1. Apply online by November 20– www.EntrepreneurshipFoundation.org– By answering 19 questions – You can paste from a word doc– Answers limited to 1500 characters/spaces

2. Start-up Grants: $1000 - $1000 - $10,000.3. Winner pitches to CT Angel Investor Guild4. Cost: No entry fee

Page 1

University Business Plan Competition

1. Apply online– www.Back-Offices.com/VCFair – $225 including two attendees

2. Three-minute PowerPoint presentation plus exhibit table.

3. 1:00 – 7:00 pm4. New Haven Lawn Club5. 30 Companies/ 30 Investors

Page 2

Early Stage and University Venture Fair

Evaluating Business Opportunities

North Bridge Venture PartnersSignal Lake Ventures

Connecticut Angel GuildConnecticut Venture Group

The Deal Scorecard

1. Management

2. Market

3. Competition

5. Ability to Forecast Results

6. Capital Intensity (Risk/Reward)

10 1

4. Product/Technology

Management

Good Teams have:

• Done their jobs before (no OJT)• Experienced ramp from startup to big company• Relevant industry experience & contacts• Specialized expertise and insight• Ability to adapt to change• Brains and hunger

Senior TeamProven Record

No OperatingExperience

10 1

Management

A Good Incomplete Team

• Vision• Energy and hunger• Efficient (Not a drain on capital)• Appropriate role for each person• Acknowledges management gaps

Market

> $1 BillionGrowth capacity > 30%

Stagnant

10 1

Attractive Markets:• Big ($50,000,000 potential)• Target users adopt new products

quickly• Customers feel real pain• Customers can be reached

economically• The time is (will be) right

Competition

Potential forLeadership

SeveralEstablished

Players

10 1

Leading Companies:

• Typically first to market• Leaders define “Market”• Leaders get market share• Market share critical to success

Product/Technology

Clearly SuperiorProviding Leverage

NoAdvantage

10 1

• Difficult to replicate• Special technical skills required• Special user knowledge required• Proprietary technology (patents)• Many man-months to develop (time, $)

• Improves rapidly with customer feedback

Ability to Forecast Results

High Low

10 1

Great companies create and execute operating plans:

• Plan is financial expression of strategy• Defines business model• Shows interrelation of timelines, functions,

hires• Reflects detailed understanding of the

business

Capital Intensity

Low High

10 1

A function of:

• Start-up and working-Capital needs (Risk)• Gross margins (Reward)• Sales and marketing expenses

(Potential to deflate margins)

No Single Recipe

1. Management

2. Market

3. Competition

5. Ability to Forecast Results

6. Capital Intensity

10 1

4. Product/Technology

A B C

Real World Feedback

• Interview:Customers, Analysts, Potential hires,

Potential partners, Other CEOs• Where is the pain?• Would you buy?• How many?• At what price?• How do you buy?• What could we do better?

• Listen for what you don’t want to hear

Venture Capital Financing TodayInnovation and Entrepreneurship

PanelUniversity of Massachusetts at

Amherst24 October 2009

Venture Funding in theCurrent Environment

Early stage companies that require relatively small amounts of capital to reach positive cash flow, with low valuations are getting funded

• LENDERS: –No Risk–Low Return

• EQUITY INVESTORS:

– Low Risk–High Return

Objective of Investors

Roer’s Continuum

Per Cent of Ownership Retained

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Idea stage Proto-type Patent Productionmodel

Orders Productsdelivered

At break-even

Profit>$1mm

Profit>$10mm

Variables Affecting the Curve

Per Cent of Ownership Retained

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Idea stage Proto-type Patent Productionmodel

Orders Productsdelivered

At break-even

Profit>$1mm

Profit>$10mm

External factors: Economy – Capital available – Confidence – Competition Internal Factors: Hot New Tech – Serial Entrepreneur – Mega Potential

Page 19

A $1 Million Investment …

After YearAfter Year @ 40% IRR =@ 40% IRR = @ 60% IRR =@ 60% IRR =

11 $ 1.4 MM$ 1.4 MM $ 1.6 MM$ 1.6 MM

22 $ 2.0 MM$ 2.0 MM $ 2.6 MM$ 2.6 MM

33 $ 2.7 MM$ 2.7 MM $ 4.1 MM$ 4.1 MM

44 $ 3.8 MM$ 3.8 MM $ 6.6 MM$ 6.6 MM

55 $ 5.4 MM$ 5.4 MM $ 10.5 MM$ 10.5 MM

CAPITAL SOURCE Amount Pros Cons

Bootstrapping with Savings Small but critical

No dilution Limited amounts

Credit Card Debt Up to $100k Easy access Interest can balloon

SBIR Funded Research www.ctinnovations.com

$125-700K Don’t have to pay back

Equity ”Angel” Investors www.EntrepreneurshipFoundation.org

$250k-$1MM Industry connections - Dilution

- Partnership

Connecticut Innovations www.ctinnovations.com

$500k-$1mm Accessible

Venture Capital Fund www.CVG.org

$1 - 100M - Experience- Deep pockets

- Difficult to meet profile- Will want 10-50%

Bank Loans Limited to assets

No dilution Guarantees = personal liability

Leasing Varies Reduces capital needs Interest Cost

Strategic Corporate Partner $1m – Unlimited

Access to markets Loss of Control