Remarkable IdeasBusiness Model CanvasCrafting your Brand Financial Models How-to Pitch

Bradford M. Wason, Tim McIntosh & Sara Fabryka | ©2014

Meet Brad• Started 3 businesses – so far, only 1 successful exit. • Failed at Pre-Calculus and abandoned all dreams of a career in

Architecture, but luckily found design. • Started working at 17 as a freelancer designer for AOL Time

Warner (When that was a thing). • Holds a degree in Fine Art from DCAD & Interactive Media

from Wilmington University • Has 14 years experience in advertising, branding and digital

media design

Meet TimYet2Ventures • Analyzed over 1000 businesses • Made investments in 45 • Made money on 4 • Lost money on 17 • TBD on 24 • Our IRR is about ~20% (unrealized) !Personal • Started 6 businesses – lost money on everyone • Degree in Innovation and Entrepreneurship from the

University of Richmond

Meet Sara

DMG Marketing • Designer, copywriter, studio guru • 0 start ups under my belt, but on my way • Freelanced for numerous local businesses and non-profits !Personal • Nickname: TL (Team Leader), I keep these guys on track • BFA in Visual Communications from the University of Delaware

The Startup Industry

514,000NEW BUSINESS OWNERS IN 2012

Source: Harvard Business School

Source: Harvard Business School

Source: Harvard Business School

Source: Harvard Business School

Social Business

“Why do we turn to nonprofits, NGOs and governments to solve society’s biggest problems? Michael Porter admits he’s biased, as a business school professor, but he wants you to hear his case for letting business try to solve massive problems like climate change and access to water. Why? Because when business solves a problem, it makes a profit — which lets that solution grow.”

Michael Porter, Harvard Business School

“Why aren’t we as an industry front-and-center in working on the great, wicked issues of our day?”

Deborah Morrison, PhD, is the Chambers Distinguished Professor of AdvertisingUniversity of Oregon’s School of Journalism and Communication

“The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimize business again.”

Michael Porter, Harvard Business School

TRENDS2013 IN REVIEW. FAST FORWARD TO 2014.

$291BILLION DOLLARS WAS SPENT IN 2013 ON E-COMMERCE.

$370IS THE EXPECTED SPEND BY 2017.

!THAT’S AN AVERAGE OF $1,950/CONSUMER/YR.

26%$45

BILLION WAS SPENT VIA MOBILE DEVICES IN 2013

OF ONLINE PURCHASES WERE MADE ON A MOBILE DEVICE

43%OF ALL DIGITAL SALES WILL BE MADE BY MOBILE DEVICES IN 2017.

MOBILE USERS WILL DO ANYTHING AND EVERYTHING DESKTOP USERS WILL DO, PROVIDED IT’S PRESENTED IN A USABLE WAY.Brad Frost

30%OF MOBILE SHOPPERS WILL ABANDON A

PURCHASE WHEN THE EXPERIENCE FAILS THEM.

79%OF ALL DIGITAL RETAILERS SAY THEY ARE NOT READY FOR MOBILE.

Business Model Canvas

Value PropositionWhat makes us unique?

Customer SegmentsWho are our customers?

Customer RelationshipHow are we connected to them?

Channels How do reach our customer?

Revenue Stream Where does your money come from?

Types of Revenue Streams

• Asset Sale

• Usage fee

• Subscription fee

• Leading/Renting/Leasing

• Brokerage fees

• Advertising

Key Activities What you do to create your Product or Service.

Categories of Key Activities

• Production

• Problem Solving

• Platform/Network

Key Partners Who can supplement and benefit what we make.

Key Partners

• Who are our Key Partners?

• Who are key suppliers?

• Which Key Resources are we acquiring from partners?

• Which Key Activities do partners perform?

Motivations for partnership

• Optimization and economy

• Reduction of risk and uncertainty

• Acquisition of particular resources and activities

Key Resources What must we have to succeed.

Key Resources

• What Key Resources do our Value Propositions require?

• Our Distribution Channels? Customer Relationships?

• Revenue Streams?

Types of Key Resources

• Physical

• Intellectual (Brand patents, copyrights, data)

• Human

• Financial

Cost Structure What are our primary costs for doing business?

Cost Structure

• What are the most important costs inherent in our business model?

• Which Key Resources are most expensive?

• Which Key Activities are most expensive?

• Is your business more Cost Driven?(leanest cost structure, low price value proposition, max. automation, extensive outsourcing)

• Is your business more Value Driven? (focused on value creation, premium value proposition)

Branding 101DEFINING & CRAFTING AN EXPERIENCE.

A brand is not a logo, not an identity, not a product. A brand is a person’s gut feeling about a product, service, or organization.

WHAT IS A BRAND?

And luckily we all make great stories.

!

Marina Willer of Wolff Olins London declared, “It’s not about

consistency, it’s about creating stories that make sense.”

!

Stories are the way we connect with people and create

relationships. If we think of brands as people or personalities,

they need to be magical storytellers. As humans, we thrive on

all of the emotional connections we have. We get passionate

about them. It’s the stories we tell and hear that trigger those

connections.

A GREAT BRAND TELLS A GREAT STORY

1.) Be Real & Don’t Lie. !2.) Write down what has made an impact on you, and why it’s important. !3.) Go back to those 5 things you LOVE to do. What are they? !4.) Be Clear & Concise. A story has a beginning, a middle and an end. !5.) Leave out the sales copy, and focus on you. We’ll get to what you’ve done soon enough.

Crafting your story.

EATbranding

wilmington newark

lancaster etc.

don’t liebe real and

Date nights, drink specials, hot foodie happenings and insider tips. EAT is built by people who love food, great experiences and a great deal.

lovewhat do we

food

Source: Ezra Gregg

DRINKS

Source: Kent Wang

PEOPLE

Source: Matthias Ripp

PLACES

Source: Matthias Ripp

experiences

Source: Kent Wang

storycreate a great

EAT is where food, drinks, places, experiences and great people converge. !Foodies seeking the next hot thing, couples looking for the perfect date restaurant, or folks looking for the best drink special on a workday, EAT will happily point them in the right direction.

Financial ModelsAN INSIDE LOOK FROM A ANALYSTS VIEW

What I Look for

Solid Management team with a defensible business model that makes money

Nice to haves are a Scalable Business Model and a Large and Growing Market

Solid Management Team

• Industry Experts: Substantial experience in the space

• Deep Team: More than one strong player

• Experience with startups or prior business experience

• Listens to other people: Knows how and when to pivot

Defensible Business Model

• High Barriers to Entry: Basically your idea can’t be built in a weekend. Or it’s easily replicated.

• Specialized Knowledge: Spent the past 20 years working on developing a speciality chemical, which is really hard to reproduce.

• Intellectual Property Protection: Patents & Trademarks, which are actually valuable.

Makes Money

Has the potential to have earnings: there is money left over after expenses, interest, taxes, depreciation, and amortization.

Nice to Haves

• Scalable Business Model: Increased revenues cost less to deliver than current revenues.

• Large and Growing Market: A rising tide raises all boats.

Basic Financial Model

The Most Important and Least Accurate Part of the pitch: The basic financial model has three elements:

• Profit & Loss

• Balance Sheet

• Statement of Cash Flow

Profit and Loss

Balance Sheet

Statement of Cash Flows

Basic Financial Model

0

2

4

6

8

10

12

2014 2015 2016 2017 2018

Revenue Projections

0

50

100

150

200

250

2014 2015 2016 2017 2018

Revenue Projections

Wrong Right

Basic Financial Terms

• Revenue: The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income.

• Gross Margin: A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. The higher the percentage, the more the company retains on each dollar of sales to service its other costs and obligations.

• EBITDA: A financial ratio that measures a company's return on investment. The EBITDA/EV ratio may be preferred over other measures of return because it is normalized for differences between companies. Using EBITDA normalizes for differences in capital structure, taxation and fixed asset accounting. Meanwhile, using enterprise value also normalizes for differences in a company's capital structure.

• Operating Income: The amount of profit realized from a business's operations after taking out operating expenses - such as cost of goods sold (COGS) or wages - and depreciation. Operating income takes the gross income (revenue minus COGS) and subtracts other operating expenses and then removes depreciation. These operating expenses are costs which are incurred from operating activities and include things such as office supplies and heat and power. Operating Income is typically a synonym for earnings before interest and taxes (EBIT) and is also commonly referred to as "operating profit" or "recurring profit."

• Net Income: A company's total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is found on a company's income statement and is an important measure of how profitable the company is over a period of time. Often referred to as "the bottom line" since net income is listed at the bottom of the income statement.

• Acquisition Cost: The cost of a business to acquire a new customer. The company recognizes costs, including marketing and incentives, to introduce new customers to the company's products and services. The customer acquisition cost is calculated by dividing total acquisition costs by total new customers over a set period of time.

• Lifetime Value: In marketing, customer lifetime value (CLV) (or often CLTV), lifetime customer value (LCV), or user lifetime value (LTV) is a prediction of the net profit attributed to the entire future relationship with a customer.

• Growth Rate: The amount of increase that a specific variable has gained within a specific period and context. For investors, this typically represents the compounded annualized rate of growth of a company's revenues, earnings, dividends and even macro concepts - such as the economy as a whole. Expected forward-looking or trailing growth rates are two common kinds of growth rates used for analysis.

What kind of questions can you expect from a judge?• Why are you going to win?

• Why are you the team to do this?

• Who is your competition? Both direct and indirect.

• What is your value proposition?

• How do you make money?

• What is your gross margin?

• Why does anyone care?

• What is success?

• Tell me about your traction.

• How are you going to acquire customers

A crash course in a simple model: www.asimplemodel.com

The Pitch

Slide Order

• 0:00 – 0:59: The foundation. What is the problem you’re solving?

• 1:00 – 1:59: What is your solution? And, why is it better?

• 2:00 – 2:59: Who is your team? What is your experience?

• 3:00 – 3:59: How are you going to make money? Future plans?

• 4:00 – 4:59: Recap: Problem, Solution, Contact.

• 5:00 – 7:00: Q & A

Slide Design 101

• Keep it simple: Consistency is your greatest tool. Colors, type, etc.

• Less is more: Don’t try to accomplish too much! Use bullets sparingly, people are more likely to remember visual content.

• Inspire us, but make it quick: Your goal should be to leave the judges stunned, and the room filled with questions. You want to be the team EVERYONE is talking to after, no matter the results.

An example: EAT Wilmington

wilmington

EATWhat do you want to

tonight?

the problem:

EATWhat do you want to

tonight?

in the moodwhat are you

for?specials

who has

tonight?

happeningwhat’s

around town?everyone

where is

else going?

E A T wilmington

the solution:

Date nights, drink specials, hot foodie happenings and insider tips. EAT is built by people who love food, great experiences and a great deal.

E A T wilmington

food

Source: Ezra Gregg

DRINKS

Source: Kent Wang

PEOPLE

Source: Matthias Ripp

PLACES

Source: Matthias Ripp

experiences

Source: Kent Wang

Bradfounder, CEO

the eat team:

tim sarafounder,CFO founder,CMO

the numbers:

EAT FINANCIAL MODEL

$ (450,000)

$ -00

$ 450,000

$ 900,000

$ 1,350,000

$ 1,800,000

Year 1 Year 2 Year 3 Year 4 Year 5

the numbers:

EAT FINANCIAL MODEL

$ (450,000)

$ -00

$ 450,000

$ 900,000

$ 1,350,000

$ 1,800,000

Year 1 Year 2 Year 3 Year 4 Year 5

WILMINGTON !WEST CHESTER !LANCASTER !KENNETT SQUARE

the MARKET:

NEWARK !REHOBOTH BEACH !LEWES !BROOKLYN

AND OTHER SMALL NEIGHBORHOODS AND CITIES…

GOOGLE !YELP !OPENTABLE

OUR COMPETITORS:

LOCAL WEBSITES !Zagat !urbanspoon

BUT NONE OF THEM HAVE GOTTEN IT RIGHT.

E A T wilmington

coming soon

Questions? Let us know.

Remarkable IdeasThank you!

Bradford M. Wason, Tim McIntosh & Sara Fabryka | ©2014