1. Global Market Access WorkshopBedaya Program GREG HOROWITT, T2 Venture Capital

2. Agenda Welcome and personal introductions Global market overview Preparing for entry overseas Tips and strategies for leveraging resources Creating your plan Questions and Answers

3. Global Market Overview

4. Business in the 21st Century Markets are hyper-competitive and fast moving Social and professional networks are critical and a key driver of trust based relationships Entrepreneurs are risk tolerant and highly adaptive Resources are distributed globally and may not be proximate Talent is mobile

5. Entrepreneurs Money Ideas & Inventions Talent Government Coaches & Mentors Trade and Industry Organizations Academia & Research Business Support Services Education & Workforce Development Access to Global Markets & Supply Chains Real Estate & Business Infrastructure News and Media Outlets Culture, Societal Values, Role Models, Rule of Law

6. At a Glance Businesses have become less physically restrictive Most ideas will need to be bundled and / or converged to deliver their sustaining value Industry is relying more than ever on ‘open innovation’ Fierce competition for resources, particularly knowledge workers and ‘smart’ risk capital Partnerships and alliances can drive significant value creation Innovation is now a game of days and months….not years and decades. Agility and speed are prized attributes

8. Opportunity Assessment and Calibration

9. Evaluating the Opportunity Criteria for evaluating opportunity Industry and market Economics Harvest Issues Competitive Advantage Issues Sustainability Management team Fatal Flaw Issue Personal Criteria Strategic differentiation For Classroom Use Only - Del Foit

10. Points to be satisfied to be accepted as Opportunity Solve a significant problem or unmet market need that someone is willing to pay a premium for, creating significant value to a customer or end user Have robust market and social/economic/environmental benefit Have a compelling business model design that offers venture scalability and sustainability Have an attractive risk-reward balance For Classroom Use Only - Del Foit

11. 4 Anchors of Superior Business Opportunities Create or add significant value to a customer or end user Solve a significant problem, or meet a significant want or need, for which someone is willing to pay a premium Robust market, margin, and moneymaking characteristics Large enough ($50 million+) High growth (20 percent +) High margins (40 percent +) Strong and early free cash flow (recurring revenue, low assets, and working capital) High profit potential (10 to 15 percent + after tax) Attractive realizable returns for investors (25 to 30 percent + IRR) 4. Are a good fit with the founder(s) and management team at the time and marketplace and with the risk-reward balance For Classroom Use Only - Del Foit

12. Does anybody care? How do you establish ‘proof of market relevance’? How many miracles have to happen?

14. Therefore, granting “Exclusivity” is not advised.

15. Avoid Monogamy

16. Avoid Promiscuity

17. Everyone talks to everyone.

18. Show passion for perfection

19. Fix mistakes fast

20. Reference selling is

21. the name of the game

23. Assessing Risk What must we confirm? What is unknowable? What is the risk of not knowing? What are the major risk factors and opportunity killers? How do I learn and validate these factors?

24. Taking the risk “You miss 100% of the shots you don’t take.” Wayne Gretzky 16

25. Where do I start? Ask yourself a few key questions? MARKET ASSESSMENT: Is it sufficiently big and accessible? PEOPLE: Do we have access to world-class people? FINANCE: Can we really see a path to the financial resources needed for project completion?

26. Where Do We Put Scarce Resources? TIMING: Will it happen in our lifetime? (The 4/2 rule) TECHNOLOGY ASSESSMENT: What does the competition know now and how could the competitive terrain change? ALPHA FACTOR: Do we really love it? Then do the FINANCIAL ANALYSIS (Break-even, ROI, NPV, EVA, Monte Carlo, etc) to make a final selection The INNOVATION needs to be exciting and intriguing but it also has to pay the rent

27. Preparing for battle Market Research

28. Market Research & Validation Purpose Market Assumptions Insight into customer needs Determine Viability of business concept Major risks and information holes Probability of success of strategy & business model For Classroom Use Only - Del Foit

30. Market Trends

32. Opportunity Selection BIG Opportunity ($) MODERATE EARLY LATE Andy Grove, INTEL Timing

33. The Market What would your sales be if you were to capture 100% of your specific market niche? Where is your market heading and why? Intensity of Problem (Aspirin or Vitamin) Can intensity of pain overcome natural market inertia?

34. The Customers Who Are They? Demographics and Psychographics How Many Make a list from your relevant market What do they want? How are there needs not being met now? Where? How and how often do they buy? How price sensitive?

35. Primary Research Talk to customers, prospective customers and competitors Call them, email them, go to trade shows and conferences Surveys Online and offline Focus Groups Trade Organizations

36. Secondary Research Google! Marketresearch.com Yahoo Finance Company websites and press releases Hoover.com WSJ.com Government Publications/Websites Census Bureau Various paid databases Capital IQ

37. Common Sense Difference between business strategy and communication strategy It is as important to properly communicate information and research as it is to collect it No difference between value and perceived value in the marketplace

38. Outsourcing Market Research ROI on well-collected, well-presented market research is extraordinarily high Opportunity Cost of pursuing WRONG opportunity is enormous Outsourced market research resources are proliferating Look for people or firm that understand both how to collect AND how to analyze and communicate data University MBA programs

39. Competition Being the best isn’t always enough

40. Competitive Analysis Who competes for your customers? Who competes for resources? Who competes for talent? Who competes for key relationships? Who competes for ‘mind share’ What role does culture play? (Baidu vs. Google) Do you have the ability to ‘warp gravity’

41. The Value Proposition Why you? Why Now?

42. Key Message Your value proposition must be: Compelling Quantifiable Demonstrable Replicable Sustainable Differentiated Provide economic and / or social impact, which can be measured

44. The “Elevator Pitch” 1. Convinces the “target person” to schedule a longer meeting with you, and be receptive to doing business with you and your company. 2. Empowers and enables the “target person” also to convince other appropriate people to become interested in your company. 3. Demonstrates sincerity. Communicates a sense of value, empathy, and urgency. Quantifies the value proposition clearly. Combines thorough Sales and Market Research. Establishes why it is in the best interest of the listener to do business with you Requires no more than 1-2 minutes (55 seconds).

45. Intellectual Property Are patents enough?

46. Base Fundamentals If I were to have only 3 things to measure in a business they would be: Customer satisfaction Employee satisfaction and Cash flow Dr. Jack Welch, Former CEO, General Electric

47. Thank you Greg Horowitt, Global CONNECT ghorowitt@ucsd.edu