D.CAMP - Investment Proposals and Pitching Methods

* Jeong Ho-seung / Reed

* Wikipedia / business plan

* good artists copy, great artists steal / ownership is mine (completely mine)
(simplification, sculpture style -> Picasso's style)



[ Writing ]

1. Who are you writing for?
   1) Management, marketing, investors / growth, profitability, nature of the capital, recovery
   2) Government grants/subsidies - format - capital erosion (negative) - headcount - project cost,
       angels & accelerators / small capital - low opex - hit milestones,
       VCs / enough market size - hit BEP - M&A potential,
       strategic investors / a 72-billion-won company Tencent (WeChat) invests to extract know-how for its own game center

2. How?
Clear and objective & easy to grasp and consistent

3. Sections
Cover (company info), summary, company overview,
"product or service, market analysis, marketing plan, operations plan, financial plan, management team,"
exit plan, risk analysis

4. Details

#Product or service
What are you selling?
Who's the customer?
Why should I buy it?
Customer value proposition?
Can it solve the customer's problem better than competitors?
Price level for sales and services? (Thresholds and pricing grounded in systematic logic)
Protection via patents and IP
Uniqueness, defensibility, sustainable competitiveness of the tech and service
Timing and position in the lifecycle (entry, growth, mature market)
Ability to execute
Ability to raise barriers to entry against competitors

#Market analysis
Analysis of the target market (there's no brand-new market with customers already in it; you only take customers from an existing market)
Understanding of the customer (basic profile, tendencies, behavior patterns of that market's customer)
What are the complementary services or products?
Market size and growth rate
Current market share? And how will you grow M/S?
Recent market trends?
Your view on how the market will evolve?

#Marketing plan
4p
How will you create a huge market and generate revenue/value in it
Customer acquisition strategy and customer acquisition cost
"Sales and marketing strategy" (Pepsi trunk trucks flipped in NYC, Crayon Pop)
Pricing (premium, freemium)
What to learn from competitors
Exposed risks, latent risks
Risk-reduction strategy

#Operations plan
How will you run production and marketing
People/assets strategy for efficient operations (outsourcing, delivery)
Service production and distribution hubs, required equipment, supplies
Stable hiring and sourcing of people
Risks by growth stage and mitigation options
Long-term growth milestones
Meaningful revenue
When BEP

#Financial plan

#Management team
Main past work
Founding and success experience
Experience creating a new market inside an existing org
Even among co-founders, clear split of responsibilities and roles
A great team is always greater than a great idea
A hires A, B-C, C-D (only A-grade people hire A-grade people)
The first 15 hires shape the org's entire culture and DNA. (Be careful)




@Emphasis
People, market, product/service (early)    >>>    financials, BEP (mid-stage)

@Writing
Excessive humility is poison.
Make the basis of your confidence clear.
Write around your strengths.
Positive words over negative words.
Terms that elevate the investor (NHN-Line)

@Investor's perspective
Sincerity
People over business items (the story, the story they'll embody)
Make the investor want to meet you
Logical storytelling (no self-worship)
The presenter writes it themselves
Study properly and write it (investors are experts too / they pull paid reports frequently)
Write in a way that helps the investor's investment decision (cite sources, share data)
At least one thing should stick in memory

@Things to avoid
Domestic first, world first
"Can't tell you, it's a trade secret" (build it so that even if known, no one can catch up)
Target raise amount, without a clear breakdown of use (request investment tied to headcount plans etc.)
Don't confuse fact with opinion
Formatting-wise: text on a black background, Jobs-style slides (think about print costs, ink/toner)
Copy-pasting the same chart
Korean/English typos, spacing, mojibake, made-up words

@Cautions
Why should I give my money to you?
- I can grow your money.
How?
- I'm the right person; I'll give my life to it with everything I have
-> I've done this before, directly or indirectly
    / small experiences and wins can stack into stepping stones
    / a business model isn't something you build alone. My model is the Beatles. (The Beatles' label was Apple Music)






[ Pitch ]

Elevator pitch

A pitch is talking to move and persuade the other party (investorWord.com)

1. An investment is exchange money = you get money in exchange for giving ownership.
   Always keep this dynamic in mind. The more investment you take, the more of your share leaves.
   So plan the next raise at the same time.

2. Investment types
1) Debt Financing
     Pros: you keep ownership
              there's also free money around (no repayment)
              quick access to cash
     Cons: personal burden, repayment schedule

2) Equity Financing
     Pros: help with hiring, marketing, and other things beyond money
             no burden even if it fails
     Cons: adjusting to new shareholders
              long time required
              excessive raises jeopardize control

3. business life cycle
You need to understand the timing and phases
Cash takes longer to come than you think


#sweat equity
Initial capital from the founders (around 10 million won)
As small as possible
Early equity split: equal vs 50%+ for CEO
Number of shareholders: 5 or fewer vs more than 5
Considerations for early employees: equity vs stock option (long-term plan)
Prevention of shareholder disputes: shareholder agreement
  - Decision-making structure in disputes (stronger than the shareholder-meeting articles; document detailed decision items)
  - Equity handling when a co-founder leaves (buy-back, price, resale restrictions, staged buyouts)
  - Ownership of individually filed IP
  - Key personnel decisions (promotions, hiring)

#friends and family / LOVE money
Broad trust and ties required
Pros: first outside capital, trust matters more than business viability
Cons: risk of severing relationships, runway burns fast
Cautions
  - Small amounts (at a level they can afford to lose: investment < lottery odds)
  - Keep the shareholder count low (lean crew)
  - Restrictions or options on selling equity (mandatory)

#Patient money (angel or accelerator)
Clear milestones
Understand each accelerator's characteristics
10 million to 300 million won
GoVenture, V Forum, Startup Weekend...

#institutional money
Understand GP/LP characteristics, potential for follow-on rounds, meaningful potential
BEP, EXIT potential
300 million to 1 billion won
Bon Angels, K Cube, Coolidge Corner, Capstone Partners (DSC, Stonebridge...)

@Connect
Introductions at conferences, via media, through referrals

@How to pitch
1. Introduce the people -> market -> product
      = amazing people, an amazing market, and a product that fits
      = great entrepreneur + great market opportunity
      = spark, guts, attitude
      = P(pure). S(smart). D(driven).

2. Concise core, limited time
     Clear, easy
     Powerful, passionate and confident
     Visual, easy to remember
     Tell & story, short story
     Target, clear understanding of the audience
     Goal-oriented, accurate understanding of the audience
     Has a hook, grabs attention, sets up another meeting

3. The CEO personally telling their own story
     Draw out empathy (pace it so they can nod along)
     Show them a new market or angle they probably don't know
     Be clear about where the money goes
     Showing is good (demo, video)
     Stick to the time
     Avoid excessive animation
     Posture while taking notes on questions, appropriate reactions, proper answers (e.g., "for the first question, please see slide 3")
     Pitching isn't some ornate stage. Practice.
     At least one thing has to stick in memory

4. Process
: Business plan -> first IR -> business feasibility review, financial/legal review, management review -> investment committee -> investment
: Draft due diligence




@Key items in the investment review report (9)


@Investment structure types
1) Usually 50%+ redeemable convertible preferred shares (common + call + put) are used.. (leverage negotiation power for adjustments)
   : R for redemption (general/option to request return if progress is too slow, special/option to request return on illegal acts, joint surety for guarantees/loan repayments),
      C for conversion (an option to sell preferred shares back as common stock / but not at 1:1—by adjusting the ratio to 1:2 etc., the valuation itself can be cut; refixing/an option for investors to buy their shares back),
      P for preferred (high dividends, liquidation),
      S for shares (securities, voting rights)
2) Common shares around 10%

* call option, right to buy
  put option, right to sell (redeem it / give the money back / joint surety required)

@The worst-case investment structures: CB & BW & project financing

@Relevant contract: indicative non-binding proposal



> daringinvest