You only get one chance to make a good impression. These tips will give you a better shot at success.
Here's a quick primer on how to go about the presentation process, no matter what industry you're in:
Find someone to work with, to coach and to advise you on the presentation's look and feel, as well as to rehearse and critique your delivery style. This person should be outside your core team. She should act as an unbiased third party, someone who can ask the difficult and/or annoying questions. This is a great way to avoid a messy presentation that falls flat with potential investors.
Prepare and critique presentation slides and supporting materials. Then leave them for a day or two, and edit everything
Prepare two presentations, one that is 10 minutes long and one that takes 15 minutes. Depending on the environment, the mood of the venture capitalist/investor or the contest rules, you should be ready for both.
Schedule at least five two-hour sessions for rehearsals to prepare for the 10-minute presentation and longer for the 15-minute session. I don't care how good your technology/idea/patents are; if you can't interest investors with your story, they will be less than impressed.
Follow up with at least three one-hour question-and-answer practice sessions. Be ready for their questions, think of the question you would dread the most, and then prepare to answer it and others like it.
Have someone outside your team attend one live presentation to critique it and provide feedback. After all that practice, it's a good idea for someone to tell you how you did during the "live" session.
Polish your elevator speech until it shines. You never know when you'll have the opportunity or the blind luck to impress the right investor with your idea.
Make a targeted list of specific venture capitalists and angels, including names of senior partners and junior partners as well as previous deals and current board-level positions held by each. Don't take a shotgun approach with VCs. They specialize by industry and even by verticals within an industry. Even within the health-care sector, most VCs have separate practices for biopharma, biotech and medical devices. Be sure you're going after the right person.
Here are some do's and don'ts:
Do:
• Let your passion shine through. Investors often bank more on the people than on the technology or patents since it's really about getting people to work together to bring the product/service to market.
• Be confident and sure-spoken about your topic.
• Be yourself.
Don't:
• Pretend you know the answer to something when you don't. If you don't know the answer, say so, then work like heck to get back to the potential investor with an answer in a relatively short amount of time.
• Overhype your credentials or experience. VCs are investing their money and will take the time to investigate your claims with rigor. Be aware of this.
You only get one shot at a first impression, and this one can cost you dearly if you don't get it right.
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
www.RogueCFO.com
Tuesday, June 28, 2011
Sunday, June 26, 2011
Financial Projections - Bring out the crystal ball
Financial projections, the backbone of any new venture. When all is said and done, the business plan polished, the website up, the office space rented, what most investors and outsiders will focus on is the numbers. Will the company make money? Are the projections realistic? When does it break even?
So how do you put together a reasonable, yet conservative, yet attainable, yet attractive 5 year financial forecast? Seems like an impossible feat to balance all the requirements. With reasonable assumptions, a straight forward model that captures all of the moving pieces of the company, and easy to change inputs that flow through the model, you will be well on your way to demonstrating the potential of your venture.
Assumptions - where it all happens
The use of an assumptions tab, one central location for all inputs into the model, will make your model dynamic, easy to change, professional, and understandable. Someone can look at one page, see all the inputs and how they relate to the final numbers, and quickly decide if everything looks reasonable.
When the assumptions are built properly, you will have put thought into every line on the P&L and Balance Sheet, as well as have some sense as to any investment funding needed, what amount of the equity you are willing to sacrafice, how long it would last, and what the future funding requirements will be. All going to plan of course.
Common Modeling Mistakes
Below is a list of things I see time and again in others models. Not that everyone should be an Excel expert, but avoiding these pitfalls will add to the credibility of your model, and ease of use.
Embedding data into formulas
I've seen lots of models built by other financial types as well as entrepreeneurs. The biggest mistake that is quickly apparent is embedding data into formulas. If revenue will be $20 per unit, don't hardcode $20 into each months revenue formula. Instead an input on an Assumptions tab would be Revenue Per Unit: $20, and the sales calculations all refer to this cell. Down the road when you realize you want to charge $25 per unit, it's a lot easier to change 1 cell vs. 12 months X 5 years. Also hard coding numbers into formulas creates an inevitable error down the road when some formula doesn't get updated like it should.
Projecting over a million in Revenues Year 1
I've yet to see a startup hit over $1 million in revenues in its first year. Investors have been around the block, and the further north of $1 million your projections go for year one, the less credible they become.
The financials all have to tie together in the end
Accounting 101: Debits = Credits. Balance sheets have to balance, cash flow statements have to reflect the same cash balances that are on the balance sheet, net income needs to match the equity section, etc. A properly built model will link all financial reports together in a way that when a change is made, all financial reports reflect the change and stay in balance relative to the others.
For example, if you change an expected investment of $100,000 to $200,000, not only does the equity section change on the balance sheet, your cash position as well as your cash flow statement would also.
Presentation goes a long way
Excel is a powerful tool, make use of all the formating capabilities. It is difficult to follow spreadsheets that have inconsistent formatting tab to tab, use several colored cells, several fonts, or worse no distinguising headings. When Revenue, COGS, Operating Expenses and all the subtotals are one long list with no bolding, offsetting, subtotal lines, etc, it looks unprofessional and difficult to really grasp what the results are.
As always, if you have questions, concerns, or need to call in the pro to help you build your financial model, get in touch with me, Chris Benjamin the Rogue CFO!
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
www.RogueCFO.com
So how do you put together a reasonable, yet conservative, yet attainable, yet attractive 5 year financial forecast? Seems like an impossible feat to balance all the requirements. With reasonable assumptions, a straight forward model that captures all of the moving pieces of the company, and easy to change inputs that flow through the model, you will be well on your way to demonstrating the potential of your venture.
Assumptions - where it all happens
The use of an assumptions tab, one central location for all inputs into the model, will make your model dynamic, easy to change, professional, and understandable. Someone can look at one page, see all the inputs and how they relate to the final numbers, and quickly decide if everything looks reasonable.
When the assumptions are built properly, you will have put thought into every line on the P&L and Balance Sheet, as well as have some sense as to any investment funding needed, what amount of the equity you are willing to sacrafice, how long it would last, and what the future funding requirements will be. All going to plan of course.
Common Modeling Mistakes
Below is a list of things I see time and again in others models. Not that everyone should be an Excel expert, but avoiding these pitfalls will add to the credibility of your model, and ease of use.
Embedding data into formulas
I've seen lots of models built by other financial types as well as entrepreeneurs. The biggest mistake that is quickly apparent is embedding data into formulas. If revenue will be $20 per unit, don't hardcode $20 into each months revenue formula. Instead an input on an Assumptions tab would be Revenue Per Unit: $20, and the sales calculations all refer to this cell. Down the road when you realize you want to charge $25 per unit, it's a lot easier to change 1 cell vs. 12 months X 5 years. Also hard coding numbers into formulas creates an inevitable error down the road when some formula doesn't get updated like it should.
Projecting over a million in Revenues Year 1
I've yet to see a startup hit over $1 million in revenues in its first year. Investors have been around the block, and the further north of $1 million your projections go for year one, the less credible they become.
The financials all have to tie together in the end
Accounting 101: Debits = Credits. Balance sheets have to balance, cash flow statements have to reflect the same cash balances that are on the balance sheet, net income needs to match the equity section, etc. A properly built model will link all financial reports together in a way that when a change is made, all financial reports reflect the change and stay in balance relative to the others.
For example, if you change an expected investment of $100,000 to $200,000, not only does the equity section change on the balance sheet, your cash position as well as your cash flow statement would also.
Presentation goes a long way
Excel is a powerful tool, make use of all the formating capabilities. It is difficult to follow spreadsheets that have inconsistent formatting tab to tab, use several colored cells, several fonts, or worse no distinguising headings. When Revenue, COGS, Operating Expenses and all the subtotals are one long list with no bolding, offsetting, subtotal lines, etc, it looks unprofessional and difficult to really grasp what the results are.
As always, if you have questions, concerns, or need to call in the pro to help you build your financial model, get in touch with me, Chris Benjamin the Rogue CFO!
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
www.RogueCFO.com
Wednesday, June 22, 2011
Dilution Clauses & Early Stage Investors
New podcast episode is up, give it a whirl:
Dilution Clauses and Early Stage Investors
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
Dilution Clauses and Early Stage Investors
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
5 Business Lessons I Wish I Knew When I Graduated
I follow a lot of business/technology blogs, and occasionaly find a gem of an article. While I share them usually on Twitter, I'll try to start posting them here as well:
5 Business Lessons I Wish I Knew When I Graduated
5 Business Lessons I Wish I Knew When I Graduated
Tuesday, June 21, 2011
Top 10 Lies Venture Capitalists Know You Are Telling
Lies, Lies, Lies!
In the quest for capital, many entrepreneurs stretch the truth. One venture capitalist calls them out.
As a venture capitalist, I get pitched dozens of times every year, and every pitch contains at least three or four of the lies below. Are you guilty?
1. “Our projections are conservative.” An entrepreneur’s projections are never conservative. If they were, they would be $0. I have never seen an entrepreneur achieve even their most conservative projections. As a rule of thumb, when I see a projection, I add one year to delivery time and multiply by 0.1.
2. “(Big-name research firm) says our market will be $50 billion in 2010.” Even if the product is bar mitzvah planning software, every entrepreneur claims the market potential is tens of billions. Do yourself a favor: Remove any reference to market size estimates.
3. “(Big-name company) is going to sign our purchase order next week.” Only play this card after the purchase order is signed, because no investor will fall for this one.
4. “Key employees are set to join us as soon as we get funded.” When a venture capitalist calls these key employees, he usually gets the following response: “I recall meeting him, but I certainly didn’t say I would leave my $250,000-a-year job to join his company.” If key employees are ready to rock ’n’ roll, have them call the venture capitalist and confirm it.
5. “No one else is doing what we’re doing.” Well, either there’s no market for it, or you’re so clueless that you can’t use Google to figure out you have competition. Neither a lack of a market nor cluelessness is conducive to securing an investment.
6. “No one else can do what we’re doing.” The only thing worse than cluelessness and the lack of a market is arrogance.
7. “Hurry, because several other vc firms are interested.” There are maybe 100 entrepreneurs in the world who can make this claim. The fact that you’re reading this article means you’re not one of them.
8. “Oracle is too big/dumb/slow to be a threat to us.” There’s a reason Larry Ellison is where he is, and it’s not that he’s big, dumb and slow. Entrepreneurs who utter this lie look naive at best, stupid at worst.
9. “We have a proven management team.” If you were that proven, you wouldn’t be asking for money. A better strategy: State that you have relevant experience, you’ll do whatever it takes to succeed, you’ll surround yourself with proven advisors and you’ll step aside whenever it becomes necessary.
10. “All we have to do is get 1 percent of the market.” First, no venture capitalist is interested in a company that wants just 1 percent of a market. Second, it’s not easy to get even 1 percent, so you look silly pretending it is. Instead, show an appreciation of the difficulty of building a successful company
.
Chris Benjamin, Rogue CFO
www.RogueCFO.com
In the quest for capital, many entrepreneurs stretch the truth. One venture capitalist calls them out.
As a venture capitalist, I get pitched dozens of times every year, and every pitch contains at least three or four of the lies below. Are you guilty?
1. “Our projections are conservative.” An entrepreneur’s projections are never conservative. If they were, they would be $0. I have never seen an entrepreneur achieve even their most conservative projections. As a rule of thumb, when I see a projection, I add one year to delivery time and multiply by 0.1.
2. “(Big-name research firm) says our market will be $50 billion in 2010.” Even if the product is bar mitzvah planning software, every entrepreneur claims the market potential is tens of billions. Do yourself a favor: Remove any reference to market size estimates.
3. “(Big-name company) is going to sign our purchase order next week.” Only play this card after the purchase order is signed, because no investor will fall for this one.
4. “Key employees are set to join us as soon as we get funded.” When a venture capitalist calls these key employees, he usually gets the following response: “I recall meeting him, but I certainly didn’t say I would leave my $250,000-a-year job to join his company.” If key employees are ready to rock ’n’ roll, have them call the venture capitalist and confirm it.
5. “No one else is doing what we’re doing.” Well, either there’s no market for it, or you’re so clueless that you can’t use Google to figure out you have competition. Neither a lack of a market nor cluelessness is conducive to securing an investment.
6. “No one else can do what we’re doing.” The only thing worse than cluelessness and the lack of a market is arrogance.
7. “Hurry, because several other vc firms are interested.” There are maybe 100 entrepreneurs in the world who can make this claim. The fact that you’re reading this article means you’re not one of them.
8. “Oracle is too big/dumb/slow to be a threat to us.” There’s a reason Larry Ellison is where he is, and it’s not that he’s big, dumb and slow. Entrepreneurs who utter this lie look naive at best, stupid at worst.
9. “We have a proven management team.” If you were that proven, you wouldn’t be asking for money. A better strategy: State that you have relevant experience, you’ll do whatever it takes to succeed, you’ll surround yourself with proven advisors and you’ll step aside whenever it becomes necessary.
10. “All we have to do is get 1 percent of the market.” First, no venture capitalist is interested in a company that wants just 1 percent of a market. Second, it’s not easy to get even 1 percent, so you look silly pretending it is. Instead, show an appreciation of the difficulty of building a successful company
.
Chris Benjamin, Rogue CFO
www.RogueCFO.com
Friday, June 10, 2011
Interim/Outsourced CFO for Growth Stage Companies - Ready to take your company to the next level?
Are you are a growth stage company and don’t have a CFO in place? I work exclusively with early stage and growing companies who need C-level management on a part-time basis. Ex-corporate CFO, 15 years in the game, I take companies from growth stage to IPO. No suits & ties, just actual results.
How can I help? Several ways - anything a CFO would normally do, I do. Working with the auditors, SEC, financial modeling, cash flow management, growth strategy, profit improvement, just to name a few.
To learn more, take a look at my site: http://www.roguecfo.com. If you think there'd be a synergy I encourage you to reach out and lets discuss.
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
www.RogueCFO.com
How can I help? Several ways - anything a CFO would normally do, I do. Working with the auditors, SEC, financial modeling, cash flow management, growth strategy, profit improvement, just to name a few.
To learn more, take a look at my site: http://www.roguecfo.com. If you think there'd be a synergy I encourage you to reach out and lets discuss.
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
www.RogueCFO.com
Thursday, June 9, 2011
The Tools You Need To Attract Investors
It’s one thing to start a company and let everyone know you are looking for investment capital. It’s another to actually have the know how and tools to properly locate the capital you need.
If term sheets, financial models, Power Point presentations and more are all foreign to you, take a look at the link below to see what I’ve put together for the entrepreneurs out there.
Both the learning and the tools themselves, you can’t go wrong!
Rogue CFO Investor Blueprint Package
Chris Benjamin, Rogue CFO
If term sheets, financial models, Power Point presentations and more are all foreign to you, take a look at the link below to see what I’ve put together for the entrepreneurs out there.
Both the learning and the tools themselves, you can’t go wrong!
Rogue CFO Investor Blueprint Package
Chris Benjamin, Rogue CFO
Wednesday, June 8, 2011
Looking for Companies Seeking Board of Director Members
Recently I’ve gone beyond acting as a CFO for growing ventures, and joining the Board of Directors for a few companies instead. The main differences are whereas a CFO is an operational, hands on role directly involved in more day to day decisions, the Board oversees the direction of the company from the 10,000 foot level. It allows someone like myself to offer their knowledge and experience with startup & growth ventures to help out the current companies I work with. Avoiding pitfalls and minefields, best business practices and ideas & suggestions for growth are all topics that come up at the board meetings.
So if you are a growth stage company (typically favor ones with traction in place where I can add the most value and relevance) and are looking to round out your board with a seasoned CFO to bring a finance perspective to the team then get in touch. I’m always open for the discussion and to learn more about each other to see if there’s a synergy to be had.
Recently I’ve gone beyond acting as a CFO for growing ventures, and joining the Board of Directors for a few companies instead. The main differences are whereas a CFO is an operational, hands on role directly involved in more day to day decisions, the Board oversees the direction of the company from the 10,000 foot level. It allows someone like myself to offer their knowledge and experience with startup & growth ventures to help out the current companies I work with. Avoiding pitfalls and minefields, best business practices and ideas & suggestions for growth are all topics that come up at the board meetings.
So if you are a growth stage company (typically favor ones with traction in place where I can add the most value and relevance) and are looking to round out your board with a seasoned CFO to bring a finance perspective to the team then get in touch. I’m always open for the discussion and to learn more about each other to see if there’s a synergy to be had.
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
www.RogueCFO.com
So if you are a growth stage company (typically favor ones with traction in place where I can add the most value and relevance) and are looking to round out your board with a seasoned CFO to bring a finance perspective to the team then get in touch. I’m always open for the discussion and to learn more about each other to see if there’s a synergy to be had.
Recently I’ve gone beyond acting as a CFO for growing ventures, and joining the Board of Directors for a few companies instead. The main differences are whereas a CFO is an operational, hands on role directly involved in more day to day decisions, the Board oversees the direction of the company from the 10,000 foot level. It allows someone like myself to offer their knowledge and experience with startup & growth ventures to help out the current companies I work with. Avoiding pitfalls and minefields, best business practices and ideas & suggestions for growth are all topics that come up at the board meetings.
So if you are a growth stage company (typically favor ones with traction in place where I can add the most value and relevance) and are looking to round out your board with a seasoned CFO to bring a finance perspective to the team then get in touch. I’m always open for the discussion and to learn more about each other to see if there’s a synergy to be had.
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
www.RogueCFO.com
10 Best Mobile Apps for CFO's
Little article yours truly was interviewed for & contributed on. Top 10 categories of smartphone apps for CFOs. Great stuff even for business owners in general.
American Express Inside Edge
American Express Inside Edge
Thursday, June 2, 2011
Learn why your business plan is not attracting investors.
Over the years I've seen business plans and investor packages of all shapes and sizes. 9 times out of 10 when someone sends me their material to review there is plenty of reasons I spot immediately why your company is not getting any attention from investors. Reasons can be anywhere from cosmetic, a lack of information, blatant hole in your business model, too wordy, or plenty of other reasons and combination's of problems.
Luckily, the Rogue CFO is here to help! I've been in the startup game for 15 years, been on both sides of the investor table, helped companies get funded, helped others realize why they won't get funded, built and sold companies, etc. If you want a seasoned professional to give you the 110% honest, painful feedback on what needs help with your plan, then you found the right guy. If you want a yes-man, that's not me.
If you need help turning your presentation into investor level quality, check out my business plan review package:
Business Plan Reviews
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
Luckily, the Rogue CFO is here to help! I've been in the startup game for 15 years, been on both sides of the investor table, helped companies get funded, helped others realize why they won't get funded, built and sold companies, etc. If you want a seasoned professional to give you the 110% honest, painful feedback on what needs help with your plan, then you found the right guy. If you want a yes-man, that's not me.
If you need help turning your presentation into investor level quality, check out my business plan review package:
Business Plan Reviews
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
Wednesday, June 1, 2011
CFO for Growth Stage Companies, plain and simple.
CFO for Growth Stage Companies, plain and simple.
Here's Who I Am:
A seasoned CFO, have brought companies from idea stage to IPO. I come on board as an interim, outsourced, part-time CFO to help grow your company. Having spent 10 years in the corporate world and now 5 in the startup/growth stage company, I know what it takes to bring your growing company to the next level, and beyond.
Here's What I'll Do For You:
Depending on the stage your company is at, I can add value in multiple ways:
* Creation of investor packages
* Investor relations
* Financial forecasting & budgeting
* Accounting review & correction
* Cash flow maximization
* Expense reduction strategies
* Growth strategy
* Management consulting
* Exit strategies
* M&A
* All things accounting & finance related, I've done it all.
Here's What I Want You To Do:
Click on the link below to visit my site, learn more about who I am and what I do. Then, hit the contact page, send me and email with more info about your company, what pain you are feeling, and how you think I might help. Lets start a conversation.
http://www.roguecfo.com/services
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
Here's Who I Am:
A seasoned CFO, have brought companies from idea stage to IPO. I come on board as an interim, outsourced, part-time CFO to help grow your company. Having spent 10 years in the corporate world and now 5 in the startup/growth stage company, I know what it takes to bring your growing company to the next level, and beyond.
Here's What I'll Do For You:
Depending on the stage your company is at, I can add value in multiple ways:
* Creation of investor packages
* Investor relations
* Financial forecasting & budgeting
* Accounting review & correction
* Cash flow maximization
* Expense reduction strategies
* Growth strategy
* Management consulting
* Exit strategies
* M&A
* All things accounting & finance related, I've done it all.
Here's What I Want You To Do:
Click on the link below to visit my site, learn more about who I am and what I do. Then, hit the contact page, send me and email with more info about your company, what pain you are feeling, and how you think I might help. Lets start a conversation.
http://www.roguecfo.com/services
Chris Benjamin, Rogue CFO
chrisb@roguecfo.com
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