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Helping Georgia entrepreneurs buildgreat technology companies
Communicating with InvestorsSeptember 9, 2008
Lance Weatherby
Agenda
• Investor Toolkit
• Presentation Deep Dive
• Top Tips
Agenda
• Investor Toolkit
• Presentation Deep Dive
• Top Tips
Tools for Telling the Story
• One-liner• Positioning Statement• 60-second Pitch• Executive Summary• Business Model• Business Plan• Presentation
Executive Summary
• One page summary of your business• Same “storyline” as presentation• Easy read to determine if they want
more information• Must be compelling enough to stand
alone• Makes you focus on the most important
points• What you send
Business Model
• It’s a spreadsheet
• Lots of assumptions
• Identifies key business drivers
• Answers the “how much” question
• Feeds other docs
Business Plan
• Good exercise to make you think through the business
• Won’t be read cover to cover
• 20 pages maximum
• Financials
• Put details in appendix
Agenda
• Investor Toolkit
• Presentation Deep Dive
• Top Tips
Investor Presentation
• Used for forums, large audiences
• Tells a story
• Same story is used in executive summary and business plan
The Storyboard
• Need consistent, compelling story• Format, length, and emphasis vary
based on the audience• Order of contents should be changed to
highlight strengths of the business• Tell what you are going to say• Tell the story• Tell them what you said
13 Ingredients of Presentation
1. The Hook
2. Market pain
3. Solution
4. Competitive advantage
5. Market size
6. Competition
7. Business Model
8. Go to market
9. Team
10.Financials
11.Current Status
12.Summary
13.Billboard
The Hook :: Overview
• Use a hook: an exciting statistic or story to get the audience engaged
• But get to the point• One-liner to clarify what you do• Set the context for the remainder of the story• Optional overview slide
“80% of all telecommunications bills are inaccurate and customers are typically
overcharged by 20%!!”
DeepDive Vision
Address the huge untapped opportunity to secure the iPhone and Android mobile environments
• Founded by a world-class team of Internet security entrepreneurs and technologists with successful startup experience
• Meaningful development & customer traction– Product trials secured– Beta released
Overview
Seeking funding to accelerate the vision by building out the technology and securing the customer base
Overview
Market Pain
• Identify a large, costly pain that must be addressed
• Use statistics or customer quotes to validate
• Use illustrations or examples
• 80% of all telecom invoices are incorrect
• Typical enterprises over spend for telecom services by at least 20%– 10% of services they don’t need– 10% from billing errors
US businesses spend over $50B more than they should for telecom services
Market Pain
*Source: Gartner Group – 2007 State of Telecom Report
Your Solution
• How are you solving this problem in a unique way
• Use illustrations or examples
• Show before vs. after charts/stats/illustrations
D2 SolutionD2 Solution
Perimeter
Typical EnterpriseEmail Environment
SendmailTrendMicro
MailSweeper
Tumble-weed
ProxyAnti-Virus
Secure Delivery
Policy & Content
ProxyAnti-Virus
Secure Delivery
Policy & Content
Secure Platform
Anti-Spam
D2 EnterpriseEmail Environment
Mail Servers
FirstAct Services
DeepDive Solution
Competitive Advantage
• What is your unique solution that allows you to solve this problem• Use diagrams/illustrations• Avoid industry jargon
• Sources of the intellectual property
• How is it protected or protectable
• Resist temptation for Geek Speak!
• They assume technology works
Lists“Automated white
listing”
Heuristics“SLS Bulk Email
Detection”
Anomaly Detection
Engine
Content Analysis“Bayesian”
Accept
Reject
Drop
Limit Rate
Label
D2 Secure
Platform
Mail Firewall
-Mail IPS
Determine email attributes
Generate spam score
Enforce policy
Block attacks
Get feedback
Accurate, effective, low administration
SpamSpamCorrelationCorrelation
EngineEngine
Enterprise Spam Profiler
Quarantine• Admin
• End-user
D2ActUpdates * Policies * Signatures
Adapt and update
DeepDive Competitive Advantage
Market Size
• Show that this problem is large and effects many – Validate with statistics and sources
• Be sure to segment your target market properly– Pie charts
• Demonstrate market growth– Charts– Analyst quotes or stats
Market Sizing
• 66 million people in the highly engaged category• Extrapolated the Pew audience to the Parks research “likely to subscribe” percentages• Results in market of $1.6 billion
Market is significant and poised for growth
0% 10% 20% 30% 40%
Percentage of Broadband Households
OnlineBackup
RemoteAccess
Appeal of Service
Consider Appealing
Likely to Subscribe at$5/month
Source: Making the Network Work, Parks Associates
Source: Digital Divisions. Pew Internet & American Life Project
Mobile Application Use
Discrete40%
Never22%
Highly Engaged
33%
Competition
• Identify competitors and potential competitors
• Include alternate methods to solve the problem
• Position yourself vs. your competitors
• Identify your unique, defensible competitive advantage
• Don’t say “no competition”
Competitive Analysis
23
DeepDive Core Competitive Strengths• Unique insight into wide range of mobile security environments• Unmatched credibility and respect within Internet security ecosystem• Proven ability to deliver massively scalable and reliable solutions
Competitive Analysis
Competitor Comments
MobileTopia •No meaningful Internet security experience•Significant credibility problems, not scalable
IC Secure •No knowledge of mobile technologies•Limited capacity to do software development
Akamobile •Want to only sell data center servers•No on handheld experience
SecMob •Immature•Limited security industry experience•Solutions generally carrier specific
SecureStream •No knowledge of mobile technologies•No experience scaling
Business Model
• How is your product/service delivered?– Requires professional installation– Self serve
• How is revenue generated?– License– Subscription/recurring revenue– Maintenance
25
Revenue Streams Price Ranges
Carriers• Rev Share
•$2.95
Enterprise• SaaS• Professional services
•$15K – 25K/unit• $0.10 - $1.00/sub/mo
Software Developers• SaaS
• $0.20 - $1.00/sub/mo
DeepDive’s straightforward business model taps into well-known existing mobile models and allows for great growth opportunity
• Current monthly burn rate: $30K
• Revenue split: 67% security provider, 33% carrier
• Total cash needed to breakeven: $4.5 million
• Success-based expense controls: capital, headcount, support
Business Model Highlights
Go To Market Strategy
• How will you market your product?– Partnerships– PR
• How will your product be sold?– Direct sales– Channels– OEM
Go To Market Strategy
• Marketing– Strategic partnerships
• Apple AppStore• Open Handset Alliance
– Sales• Leverage Apple relationship
– AT&T– AppStore developers
• Domestic carriers– Verizon trial in process
• Target enterprises with security concern• Passive sales to ISVs
The Team
• Mention key team members• Show their relevance to this business
– Serial entrepreneurs– Sales experience– Managerial and finance experience– Industry/market knowledge
• Include key advisors and Board members
• Identify gaps and next hires
The Team
• Lance Weatherby - Cofounder & CEO– General manager of EarthLink’s mobile wireless business unit– Led business development, marketing, product management & product
development at MindSpring– CipherTrust CMO
• Robert Sanders - Cofounder & CTO– CTO at MindSpring, cBeyond, & Vitrue– Proven expertise in designing and implementing scalable systems for Internet
services– Architected EarthLink’s mobile wireless services
• Guru Rajan - Cofounder & VP Engineering– Vice President of Messaging Security at Secure Computing– Cofounder and Chief Architect of CipherTrust– Cofounder of S1
• Additional Early Hires:– Developers– BizDev lead
• Board of Advisors– Merrick Furst - Professor of Computing at Georgia Tech– Phil Schiller - SVP Product Marketing, Apple
Financials
• Provide high level 3-5 year projections– Revenue, expenses, and net income
• Cash flow forecasts
• How much funding will you need, now and in the future?
• Uses of funds
• Derived from business model
2002 2003 2004 2005 2006(dollars in 000's)
RevenuesSoftware $13 $443 $4,709 $14,213 $27,577Services 5 738 2,867 7,512 13,911Other 74 81 36 21 18
Total Revenues 91 1,262 7,612 21,746 41,506
Implementation and Operation Costs 45 380 1,914 4,590 7,411
Gross Profit 46 882 5,698 17,156 34,094Gross Margin 50.3% 69.9% 74.9% 78.9% 82.1%
Operating ExpensesGeneral & Administrative 241 366 1,923 4,281 7,166 Selling & Marketing 131 272 1,853 5,191 9,071 Product Development 5 413 966 2,075 3,437 Total Operating Expenses 377 1,050 4,742 11,547 19,675
Operating Income (331) (168) 956 5,609 14,420 Operating Margin NM NM 12.6% 25.8% 34.7%
Net Income (329) (147) 756 4,054 10,383
New AccountsTotal New ASP Accounts 12 25 44 67Total New License Accounts 2 20 68 124
Total new Accounts 14 45 112 191
Financials
Year 1 Year 2 Year 3
Revenue $50,000 $250,000 $1,500,000
Expenses $300,000 $1,400,000 $3,500,000
Net ($250,000) ($1,150,000) ($2,000,000)
Financials
• Seeking $1.5M– Complete version 1.0– Hire devs, VP BizDev & Sales– Milestone: Launch v1.0 with 3 Beta customers
• Raise $3M in Year 3
Current Status
• Highlight milestones and successes
• Show customer traction
• Previous investments received
• Upcoming milestones
34
Development and initial customer traction
General launch initial product offering
Roll out advanced services
+ Build out core end to end system+ 2-4 representative trials
+ Build initial data center(s) + 10 – 20 mobile apps
2008 2009 2010
+ Market core service offering+ First big deployments + Expand system
scalability + 100’s of mobile
apps
+ Premium subscription svcs + Personal Protection
+ Killer apps
Status & Roadmap
Summarize
• Summarize 3 main points you want the audience to remember
• Be prepared to answer questions– Brainstorm and anticipate questions
beforehand– Have backup materials ready to support
your answers
Summary
• DeepDive poised to address huge untapped opportunity to bring Internet security to mobile applications
• No company adequately addressing the needs of the market
• Management has relevant experience– Mobile Internet & security pioneers– Built scalable systems and businesses to successful exits
• Right opportunity– Secured trial customers– Immediate customer needs– Scalable model
Now is the time to accelerate the vision by building out the technology and securing the customer base
Helping Georgia entrepreneurs buildgreat technology companies
Lance Weatherby
Venture [email protected]
www.atdc.org
www.peachseedz.com
Agenda
• Investor Toolkit
• Presentation Deep Dive
• Top Tips
Presentation Tips
• Use bullets, not sentences• Speak to the back of the room• Show passion and energy• How you say it is more important then
what you say• Get to the point• Put detailed slides in Appendix• Do not read slides!• Practice, practice, practice
Don’t You Dare Say!
• “We don’t have any competition”
• “These estimates are conservative”
• “Our exit will be an IPO or an acquisition”
• “I need you to sign an NDA”
• “Based on our projections, your investment of $2M will give you a return of $30M in 3 years!!”
10 - 20 - 30 Rule
• 10 slides• 20 minutes• 30 point typeface
– This line is 28 point, anything smaller is a mistake
• http:www.presentationzen.com
Writing Tips
• Clearly explain– The market– Your unique/innovative technology– Management team– Financials, stage of company and use of funds
• Be concise– 1 page is 1 page– More is less, a lot less
• Spell check!• Make sure the documents are consistent
Q & A Tips
• Answer the question, bridge to your pitch and shut up!
• “Yes” and “No” are answers• Be honest, not defensive• You don’t say…
– “Well honestly”– “That’s a good question”– Or any variants thereof
• Have a teammate take notes• The CEO directs others• Practice, practice, practice
Be Found
• Put contact info on every document
• Include company name in all files
• Include company name in email subject lines
Helping Georgia entrepreneurs buildgreat technology companies
Lance Weatherby
Venture [email protected]
www.atdc.org
www.peachseedz.com
