Welding Electrode Making Machine By Deccan Dynamics
How to write your business plan - Rob Moffat, Balderton Capital
1. How to write a business plan
Campus EDU
31 May 2013
2. • Invest $0.1 - 10M in tech companies with $B potential
• Invest across Europe, help businesses go international
• Have invested in >100 companies over last 10 years
2
Balderton Capital – what we do
3. We back great entrepreneurs & disruptive companies
3
Europe’s leading
vacation rental
marketplace
Top 2 global music
publisher from zero:
Prince, McCartney
1 Million loan
applications per
month
1M products sold
per month
9. 9
Contents of a (software/internet) business plan
• The problem
• Your solution
• Competition, and why you win
• Size of the opportunity
• Unit economics
• The necessaries: Product, Team, Capital
• Milestones
10. 1
0
Contents of a (software/internet) business plan
• The problem
• Your solution
• Competition, and why you win
• Size of the opportunity
• Unit economics
• The necessaries: Product, Team, Capital
• Milestones
11. 11
What is a problem?
• Unmet need
• Unmet want
• Too expensive
• Too time-consuming
How many other people really care about this problem?
14. 14
Contents of a (software/internet) business plan
• The problem
• Your solution
• Competition, and why you win
• Size of the opportunity
• Unit economics
• The necessaries: Product, Team, Capital
• Milestones
15. 15
Your solution
For… (target customer)
who… (statement of the need or opportunity),
we are a… (product type)
that… (key benefit).
Unlike… (main competitor),
our product… (how we are different).
16. 16
Which company?
For young travellers
Who need somewhere cheap to stay,
We are a marketplace for accommodation
That gives you a better room for half the price.
Unlike hotels or hostels
Our product gives you the personality of the city
20. 20
Contents of a (software/internet) business plan
• The problem
• Your solution
• Competition, and why you win
• Size of the opportunity
• Unit economics
• The necessaries: Product, Team, Capital
• Milestones
21. 21
“We have no competitors”
#1 reason for a VC to ditch your business plan?
22. 22
Know your competition
Where are the weaknesses?
What are they good at?
Common mistake: Compare where you will be in two
years with where they are today
24. 24
Good & bad competitive advantages
• Disruptive innovation
• Speed
• Unique technology / IP / data
• Exclusive partnerships
• Substantially lower cost
• Quality of your team
Good Bad
• Features
• Better service
• Lower margins
• Better for client but not for users
26. 26
How will you sustain your advantage?
• Network effects
• Virtuous circles
• More/better data
• Brand
• Depth of tech expertise
27. 27
Contents of a (software/internet) business plan
• The problem
• Your solution
• Competition, and why you win
• Size of the opportunity
• Unit economics
• The necessaries: Product, Team, Capital
• Milestones
28. 28
#2 reason for a VC to ditch your business plan?
“Our market opportunity is $100B”
29. 29
Bottom up market sizing
Number of potential users of your product
% who are willing/able to pay
Your annual revenue per user
x
x
30. 30
Example: Lovefilm
Number of potential users of your product
% who are willing/able to pay
Your annual revenue per user
x
x
24 M
UK households
40% ?
Sky TV penetration
(as a proxy)
£120
£1.1BAddressable market
=
31. 31
Contents of a (software/internet) business plan
• The problem
• Your solution
• Competition, and why you win
• Size of the opportunity
• Unit economics
• The necessaries: Product, Team, Capital
• Milestones
32. 32
Unit economics = can you make money?
Contribution
per order
Revenue per
order
Variable Cost per
order= -
Cost Per
Acquisition
(CPA)
Cost per lead
% of leads that
convert= ÷
Customer
Lifetime value
(CLV)
Contribution
per order
Average # orders per
customer before they
leave
= x
Lifetime value
(LTV)
Making
money
Cost Per
Acquisition
(CPA)
>=
33. 33
Unit economics = can you make money?
Contribution
per order
Revenue per
order= -
Cost Per
Acquisition
(CPA)
Cost per lead
% of leads that
convert= ÷
Customer
Lifetime value
(CLV)
Contribution
per order= x
Lifetime value
(LTV)
Making
money
Cost Per
Acquisition
(CPA)
>=
Variable Cost per
order
Average # orders per
customer before they
leave
34. 34
Contents of a (software/internet) business plan
• The problem
• Your solution
• Competition, and why you win
• Size of the opportunity
• Unit economics
• The necessaries: Product, Team, Capital
• Milestones
35. 35
The necessaries: Product, Team, Capital
Product
• Minimum Viable Product
• Make use of third party tech
• ‘Mechanical turk’?
Team
• Skills that you need
• Raw talent vs. experience?
• Want VC investment? You need a CTO
Capital
• Running costs for 18 months, plus 25%
• Sufficient runway to prove the product?
• Use client work to help build product?
36. 36
Contents of a (software/internet) business plan
• The problem
• Your solution
• Competition, and why you win
• Size of the opportunity
• Unit economics
• The necessaries: Product, Team, Capital
• Milestones
40. 40
Some ways to test a business plan
• Talk to …
• Potential clients / partners / similar companies
• Smart 3rd parties (including investors)
• Dummy ad campaigns to test messaging & CPC
• Landing page & waiting list
• Kickstarter
• Minimum viable product
• Work at your competitors
42. 42
Your turn
1. Write a simple business plan for your
business/idea
• If you don’t have an idea, pick your favourite startup
2. Get your neighbour to critique it
15 mins
10 mins
43. 43
Reminder: Contents of a business plan
• The problem
• Your solution
• Competition, and why you win
• Size of the opportunity
• Unit economics
• The necessaries: Product, Team, Capital
• Milestones
45. 45
Advice
• Re:work: Guess not a plan – keep short & revisit often
• Be clear on what problem you are solving. It’s best to
do one thing really, really well
• Cost is a disease
• People don’t like giving ‘negative feedback’. Push
them to find the weak points, and listen
• Be optimistic (but not blindly so)
48. Your business plan
The problem Competition / why you win Size of the opportunity
Your solution
Unit economics Necessaries: Product, Team, Capital Milestones
Notas do Editor
2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5
2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5
2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5
2007200820092010201120122013 European Union12,397,498.0 12,466,896.5 11,752,175.4 12,256,226.4 12,649,146.5 12,957,700.3 13,381,221.5