keep the presentation conversational. The problem with most pitches is that they get crafted on paper but not adjusted to sound like how a real person speaks. The majority come across as synthetic as an infomercial ( We help startups maximize their social media strategies to grow their customer base " ---- this is boring, provides no real information, and the audience is not engaged!) Check for words that make the person you are speaking to tune out. Example: My company provides integrated solutions to clients world-wide. What?! This is jargon that means nothing to most people. Not only will your audience not get what you do, they will have no idea what you may have said after that because they will have tuned out. Be focused and specific and use NOUNS (not pronouns). Bring out the big picture and big benefits, early (slide 1). Tell a story; do not simply show PowerPoint slides. Skip the acronyms, history, and the colorful autobiography. Lead with facts, but skip the details. Skip the generic phrases like "more user friendly", "massive opportunity", "paradigm shifting", etc. Skip buzzwords, otherwise you sound like all other proposals. Instead, state something concrete like: According to Gartner, the opportunity is $100 million by 2015, with 12% compounded growth. A pitch should always end with a reminder of the value the product or service will provide to the investor. Some things to consider: Is the value of your product/service apparent? Is the value enough that investors will pay for it? Why should money/time be invested into this particular product/service rather than other opportunities? Make sure your answer clearly these two QUESTIONS: What value will a consumer derive from the use of your product? What added benefit will they experience by using your product over a competitor s or the status quo? Below is a quick (hopefully good) example using the above points (note: the numbers are made up, but you could construct a similar pitch with numbers that you have). This pitch could always be improved, but it is a good start for slide 2. "There are 3000 urban hospitals in this country. Do you know how many qualified nurses leave an urban hospital each year because they are unhappy with career advancement opportunities? Approximately 100! 100?! Do you know how much it costs to recruit and train a new nurse? $150,000! To train one newly hired fully qualified nurse. This means each year an urban hospital spends $15 million to replace nurses who leave because they are unhappy. Imagine what a hospital could do with $15 million, money saved just by retaining their great nursing staffs? Imagine what our 3000 urban hospitals could do with the $45 billion they would save by retaining their nurses. Now, we have developed an education app that has been shown to increase nursing staff satisfaction levels and increase retention rates. Let me tell you more about this app that will help our country's 3000 urban hospitals better retain their nurses.....etc..." (from Chris O'Leary) The point of a pitch isn t to get into every detail of your Product. Instead, all you want to do -- and all you have time to do -- is to make sure the audience understands what you are talking about and what s in it for them. Concise. An effective pitch contains as few words as possible, but no fewer. Clear. Rather than being filled with acronyms, MBA-speak, and ten-dollar words, an effective pitch can be understood by your grandparents, your spouse, and your children. Compelling. An effective pitch explains the problem your Product solves. Conceptual. An effective pitch stays at a fairly high level and does not go into too much unnecessary detail. But, it provides enough CONCRETE and SPECIFIC detail so that the PRODUCT and solution is clear. Here is a test - give your pitch to your kids (or parents) - can

4 Investor Pitch Pointers Page 4 of 6 "Successful Entrepreneurship" they then tell you the main parts of how your solution will work? Conversational. Rather than looking to close the deal, the goal of a pitch is to just set the hook; to start a conversation, or dialogue, with the investors. They should want to know more when you are done. When you have made your draft presentation, ASK YOURSELF the following Did you hook them? Your pitch should be opened with a hook to capture the listener s attention. This could be a question or a statement that really entices them to stay with you for the full time. The hook is critical; seize their full attention with a powerful hook. How clear are you? You have to use simple language in your pitch. This isn t a case of dumbing it down, rather ensuring that anyone can understand it whether they are in your industry or not. If you use too much jargon you tend to alienate most people and their minds start to wonder as a result. Is it memorable? Make an effort to stay memorable. You can use visual language, be witty or just very different the point is that a pitch will only be memorable if it stands out. Imagine a speed networking event, you ll hear 30 pitches in an hour and how would you ever remember them unless they had something special about them? Did you end with a call to action? At the end of the pitch, you ll want the listener to think, How can we do business? Rework your presentation! PRACTICE, PRACTICE, PRACTICE Now that you have put your pitch together, it s time to rehearse. Do it to your friends, in front of a mirror, on your webcam work as many failure platforms as possible so that you can deliver the perfect pitch when you really need it. Even if you know your material inside and out, you still need to practice your delivery. Moving around and gesturing can be very effective, but too much of a good thing can also be distracting. Bottom line look at ease and be natural practicing will get you there. The actual presentation Rely on your practice. Stay true to what you know and don't start making things up. Stay calm and do not get defensive. The core of the pitch is a business transaction. If you start getting defensive, emotional, or angry, you might lose out on a valuable chance. This is the good time to try to be as humble as possible, no matter the questions. Lastly, if a deal doesn't happen, don't take it personally. Look at your Investor Panel and really get them engaged. Make eye contact. Remember that sincere questions force your investors to consider what you are saying. What questions will you ask your investors when you are speaking? Are you sincere? Be yourself. Think back to your favorite presentations. Aren t they a lot more interesting when the presenter feels like someone you d like to hang out with instead of a stuffy business guy (or gal)? Loosen up a little and be yourself. Don t be afraid to lighten the mood a little and make things more comfortable. But, be careful of making jokes unless you are a professional, which is doubtful.

5 Investor Pitch Pointers Page 5 of 6 "Successful Entrepreneurship" Be careful of your visuals. Keep them appealing. Don t overload your visuals with words, especially hard to read fonts that are too small. Fonts should be >30 point. Whenever possible let your images speak and just use words as captions. Your audience should be listening to you, not reading slides. Be prepared to engage your audience. Your message deserves a certain style a style that s authentic and engaging. If you can t connect with your audience, the best material in the world won t matter much. The investors invest in YOU even more than they invest in the product. Take time to create the connection that makes the difference that s the secret!

6 Investor Pitch Pointers Page 6 of 6 "Successful Entrepreneurship" Proposal Outline AUDIENCE: Name the person(s) who can act on your proposal. YOUR OBJECTIVE: State exactly what you want to accomplish as a result of this proposal (50 words or less). NEED(s): List your audience s needs, as you believe he/she understands them. (Do you have agreement on these needs?) 1) 2) 3) PLAN: State what you propose that your audience do to satisfy his/her needs (25 words or less). HOW-IT-WORKS: Outline how your PLAN will be carried out. RESULTS: List what your audience will get in terms of benefits to satisfy his/her needs. (Couple the benefits with the NEEDS listed above.) 1) 2) 3) NEXT STEP: Request the action you want your audience to take. (Remember: a specific action by a specific time.)