Telluride Program - Greater Colorado Venture Fund workshop
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This document provides an overview of a workshop on driving enterprise value and scaling predictable revenue. The workshop covers topics like M&A preparation, scaling revenue through predictive modeling, pricing strategies, and sales and marketing funnels. It discusses revenue models, metrics for qualifying leads, and how to build business development relationships. The document also includes templates for common revenue models and guides for pricing testing and strategy.
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Telluride Program - Greater Colorado Venture Fund workshop
- 1. Copyright DKParker, LLC 2018 Driving Enterprise Value Dave Parker @DaveParkerSEA www.dkparker.com/blog Dave@dkparker.com https://www.dkparker.com/past-cohorts/
- 2. Copyright DKParker, LLC 2018 Agenda ¤ Beginning with the end in mind. M&A Prep - Corp hygiene, contracts, Due Diligence and process ¤ Scaling and Predictable Revenue ¤ Revenue Models and Pricing, Forecast vs Actual Modeling ¤ Pipelines and customer concentration ¤ Boards & Quarterly Planning ¤ Board management (prepping for a Board) ¤ Mapping resources and timing ¤ People - Right people on the bus, right seats, Hiring process
- 3. Copyright DKParker, LLC 2018 About Dave ¤ 5X founder, Board Member, former SVP Programs at UP Global (Startup Weekend + Startup America) ¤ Startup Next ¤ Startup Week ¤ 8 transactions – 6 sell side, 2 buy side ¤ Family Office Investor – Sell Side M&A for Early Stage
- 4. Copyright DKParker, LLC 2018 Score Yourself 1-4 Team: Why you, balanced team (talents, diversity), domain experts, serially successful founders, great company experience Market/Customer: big market (TAM/SOM), cash available, new or nascent market? Product: do you have a product, how mature, customer first, solid design, clear roadmap to scale Traction: Customer validation, revenue, improving unit economics? Idea: Are you solving a problem? New or existing problem, big category (vs tool), early/late continuum, technical achievable, pain pill or vitamin Competition: How many incumbents, funding status, are you incremental better or 10X better? Revenue Model/Finance: How will you monetize your idea? Do you have a basic budget on spending, big or small economics Timing: Why now? Are you late, early, too early? IP/Moat: Is your idea defensible? Can you build a moat over time? Clear Ask: What do you need help with? Advice, funding, introduction, help finding staff? What do you need now? Total out of 40
- 5. Copyright DKParker, LLC 2018 Venture Ready Fast NO ¤ Team ¤ Market ¤ Product ¤ Traction Slow Yes ¤ Idea ¤ Competition ¤ Business Model/Finance ¤ Timing ¤ Intellectual Property/Moat ¤ Clear AskBlog link
- 7. Copyright DKParker, LLC 2018 M&A Process ¤ Building relationships thru business development, in advance of transaction ¤ Avoid the auction process with goal of multiple bidders ¤ Engaging a banker/broker ¤ Corporate Hygiene ¤ Indication of Interest (IoI) vs. Definitive Agreements ¤ Due Diligence ¤ Closing
- 8. Copyright DKParker, LLC 2018 Type of Buyers ¤ Peers – local peer to peer ¤ Lower valuation ¤ Strategic – larger buyer with history of M&A activity. Roll up strategy. Buying access to market or customers and revenue ¤ Financial Buyer – based on revenue. Cash on cash return oriented. Financially, not strategically driven. Private Equity groups (PE or PEGs)
- 9. Copyright DKParker, LLC 2018 Price & Terms ¤ Old Rule of 40 – 40% profit, 20 growth 20 profit, 40% growth. Flat doesn’t drive premium or urgency ¤ Price – the sale price of the company ¤ Terms – more often to kill a deal than price ¤ Percentage of purchase ¤ Earnout – duration ¤ Payout – cash at close or duration ¤ Jobs and compensation after the close ¤ Additional Capital for growth
- 10. Copyright DKParker, LLC 2018 The Private Equity Inbound Call ¤ Private Equity (PE or PEG for Groups) use Junior Associates to find interested sellers ¤ Most inbound calls don’t convert to sales ¤ PE’s don’t want you to engage a broker/banker ¤ Typically increase pricing by 50%
- 11. Copyright DKParker, LLC 2018 Business Development Process ¤ 6-12 months of building relationships with upmarket companies ¤ Forbes Article – 15 Ways to build relationships, trade associations, event/shows, ecosystem ¤ You, BD employee or Banker relationship ¤ Goal of creating multiple competitive partnerships ¤ Joint customers, press releases ¤ Catalyze a lead buyer – create a process around that buyer
- 12. Copyright DKParker, LLC 2018 Banker/Broker ¤ Raising money for a fee required a registered broker/dealer PERIOD ¤ Banker/Broker can sell the company ¤ Minimum Fee ¤ Percentage of transaction ¤ Usually 18 month tail on agreement ¤ Make sure they have experience ¤ Deal size, market sector, not geographically based
- 13. Copyright DKParker, LLC 2018 Fees and Aligned Incentives ¤ Retainer for Monthly Services ¤ Business development ¤ Outbound effort ¤ Can be rolled into closing fee ¤ Fee ¤ Minimum Fee ¤ Percentage of transaction (4%) ¤ Could be less with a bump for sale price >target goal
- 14. Copyright DKParker, LLC 2018 Prepping for Sale ¤ Confidential Investment Memorandum (CIM) put together by Banker ¤ Exec summary sent in advance to create ¤ List of target buyers and contacts ¤ Indication of Interest (IoI) – less formal than Letter of Intent (LOI) ¤ Starts the Due Diligence Process
- 15. Copyright DKParker, LLC 2018 Due Diligence Prep ¤ Organizational matters ¤ Bylaws, Registration, Board docs ¤ Founders matters ¤ IP and assignment agreements ¤ Financial Statements ¤ Contracts ¤ Employment ¤ Intellectual Property ¤ Taxes Link to Checklist
- 16. Copyright DKParker, LLC 2018 Due Diligence Process ¤ Data room - ¤ Shows who viewed what docs ¤ Watermarks all pages ¤ Docs by checklist category ¤ Timeline ¤ Definitive documents ¤ Closing date ¤ Wires
- 18. Copyright DKParker, LLC 2018 Business Model Breakdown Creating Value - Product or Service Delivering Value - Marketing & Sales Capturing Value - Reasonable to Exceptional Profit
- 19. Copyright DKParker, LLC 2018 Scaling Predictable Revenue ¤ Moving from trailing 12 to future 12 ¤ Pre-Product Market Fit/Post-Product Market Fit ¤ Market and Sales Motion ¤ Revenue Models and Pricing ¤ Financial Modeling ¤ Forecast vs Actual
- 20. Copyright DKParker, LLC 2018 Marketing Funnel Breakdown ¤ Time to Close ¤ Marketing Activities ¤ Channels ¤ Monthly Spend ¤ Attribution ¤ Marketing Qualified Leads (MQLs) – Conversion ¤ Sales Qualified Leads (SQLs) – Conversion ¤ Customers
- 23. Copyright DKParker, LLC 2018 Marketing Channels ¤ Paid Search ¤ Organic Search ¤ Word of mouth ¤ Sales calls ¤ Public Relations ¤ Affiliate ¤ Email marketing ¤ Social
- 24. Copyright DKParker, LLC 2018 Marketing Qualified Leads ¤ Define qualified vs list ¤ Suspects ¤ Prospects ¤ Qualified Prospects
- 25. Copyright DKParker, LLC 2018 Sales Qualified Leads ¤ Hand off to Sales ¤ Identify steps to close ¤ Number of calls
- 26. Copyright DKParker, LLC 2018 Time to Close ¤ Lead attribution ¤ Source time ¤ Compressing or Expanding ¤ Trend by source
- 27. Copyright DKParker, LLC 2018 Tracking ¤ Data allows you to know where to double down and where to hold back ¤ Conversion ratios
- 28. Copyright DKParker, LLC 2018 Monthly Budget ¤ Hypothesis: ¤ $1000 in Marketing spend will create #____ MQL ¤ Monthly Amount ¤ Channels ¤ Track your results
- 29. Copyright DKParker, LLC 2018 Sales – capturing value created
- 30. Copyright DKParker, LLC 2018 How will they buy? ¤ Web Direct – place the order to buy on the web ¤ Direct – outbound sales, inside/outside ¤ Indirect/Channel – fulfills demand, doesn’t generate ¤ Retail – BestBuy, etc
- 31. Copyright DKParker, LLC 2018 Sales Model Hypothesis Known Market Unknown Market Low Price Point High Price Point Known Search Words Unknown Search words Web Direct Direct Indirect Retail
- 32. Copyright DKParker, LLC 2018 Sales ¤ Model – Pick one, why? ¤ Strategy ¤ Who ¤ Tactics ¤ How ¤ Tools ¤ Sales tools
- 33. Copyright DKParker, LLC 2018 Customer Profiles ¤ What similar about your customers? ¤ How do you go deep in a customer segment ¤ How do you get price up 10X? Increase features, more users, etc. ¤ Customer concentration ¤ One big customer will create a discount ¤ Pipeline ¤ Regardless of tools to track, how is the forward looking pipeline?
- 35. Copyright DKParker, LLC 2018 Business Development ¤ Strategic relationships ¤ Who has the list you want ¤ How do you get the partnership ¤ Who might be the upmarket buyer
- 36. Copyright DKParker, LLC 2018 Business Development ¤ Strategy ¤ Who should you get as a partner ¤ How will you build the relationship? ¤ What channels ¤ Tactics ¤ Messaging/Value proposition ¤ Tools ¤ CRM
- 37. Copyright DKParker, LLC 2018 Revenue Models ¤ Full post here ¤ What you need to know ¤ Mark up ¤ Commerce, services, ¤ Subscriptions ¤ MRR, ARR ¤ Transaction Fees ¤ Rental, marketplace
- 38. Copyright DKParker, LLC 2018 Revenue Models– Pick Two 1. Fee for Service 2. Commerce 3. Subscription 4. Metered Service 5. Transaction Fee/Rental 6. Productize a Service 7. Combinations 8. Marketplace 9. Lead Generation 10. Gaming 11. Advertising/Search 12. New Media 13. Coins & Tokens 14. Big Data 15. Licensing
- 39. Copyright DKParker, LLC 2018 Top Templates ¤ Subscription – recurring revenue, churn, ARR/MRR, ¤ Transaction Fee/Rental (can be used for Commerce) ¤ Productize a Service – people required to deliver some portion of the service ¤ Marketplace – ¤ Two funnels
- 40. Copyright DKParker, LLC 2018 3. Subscription ¤ Example: Salesforce , Box, Spotify ¤ Use: B2C & B2B ¤ Key Metrics ¤ Average Revenue Per User (ARPU) ¤ Conversion ratio – e.g. trial to purchase ¤ Churn ¤ Challenges: MVP won’t be enough to be Kick Ass Product ¤ Notes: Highest multiple, forecastable revenue
- 41. Copyright DKParker, LLC 2018 5. Transaction Fees/Rental ¤ Example: 99Designs, KickStarter, Elance, Chugg ¤ Use: B2C & B2B ¤ Key Metrics ¤ Average transaction revenue ¤ Fee % per transaction ¤ Number of transactions ¤ Challenges: Margins are small (15%), need efficiency ¤ Notes: Don’t start too low
- 42. Copyright DKParker, LLC 2018 6. Productize a Service ¤ Your offerings is generally complex and requires services to deploy ¤ Gross margin on Services >35% ¤ Product development comes with services ¤ Use: B2C & B2B ¤ Examples: Moz, service company convert to tools. ¤ Challenges – difficult to make the transition away from services
- 43. Copyright DKParker, LLC 2018 8. Marketplaces ¤ Example: eBay, Alibaba ¤ Use: B2C & B2B ¤ Key Metrics ¤ Average Transaction Amount ¤ Number of Monthly Transactions ¤ Commission % ¤ Challenges: two sided market places require you start with one side, value to seller & Product market fit (x2) ¤ Notes: critical mass or marketplace required
- 45. Copyright DKParker, LLC 2018 Overview ¤ Pricing is Art and Science ¤ Business & Revenue Model Framework ¤ Mechanics ¤ Triangulation ¤ Your Hypothesis ¤ A/B Testing & Promotions
- 46. Copyright DKParker, LLC 2018 Art and Science ¤ Pricing is an informed decision based on data and proven revenue models ¤ A hypothesis backed by testing – at launch and while you grow
- 47. Copyright DKParker, LLC 2018 Ultimately pricing needs to cover ¤ Cost of Customer Acquisition ¤ Cost of Delivering ¤ Margin (Profits and Returns) ¤ Lifetime Value (LTV) is calculated at 12 or actual ¤ Pricing is not an afterthought ¤ 10, 100, 1000 customers
- 48. Copyright DKParker, LLC 2018 Sales Models ¤ Web Direct/Inbound – based on ability to drive traffic and convert leads – must be known key words ¤ Self Service – MOZ ¤ Rep required – Hub Spot ¤ = lower price point ¤ Outbound selling – no traffic to purchase ¤ List acquisition ¤ Outbound sales ¤ = higher pricepoint
- 50. Copyright DKParker, LLC 2018 Cost Based ¤ Pay Rate ¤ Bill Rate ¤ Gross Margin
- 51. Copyright DKParker, LLC 2018 Value Based ¤ What the market will bear
- 52. Copyright DKParker, LLC 2018 Value Based ¤ Range ¤ Product maturity ¤ Jobs to be done framework
- 53. Copyright DKParker, LLC 2018 Competitive Analysis ¤ Use the Wayback Machine – Internet Archive ¤ Know the Market ¤ Price changes over time ¤ Service/Product Offerings ¤ Terms – duration, contract length
- 54. Copyright DKParker, LLC 2018 A/B Testing ¤ Have a hypothesis – what will you test? ¤ Hide current pricing on site ¤ Traffic to landing pages ¤ Unbounce or other ¤ Squeeze Page – only CTA is buy
- 55. Copyright DKParker, LLC 2018 Promotions ¤ Freemium ¤ Time based ¤ Early Adopter based ¤ Percentage Discount ¤ Grandfather early users
- 56. Copyright DKParker, LLC 2018 Common Errors ¤ Setting your pricing too low ¤ Freemium is a marketing method, not a price ¤ Too Opaque of a price will frustrate customers ¤ “Knowing the answer” vs testing ¤ Positioning as “me too” – just like my competitors but less ¤ Same price for all customers ¤ Free for Life!
- 57. Copyright DKParker, LLC 2018 Where to start? ¤ Pick a model ¤ Do the competitive analysis ¤ Build a pricing hypothesis ¤ A/B Test ¤ Three tiers – max! ¤ Price high – promo code for discounts ¤ Quarterly Pricing Committee
- 58. Copyright DKParker, LLC 2018 Resources ¤ Pricing Page Teardown – podcast and email ¤ Neil Patel – Pricing Strategies and examples ¤ Tomasz Tunguz – Redpoint Ventures ¤ Sequoia – pricing your product ¤ Startups.com -
- 61. Copyright DKParker, LLC 2018 Inc 500 Data Quiz ¤ How much revenue do you need to do to land on the Inc 500 Top 10?
- 62. Copyright DKParker, LLC 2018 Inc 500 Data Quiz ¤ How much revenue do you need to do to land on the Inc 500 Top 10? ¤ Data from Top 10 Companies over eight year span ¤ Avg $50.64M ¤ High Average $147.78 ¤ Low Average $20.44M ¤ All from a minium base of $1M
- 63. Copyright DKParker, LLC 2018 Inc 500 Data https://www.inc .com/inc5000/lis t/2017 2017 2016 2015 2014 2013 2012 2011 2010 Average 1 $54.20 $116.20 $118.20 $195.60 $117.90 $59.50 $195.60 $325.00 $147.78 2 $37.40 $55.00 $34.40 $82.60 $49.60 $26.90 $38.00 $15.60 $42.44 3 $48.80 $33.50 $33.60 $85.10 $25.50 $21.80 $20.90 $37.50 $38.34 4 $26.80 $30.70 $83.70 $35.30 $1.9b $14.70 $17.10 $14.40 $31.81 5 $49.10 $33.40 $44.60 $77.70 $87.00 $55.00 $16.40 $17.90 $47.64 6 $19.70 $17.70 $32.90 $138.00 $45.70 $55.60 $14.20 $249.80 $71.70 7 $23.20 $15.70 $37.20 $27.30 $25.50 $12.40 $15.10 $26.20 $22.83 8 $59.60 $15.60 $30.50 $159.90 $23.90 $21.80 $15.20 $131.40 $57.24 9 $41.70 $42.40 $32.10 $26.30 $33.10 $31.70 $14.90 $19.10 $30.16 10 $17.20 $25.90 $31.10 $32.90 $18.60 $14.20 $12.40 $11.20 $20.44 $50.64 $37.77 $38.61 $47.83 $86.07 $42.68 $31.36 $35.98 $84.81
- 64. Copyright DKParker, LLC 2018 Telling a Financial Story ¤ Finance is the “language of business” ¤ The story comes down to numbers, and the model validates the story ¤ Investors want to see your model, and stress test it ¤ Models serve multiple purposes: ¤ Fundraising - Pitch deck storytelling ¤ Budgeting and forecasting ¤ Cash flow forecasting – “Runway”
- 65. Copyright DKParker, LLC 2018 The Model Supports the Deck ¤ The pitch deck provides a 5-year summary of the model ¤ The summary includes, at a high level: ¤ Revenue, cost of revenue, and gross margin ($,%) ¤ Operating expenses ¤ Profitability and cash flow breakeven ¤ Headcount ¤ Key drivers (e.g. customers)
- 66. Copyright DKParker, LLC 2018 Financial Models – Best Practices ¤ The success drivers (metrics, KPI’s) are simple and easy to understand. Avoid complicated formulas. ¤ The revenue categories map to one or more of the 15 revenue models ¤ The 5-year revenue ramp is realistic. ¤ Cost of revenue is complete, so gross margin is correct: ¤ Hosting, fulfillment, shipping ¤ Labor (customer service) ¤ Production costs
- 67. Copyright DKParker, LLC 2018 Financial Models – Best Practices ¤ Operating expenses are complete: ¤ Expenses grouped by department (fixed versus variable) ¤ Headcount - Roles, compensation and benefits ¤ Contractors - HR, Acctg., Engineering ¤ Travel expenses ¤ Marketing- Reflects go-to-market strategy ¤ G&A – Facilities, insurance, other operating expenses ¤ Investments are reasonably estimated: ¤ Intellectual property, equipment
- 68. Copyright DKParker, LLC 2018 Financial Models – Best Practices ¤ GAAP/Accrual-based accounting ¤ A great model answers the burning questions: ¤ When does the company become profitable? ¤ When does cash flow breakeven occur? ¤ How much investor capital is needed? ¤ Will more than one round of funding be needed?
- 69. Copyright DKParker, LLC 2018 Forecast Versus Actual ¤ Four dimensions of financial reporting: ¤ Actuals – QuickBooks (Accrual) ¤ Operating Plan – Budget (“Roadmap” for the year, quarter) ¤ Forecasting ¤ Variance Analysis: ¤ Actual to Plan ¤ Actual to Forecast
- 70. Copyright DKParker, LLC 2018 Common Mistakes ¤ Complex and confusing assumptions ¤ Confusing model design ¤ Metrics and success factors are not defined ¤ Overly aggressive revenue ramp ¤ Improper revenue model ¤ Underestimating expenses and cash needs ¤ Key milestones are not clearly defined
- 71. Copyright DKParker, LLC 2018 Template ¤ Start with Assumptions on Marketing and Sales ¤ Pulls to revenue tab ¤ Customer Growth and Revenue ¤ Investments tightly timed ¤ “Right things at the right times” ¤ Manage headcount expenses
- 72. Copyright DKParker, LLC 2018 Monthly Update – Forecast to Actual ¤ Total Revenue ¤ Total Expenses ¤ Profitability ¤ +/- from plan ¤ Trend data
- 74. Copyright DKParker, LLC 2018 Boards & Quarterly Planning Dave Parker @DaveParkerSEA www.dkparker.com/blog Dave@dkparker.com Dave@SevenPeaksVentures.com
- 75. Copyright DKParker, LLC 2018 Session 2 Agenda ¤ Quarterly Planning ¤ M&A ¤ Financial modeling ¤ Resources
- 76. Copyright DKParker, LLC 2018 Agenda ¤ Goal of Boards ¤ Types of Boards ¤ Recruiting Great Board Members ¤ Board Process – Flipping the model to make it useful for you ¤ Committees
- 77. Copyright DKParker, LLC 2018 Goal of Boards
- 78. Copyright DKParker, LLC 2018 Fiduciary Duty ¤ Fiduciary Duty is to represent all shareholders – smallest to largest ¤ Is this in the best interest of ”all shareholders” ¤ Vote their specific shares ¤ Represent common or preferred as a group ¤ Approved at Annual Shareholder Meeting (put that on your calendar as well, check Bylaws)
- 79. Copyright DKParker, LLC 2018 Support the CEO & Company ¤ You are the CEO – you report to the Board, however, they are not your day to day boss ¤ You recommend, they look for blind spots ¤ Nose in – Fingers out ¤ Quarterly, with regularly communications ¤ More frequent with pending topics (fundraising, deal, closing, etc) ¤ Coach: You and your team
- 80. Copyright DKParker, LLC 2018 Value to you ¤ Time is a forcing function: ¤ Did you hit deadlines? ¤ Are you still focused on the same tasks ¤ Experience ¤ Therapist
- 81. Copyright DKParker, LLC 2018 Types of Boards
- 82. Copyright DKParker, LLC 2018 Boards are People ¤ Advisors operate independent of formality – it’s a good place to start and not scary ¤ Starts 1:1 ¤ Come and go – establish value and chemistry ¤ Transitions to Board ¤ Executive Chair – member that acts as Chair, runs the meetings, sets the agenda (might be external)
- 83. Copyright DKParker, LLC 2018 Advisory Board ¤ Advisory Board has not legal/fiduciary duty ¤ Usually to support product, add creditability or test candidates for being solid BOD members ¤ Expectations and Milestones need to be documented – no FREE Stock - ¤ Advisory Agreements ¤ FI.co FAST advisory docs
- 84. Copyright DKParker, LLC 2018 BOD ¤ Odd number – includes CEO/Founder ¤ 3 or 5 – Avoid 7 until mature rounds ¤ Appointed as part of a fundraising round – Angel or VC ¤ Generally no economics – cost to the fund ¤ Independent Board member ¤ Options – >than Advisory Board, still stage/experience dependent ¤ Travel costs to be discussed
- 85. Copyright DKParker, LLC 2018 Board Attendees ¤ CEO ¤ Board ¤ Board Observers – previous rounds of investors ¤ Counsel ¤ Key executives that are presenting
- 86. Copyright DKParker, LLC 2018 Board Comp & Terms ¤ Options if you’re Venture Scale ¤ Cash if the company won’t exit ¤ How much Equity – varies on stage and skill ¤ Co-Founder ¤ Board Member ¤ Advisor
- 87. Copyright DKParker, LLC 2018 Board Terms ¤ Usually perpetual to start ¤ Move to three year with staggered end dates (Year)
- 88. Copyright DKParker, LLC 2018 NOTE: Zone of Insolvency ¤ If you company can’t pay your bills/payroll/ ¤ Role shifts from shareholders to creditors
- 89. Copyright DKParker, LLC 2018 Recruiting a Great Board
- 90. Copyright DKParker, LLC 2018 Types of Board Members ¤ Industry Experience – but they won’t be your VP Sales or Marketing ¤ Board Experience – stage appropriate ¤ Filling a Gap Experience – what don’t you have on your exec team you could use? Strategy, Marketing, Sales, etc. ¤ “Brand Names” – these generally have a shelf life ¤ Watching their Money
- 91. Copyright DKParker, LLC 2018 Recruiting ¤ Spend time getting to know them – don’t rush ¤ Get references from other CEOs ¤ Test Advisory Board role first before BOD ¤ Communicate expectations ¤ Don’t get someone that just validates you – need to add value
- 92. Copyright DKParker, LLC 2018 Diverse & Inclusive Teams ¤ Lay your foundation with your Independent Board Member ¤ Female Ready Board Members ¤ Him for Her
- 94. Copyright DKParker, LLC 2018 Mechanics ¤ Quarterly meetings ¤ Schedule the year in advance ¤ In Person/Phone optional ¤ Quorum ¤ Monthly Updates ¤ Financials ¤ Narrative: What you thought, what you learned, what you’re doing about it ¤ Calls/Lunches - as needed
- 95. Copyright DKParker, LLC 2018 Two approaches to the meeting Read the Deck ¤ Don’t prepare in advance ¤ Laundry List of everything you’ve been doing ¤ Read the deck to the Board ¤ Two+ Hour Monolog One (Two) Big Topic(s) ¤ Requires the Board to be prepared ¤ Public shaming if not ¤ Questions are asked and answered in advance ¤ Get feedback on one or perhaps two big topics
- 96. Copyright DKParker, LLC 2018 Quarterly Mechanics ¤ 7 days prior ¤ Google Doc/Slides ¤ Agenda ¤ Narrative with links (Doc) ¤ Comments available – not editable. Tag @Name with questions ¤ Slides ¤ Financial Packages – prepared by accountant ¤ Income Statement ¤ Balance Sheet ¤ Budget – Forecast to Actual
- 97. Copyright DKParker, LLC 2018 Quarterly Mechanics, Cont. ¤ Cap Table/Options available ¤ Important things your not doing now list ¤ Great Ideas come up all of the time ¤ From you, the team and your Board ¤ Quarterly Milestones ¤ Past ¤ Future
- 98. Copyright DKParker, LLC 2018 Meeting Agenda (Flipped) ¤ Big topic - What we need ¤ Next meeting dates ¤ Admin - Approvals of previous minutes, options, etc. ¤ Brief Update ¤ Narrative Review, Financial, Product, People ¤ What we thought, What we learned, What we’re doing about it (emphasis here) ¤ In Camera – Just Board for CEO Feedback ¤ Executive Session – Board + CEO and Feedback
- 99. Copyright DKParker, LLC 2018 One Big Topic – What you Need ¤ Context and background to the topic ¤ What is the one big thing you need help with this quarter? ¤ Product, Hiring, Fundraising, Selling, etc ¤ What do you need the most help with? ¤ Who can they introduce you to?
- 100. Copyright DKParker, LLC 2018 Board Minutes & Resolutions ¤ Two types of minutes ¤ Practical – where you start with the Agenda and add your action items and decisions are documented ¤ Legal – will come along later “significant discussion was held” ¤ Taken by one member – not CEO, Lawyer should do it for free ¤ Distributed as DRAFT immediately following Board Meeting, ask for feedback
- 101. Copyright DKParker, LLC 2018 Important things we’re not doing now List * ¤ Make a list of great ideas that you are not currently pursuing ¤ Pull the list forward from meeting to meeting ¤ Won’t forget them! ¤ Stop talking about them! ¤ Applies to Board Members as well ¤ What can you take on this quarter? Next Quarter? Next Year? Given current constraints ¤ * Shout out to T.A. McCann
- 102. Copyright DKParker, LLC 2018 In-camera & Executive Session ¤ After the main session ¤ In-Camera ¤ Board talks w/o the CEO ¤ Happens after each meeting ¤ Consolidated feedback to the CEO during Exec Session ¤ Executive Session - Board and CEO only ¤ Actions are noted – minutes are ”light” ¤ Happens after each meeting – leave enough time ¤ Always – so when it has to happen it’s not new
- 103. Copyright DKParker, LLC 2018 Board Makeup ¤ Should co-founder(s) be on the Board? ¤ At start, yes, you will fill three roles: President, Treasury and Secretary ¤ Can change over time ¤ Should other exec members be on the Board? ¤ Not usually – no hard and fast rules, but generally you have 100% of that persons attention without adding Board duties
- 104. Copyright DKParker, LLC 2018 Committees ¤ Compensation ¤ All Board ¤ CEO comp ¤ Bonus amounts – not to level of detail as CEO ¤ Audit ¤ Everyone ¤ Special ¤ M&A
- 106. Copyright DKParker, LLC 2018 Company Roadmap ¤ Where will you be in 18 Months ¤ Product ¤ People ¤ Customers ¤ Owner of category ¤ Should map to your financial model ¤ Should double your enterprise value
- 107. Copyright DKParker, LLC 2018 Q1 • Customer Acquisition • Revenue • Product or Service • People • Ops • Important Things We're Not Doing Yet • Owner for each
- 109. Copyright DKParker, LLC 2018 Quarterly Board Milestones ¤ Every topic has one owner ¤ Realistic quarterly goals ¤ Customer Acquisition ¤ Revenue ¤ Product/Service ¤ People ¤ Ops ¤ Important list of things were not doing yet
- 110. Copyright DKParker, LLC 2018 Customer Acquisition ¤ Who owns new customer acquisition ¤ How much will you spend this month/quarter? ¤ Today ¤ Channel effectiveness ¤ Who owns proposals ¤ Budget
- 111. Copyright DKParker, LLC 2018 Revenue ¤ Who owns Revenue? ¤ Profitability by project/product ¤ Collecting cash ¤ DSO/DPO/DIO
- 112. Copyright DKParker, LLC 2018 Product/Service ¤ Who owns product and service innovation ¤ Any product or service changes or innovations? ¤ Where will it create competitive advantage ¤ What will they cost to develop or implement ¤ How will it make or save you money ¤ Budget
- 113. Copyright DKParker, LLC 2018 People ¤ Who Owns People ¤ Right People on the Bus? ¤ Right Seats ¤ Wrong People off the Bus ¤ What staffing changes do you need to make this quarter and each following quarter? ¤ Budget
- 114. Copyright DKParker, LLC 2018 Ops ¤ Who owns Ops? ¤ Product or Service delivery improvement ¤ How will you measure the result ¤ Who owns inventory? ¤ Who owns Employee Satisfaction ¤ How will you measure it ¤ Budget
- 115. Copyright DKParker, LLC 2018 Important Things We’re Not Doing Yet ¤ CEO Owns – this is a focus topic ¤ What projects would you do if you had the cash? ¤ How much free cash do you need to create to deliver those projects? ¤ Estimate the free cash + time ¤ Drop these projects into that specific quarter ¤ Budget
- 116. Copyright DKParker, LLC 2018 Fundraising Plan ¤ Your plan reflects what you’re doing with or without a funding partner ¤ Marketing and Sales inputs create your Forecast vs Actual ¤ These Assumptions go into the model ¤ Funding risk goes down with a plan that is already being executed
- 117. Copyright DKParker, LLC 2018 Workshop ¤ Start filling you quarterly plan ¤ New customer acquisitions goals ¤ Revenue and profit targets ¤ Investments ¤ Place new projects or people in a future quarter based on your best estimate ¤ Aspirations – as long as they are in future quarters ¤ Rule of 40 - 20% growth + 20% Profit
- 121. Copyright DKParker, LLC 2018 Resources ¤ Folder with: ¤ Productize Service Financial Model Template ¤ Quarterly Board Milestones ¤ Marketing Funnel ¤ Financing Due Diligence Checklist
- 122. Copyright DKParker, LLC 2018 Opportunity to Review Pricing ¤ Quarterly ”Pricing Committee” ¤ Doesn’t mean prices go up every quarter ¤ Where are their external factors to consider? ¤ Where is the margin opportunity?
- 123. Copyright DKParker, LLC 2018 Preparing for Fundraising
- 124. Copyright DKParker, LLC 2018 Fundraising Process ¤ Faith Capital ¤ Friends and Family ¤ Should be best terms ¤ Risk Capital ¤ Institutional investors ¤ Venture capital – not generally for service companies ¤ Growth Capital ¤ Funding based on the numbers & Data ¤ Banking
- 125. Copyright DKParker, LLC 2018 Debt & Equity ¤ Debt – a note to be paid back. Secured or unsecured. Payback terms, interest rate ¤ Equity – the sale of new stock in exchange for equity. No interest rate, sale of part of your company. They equity investor gets a return in dividends or at the sale of your company
- 126. Copyright DKParker, LLC 2018 Fundraising Prep ¤ Use of Proceeds ¤ 18-month plan for required capital ¤ Priority of spend based on plan ¤ Marketing ¤ Sales ¤ Product ¤ People ¤ Calculating ROI
- 127. Copyright DKParker, LLC 2018 Telling Your Story ¤ Bankers are generally centralized in decision making ¤ Package the story so they can sell it for you ¤ Can your story be repeated ¤ Create momentum and a reason to close
- 128. Copyright DKParker, LLC 2018 Tools ¤ Pro-forma or Financial Model ¤ Forecast vs Actual ¤ Tracking results of your current spending ¤ Showing momentum ¤ Investment Deck ¤ Tracking Investors – spreadsheet is fine ¤ Name, contact info,
- 129. Copyright DKParker, LLC 2018 Tracking Campaign Company Name Email Phone Sent Last Contact Notes
- 130. Copyright DKParker, LLC 2018 Campaign Approach ¤ Create optionality with multiple choices ¤ Choice is good for you ¤ All materials ready in advance ¤ Introductions where possible ¤ Cold call where not
- 131. Copyright DKParker, LLC 2018 Investment Deck ¤ Key slides ¤ Company History ¤ Team ¤ Market ¤ Performance and Forecast ¤ Use of proceeds ¤ Spend ¤ Expected Returns ¤ Tracking Progress
- 132. Copyright DKParker, LLC 2018 Executive Summary ¤Two pages ¤ ”Don’t Bury your Lead” ¤ Your headlines and opening paragraph tell the story ¤ It’s designed to get the next meeting, not to get a check ¤ Stay at 10k feet and out of the weeds ¤ Numbers should sync with deck and forecast!
- 133. Copyright DKParker, LLC 2018 Forwardable Intro Email ¤ Great blog post from Alex Iskold, Techstars NYC ¤ The associate needs to be able to repeat your message ¤ Make it easy to get the introduction ¤ Avoid buzzwords