The Startup CFO - Chapter 5

The business model canvas

• Bank: Funding decisions are dominated by financial consideration - little consideration is given to entrepreneurial capabilities or opportunity characteristics

• Venture capatalist: Funding decisions are also significantly influenced financial issues, but in addition emphasis is given to the entrepreneurial team and market characteristics

• Business Angel: Funding decisions are based financial and market issues with a slightly larger emphasis on the entrepreneur

• Entrepreneurs can convince investors by including stress tests in their business plan

• Stress tests provide investors with confidence that the start-ups strategy and finances are viable

• Stress tests simulate the start-up development under varying assumptions

• 60% of strategy execution fails due to hidden traps in the business plan

• Quantative assumptions of financial budgeting should be consistent with the strategy laid out in the business plan

• Business development along key performance indicators should follow “Hockeystick” projections in the business plan

• The CFO should find the right degree of optimism during the budgeting process. Too optimistic budgets usually lead to future disagreements with shareholders

Your pitch deck needs to convey a compelling story about your business idea

1. Company overview

2. Mission/Vison

3. The Team

4. The problem

5. The solution

6. The product

7. The market opportunity

8. Customers & Partnerships

9. The Technology

10. The competition

11. The Traction

12. The Business Model

13. The marketing plan

14. The Financials

15. The “Ask”

• Start like a rocket: Get the investor’s emotional attention in the first 10 seconds

• Take the investor on an upward path: Your story gets better and better so that the investor is at an emotional high at the end of the pitch

• Follow the rule of three: Focus on 3 key ways your idea solves customer problems and communicate those top-down

• Be precise and catchy: Capture your key message in short “Twitter-friendly” headlines that generate attention

• Strive for simplicity: Avoid bullet lists, minimize the number of words on your slides and make visual content dominant

• Include an antagonist and a hero: Point out the problem and reveal the solution using a slightly dramatic story to sell your solution

Do’s

• Logical progression: Make sure your pitch is structured and follows a red thread from start to end

• Simplicity: Tie in the audience by referencing to things everyone can relate to

• Validators: Reassure that there is outside validation of your business model

Dont’s

• Untruth: Do not damp your credibility by including information that is not true

• Complexity: Do not challenge the audience with complex information they need to process. It harms the flow of the presentation

• Internal inconsistencies: Make sure that all information is consistent and that the numbers are conflicting

• Integrity

• Passion

• Experience

• Knowledge

• Skills

• Leadership

• Commitment

• Vision

• Realism

• Coachability

1. Practice, practice, practice

2. Don’t read the speech and do not turn to the screen

3. Provide the investor with a handout