NVC Feasibility Summary 2012 new

7/27/2019 NVC Feasibility Summary 2012 new

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HOW TO WRITE A

FEASIBILITYSUMMARY

The 16thAnnual Edward L. Kaplan, 71New Venture Challenge 2011-12

Steve KaplanEllen Rudnick


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REVIEW NVC TIMELINE

FEASIBILITY SUMMARY: KEY ELEMENTS

OUTSIDE - IMPACTS

DOS & DONTS

Q&A

FAST PITCH

CASUAL NETWORKING

AFTERWARDS

PRESENTATION

AGENDAWORKSHOP


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Phase 1 FeasibilitySummaries Due

Phase 11 TeamsAnnounced

Phase II OrientationHarper Center

Developing a NewVenture

(Bus 34104)begins

JANUARY FEBRUARY MARCH APRIL MAY

Full BusinessPlans Due

TODAY

FinalistsAnnounced

NVC FinalsHarperCenter

Phase I Phase II Finals

Feb 6

Feb 23

Feb 28

Mar 26

April 27

May 21

May 24

TIMELINENEW VENTURE CHALLENGE


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Phase 1 Feasibility

Summaries Due

JANUARY FEB

TODAY

Phase I

Feb 6

WEDNESDAY, JAN 11 4:30-5:30PMPolsky Center Coffee Hour

TUESDAY, JAN 17 12:00-1:00PMCreating an MVP for the NVC (Avi Stopper)


TUESDAY, JAN 24 4:45-6:15PMEVC Feasibility Summary Working Session


WEDNESDAY, FEB 1 4:30-5:30PMPolsky Center Coffee Hour

DEADLINEBETWEEN NOW & THE


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COMPANY MISSION MARKET INFORMATION

PROPRIETARY ASPECTS

REVENUE MODEL

OPERATIONS MODEL

FEASIBILITY SUMMARYKEY ELEMENTS

MANAGEMENT TEAM

FINANCIAL INFORMATION

PROGRESS TO DATE

BUSINESS RISKS


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What are you selling?

What problem are you solving?

How big is the problem?

Why should an investor read any further?

MISSIONKEY ELEMENTS


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MISSION EXAMPLESKEY ELEMENTS

The company has developed the SalivaSac, a proprietary semi-permeable membrane that enables the collection in saliva ofbiochemical markers below 12 kilodaltons. The company willfocus on finding those applications which meet this criteria andwhere there is an advantage to collecting a non invasive sample.

The Companys objective is to develop non invasive medical

diagnostic tests. The first application is for using a proprietary salivacollection device to measure glucose levels in diabetics.

ex 1

ex 2


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How do you define yourmarket?

Who is the customer?

What is the potential market size?

How much do costumers buy?

MARKET INFOKEY ELEMENTS


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Who are current players in the market?

Who could be your competition in the future?

What are your competitive (dis)advantages?

How are you positioned with respect tocompetition?

COMPETITIONKEY ELEMENTS

What barriers to entry will protect you?

o IP, Customer development process, etc.?

How will you win?


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Describe technology if there is a key differentiator /element of plan

Is it proprietary? Are there patents?

Are there key milestones in terms of development orproduct testing?

What are the technology risks?

TECHNOLOGYKEY ELEMENTS


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What is your revenue model & go to marketstrategy?

How will you make money?

Why will the customerbuy your product/service?

What will the customerpay?

GO TO MARKETKEY ELEMENTS

o Why are you sure the customer will pay this?

o Have you spoken to customers?

How many customers will you get?

How will you get to the customer?


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OPERATION MODELSKEY ELEMENTS

How will you deliver this product/service?

Do the costs of providing thisproduct/service provide a sufficientprofit?

Are there execution risks?

Outsourced vs. in-house resources?


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MANAGEMENT TEAMKEY ELEMENTS

Who makes up your team? Advisors? Partners?

Who are they?

Why are they relevant for this business?

How do you plan on filling these gaps?


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MANAGEMENT TEAMKEY ELEMENTS

e.g.Frank Smith, our CTO, has extensive experience in managing and

building data warehouses. He previously served as Vice President incharge of Thompson Financials database management systems,and worked as a consulting manager with IBM for organizations

building data warehouses. Frank received a B.S. in computerscience from MIT and an MBA from Chicago Booth with aconcentration in operations.

e.g.

We currently are looking for a Director of Sales. We have identifiedseveral individuals in data/information companies also selling to theFortune 500 companies, consulting and investment firms that wouldbe interested once we have secured our financing.


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PROGRESS UP-TO-DATEKEY ELEMENTS

Milestones that have been achieved

Patents, trademarks that have been filed

Testing your business assumptions:

Prototypes, MVPs, websites, focus groups,

beta customers, etc.


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BUSINESS RISKSKEY ELEMENTS

What are you worried about?

What do you plan to do about it?


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COMPARABLESKEY ELEMENTS

Are there comparables in the industry or otherindustries that validate your business model?

Who are they and have they been successful?

How are they valued and how did they getfunded?

Have there been successful exits? Multiples? Have similar businesses failed? Why? (look for

corpses)


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A FRAMEWORK FOR

EVALUATING A BUSINESS PLAN

STEVE KAPLAN


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How Will Angels and VCs

Evaluate a Business Plan orOpportunity?

When I look at an opportunity, I usethe following framework:

OUTSIDE- IMPACTS


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Opportunity, Uncertainty, Team,

Strategy, Investment, Deal, Exit.

OUTSIDE -IMPACTS


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(O) Opportunity: Is this a positive present value

opportunity? (Does it have IMPACTS?)(I) What is the idea / industry?

(M) Is the target market large enough to support substantialgrowth/valuation?

(P) Why does the opportunity generate a positive presentvalue? What is unique?

(A) Acceptance: Will customers in that market accept /buy this new product / service?

(C) Why won't the value be competed away?

(T) Why is this a good time to enter?

(S) Speed? How quickly can this be implemented?

OUTSIDE-IMPACTS


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(O) Opportunity: Is this a positive present valueopportunity? (Does it have IMPACTS?)

(I) What is the idea / industry?

Explain the idea / opportunity clearly and succinctly What problem does it solve? What is the pain point

(M) Is the target market large enough to support substantialgrowth/valuation?

How large is the overall market? How large is the market segment you are targeting?

Who are the key customers? How many are there? What will they spend? Provide solid support for your analysis.

Are there additional opportunities?

OUTSIDE-IMPACTS


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(O) Opportunity: Is this a positive present valueopportunity? (Does it have IMPACTS?)

(P) Why does the opportunity generate a positive presentvalue? What is unique? What is differentiating?

The answer to this should be implicit in other parts of

OUTSIDE-IMPACTS. But, doesnt hurt to be explicit. Why will you make money? How will you make money? What is your edge?

First-mover advantage?

Network effect Switching costs Execution

Technology? Advantage? Defensible?

OUTSIDE-IMPACTS


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Is this a positive present value opportunity? (Does it haveIMPACTS?)

(A) Acceptance: Will customers in that market accept / buythis new product / service?

Who is the customer in the target segment? Put yourself in shoes of a

customer.

How does the customer spend the day Why will they buy your product / service?

What do they buy now? Why do they buy what they do now? Why will they switch from their current product?

How will you get to the customers? Direct Salesforce? Resellers? Distributors?

How much of each? How quickly? Advertising How much will it cost? Common to underestimate time / cost

How will you keep customers? How much will it cost?

OUTSIDE-IMPACTS


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Is this a positive present value opportunity? (Does it

have IMPACTS?)(C) CUSTOMERS, CUSTOMERS, CUSTOMERS

Get beta sites, beta customers, etc. VC pitches Kathryn Gould

OUTSIDE-IMPACTS


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(C) Why won't the value be competed away? What will existing competitors do? What will other new entrants do? How will you respond?

(T) Why is this a good time to enter? Why hasn't the opportunity been taken already?

(S) Speed? How quickly can this be implemented?

Good opportunities have positive IMPACTS.

If the opportunity does not have IMPACTS,then it should not be pursued.

OUTSIDE-IMPACTS


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(U) Uncertainties: What are major uncertainties?

Possible uncertainties: Market size Customer acceptance Customer approach Competition Management team Potential real options

Which uncertainties can be managed so thatoutcome is more likely to be favorable? Choice of initial customers? Choice of investors?

How do the answers affect the opportunity?

OUTSIDE-IMPACTS


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(T) Team

Can management team implement opportunity? How does previous experience relate to opportunity? How hungry is the management team?

If management pieces are missing: What pieces are missing?

What type of person will you look for to fill them? How will you find that person?

For VCs, a good team and a good opportunity arenecessities.

(S) Strategy Is strategy consistent with opportunity, uncertainty, team,and exit?

OUTSIDE-IMPACTS


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(I) Investment Requirements Forecasts and cash flow requirements Forecasts:

What do investors look for? Possibility of 10x return

Credible forecasts Growth, margins, exit value Analogs

What do investors do? Cut forecasts in , by 2/3

Push out forecastsWhat should you do? Plausible best-case scenario

OUTSIDE-IMPACTS


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OUTSIDE-IMPACTS(D) Deal

Does deal structure provide appropriate incentives? Is the deal priced attractively? Do key individuals have incentives to do deal? Do key individuals have incentives to make deal

work? Does deal structure provide / ensure appropriate

governance? Does deal structure help manage the uncertainties?

(E) Exit Can investors exit the deal? How?

Is the deal priced attractively?

If an investment does not pass theOUTSIDE tests, leave it outside.


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GrubHub.coma website for finding and ordering from restaurants that deliver.

have to call every restaurant in city to get menu / ask if and wherethey deliver. Info is hard to collect.

M - Not a huge market, but large enough.

Make money off on-line ordering.

A -Useful for consumers.

Key issue is whether you can get them economically.

Restaurants follow once consumers are engaged.

P -

First-mover advantage / network effect for consumers.

Costly and time intensive to get menu / delivery info.

Consumers have no reason to switch because restaurants pay.


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BumpiPhone App to exchange contact info.

Uses unique identification of two phones from:GPS

Synchronicity of Bump

A -

Consumers liked it / found it usefulHuge piece of luck when billionth iPhone App

P -

Network effect

But what is M? I? How do you make money?


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DOS AND

DONTS

DOS & DONTS


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AVOID CLICHSDO S & DON TS

We have no competition.

We are the low cost provider.

We only need a 5% market share.

Our numbers are conservative.

DOS & DONTS


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AVOID ACRONYMSDO S & DON TS

Dont assume everyone reading plan

has your knowledge base

When you use an acronym, explain it

TFT (the first time)

DOS & DONTS


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NO AUTOPILOTDO S & DON TS

Make sure the car has a driver.Someone should be the current CEO.

OK to say you will find a permanent /better one later.

DOS & DONTS


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BE CLEAR & BRIEFDO S & DON TS

Yes:Middleware for wireless networks

No:Develops and delivers an integrated suite ofpackaged applications for web and wirelessdeployment. Global enterprises use these

applications to become more competitive andprofitable by establishing and sustaining high-yieldinteractions and transactions with customers,suppliers, and employees.

DOS & DONTS


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CAPTURE ATTENTIONDO S & DON TS

Typical VC will not read past the firstpage

Should answer the following questions in

the first page

- What is the opportunity?

- Why does anyone care?

- How will it be achieved?

- What is your unique differentiator?

DOS & DONTS


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EXAMPLES & EXPERIENCESDO S & DON TS

Provide tangible examples / experiences whereverpossible:

Reference customerso Actual customers best. Potential customers next best.

o TALK TO CUSTOMERS. Describe what you discovered.o There is nothing more important than a customer! Focus

on how you are going to get that first customer.

Credible partners, suppliers, advisors, etc. Identify comparable businesses or business models


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IN CLOSING

NEXT STEPS

RESOURCES


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CHICAGONVC.COMRESOURCES

Link to key dates,

deadlines, and

events for the

2011-1\2 New

Venture Challenge

Check here forthe latest news on

current & former

NVC Companies

Link to onlineteam building

site where

people can post

ideas and team

openings

Link tosample

business plans,

NVC classworkshops,

sample equity

agreement

Link to officialrules and

regulations,sample

feasibility

summaries

RESOURCES


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LINKD.IN/NVCIDEASRESOURCES

Get feedbackon a new

business idea!

Find teammembers for

your NVCEntry!

Share yourresume &

expertise to let

other studentsfind you!

TONIGHT


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FAST PITCH & NETWORKINGTONIGHT

30 mins of pitches

Casual Networking

Get food, come back

o Around the room, 45 sec per pitch

TONIGHT


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FAST PITCH & NETWORKINGO G

Your Name:

Company name:

Short Description:

Needs:

John Smith

Banana Hats

We make hats for monkeys

Finance Guru, Developer

In 45 seconds, say:

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NVC Feasibility Summary 2012 new