The Art of the Fast Pitch: Your Business Plan in 1 Minute Flat!

Recently the Tech Coast Angels held their ever popular, yearly fast pitch competition at UCLA. After several rounds, 12 start-up companies were selected to make the fast pitch.

Each company was given 1 minute - exactly. In that time, they had to impress a team of 12 judges. At the end of each presentation, the judges held up placards, rather like they do at the Olympics ice skating competition, with two scores going into the mix - presentation and investability.

If you are wondering how much can one really squeeze into a minute - the answer, well, a lot. The teams did admirably presenting their business plans in 60 seconds.

Not co incidentally, teams that scored high for investment opportunity, also got top marks for presentation. It is clear that an effective pitch is key in creating a strong impression on investors.

In a 1 minute pitch, it is very important to drill down to the basics and select a few key highlights, and pare the entire pitch down to these points.

There are a few key ingredients that must go into the perfect pitch

1. The idea: If the essence of the plan can be distilled into one sentence, great. If not, explain the pain that this plan will ease. Sometimes that is easier, and quicker, to explain.

2. The people: This is crucial so don’t skip this step. You don’t need to recite titles of people or who is on your board. Just say “I am Sam and I have 10 years of expertise in …..”. Investors maintain they invest in people, not ideas.

3. The competition: While there is not enough time to trash the competition, you cannot ignore them either. One well thought out line about how you are different from the crowd, will take you a long way towards credibility.

4. The customers: If you have a real client - tout it. There is nothing like the endorsement of knowing that someone else is taking a chance on your company.

5. Intellectual property: Very often investors might like an idea, and even how the company is executing, but might be leery about investing, if they do not have an assurance that the technology is protected. So if you have a patent, let them know, and the rest will be easy sailing.

A fast pitch is not meant to get you funding. It is meant to give the investors enough of a flavor to whet their appetites, so they will want to talk to you further.


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LinkedIn To the Big Cash: Looking for $13M

So LinkedIn is finally making money….. Hand over fist. The company is projected to reach revenues of over $60M this year - it turned profitable for the first time, in the early part of 2006.

So why is the company now looking for Series B funding, that too for the paltry sum of $13M (they are reputedly close to sealing the deal)? The speculation is that the company is either being prettied up for an acquisition or they have huge expansion plans in the works. Clearly, either way the company would have nowhere to go but up.

With social type sites like Facebook and MySpace reaching ridiculous valuations, LinkedIn with its niche business focus is actually being considered as having a “reasonable” valuation at $250M. Besides, even with its 9 million members, LinkedIn still has room to grow. And no doubt it will discover new revenue streams as it flows along. Already, the company is generating decent cash flow from its premium memberships, subscriptions from large companies who use LinkedIn for recruiting (45% of revenue), and from job postings.

And lastly, there is the financial backing. In Series A, the company raised $4.7M led by Sequoia. Series B was $10M, raised in 2004 with Greylock Partners (of Red Hat & Ascend Communications fame, amongst others) leading the charge. Most notable, however, were the whos-who list of 14 Angels who also participated in that round - including Marc Andreessen, co-founder of Netscape, Joe Kraus, co-founder of Excite, Josh Kopelman, founder of Half.com, and Peter Thiel, co-founder of PayPal. With a celebrity list like that standing behind it, my money would be on LinkedIn making it really big!

Company: LinkedIn
Comany location: Mountain View, CA
CEO: Reid Hoffman
Funding received: $14.7M in Series A, Series B
Investors: Sequoia Capital, Greylock Partners
Angels: Marc Andreessen, Co-Founder of Netscape and Chairman of Opsware,Andrew Anker, Co-Founder of Wired Digital and EVP of SixApart,Andrew Beebe, former CEO of Bigstep and President of Energy Innovations, Robert Clarkson, former COO of CKS Group and Partner at Jones Day, Rob DeSantis, Co-Founder of Ariba, Tom Gruber, Founder of Intraspect Software, Josh Kopelman, Founder of Half.com, Joe Kraus, Co-Founder of Excite and CEO of JotSpot, Loïc Le Meur, Founder of French startups RapidSite, B2L and Tekora, Jun Makihara, former Managing Director of Goldman Sachs Japan, Sunil Paul, Co-Founder of Brightmail and Freeloader, Gil Penchina, VP International at eBay, Peter Thiel, Co-Founder of PayPal


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Crowdcasting: Outsource your R&D for $50k and up

innocentive logWhat if your company had a niggling problem that you just could not solve? Why not turn the problem over to a hundred of the best minds around? And all for less than the cost of mounting the resources and trying to solve the problem yourself.

The idea of declaring a reward for a solution to an unsolvable problem, has been around since from the beginning of time. High profile prizes like the $10 million X-prize awarded to the first team to build a spacecraft capable of carrying humans to space twice in two weeks, have grabbed the headlines in recent times.

Now companies are springing up for the sole purpose of matching the bounty hunters with the big prizes, using “crowdcasting” as the means of finding the best minds.

InnoCentive, an Eli Lilly spinoff received $9M in Series A venture funding in a round led by Spencer Trask Ventures. Using the model of crowd casting, the company is posing problems for which major companies are willing to pay upwards of $50,000, to a set of experts. This appears to have produced new and innovative solutions, often put forward by people with expertise outside the immediate realm of the problem - a tough toxicology problem was solved recently, by a crystallographer.

So how beneficial is “prize philanthropy” concept? For the company posing the problem, it seems like a win-win situation. They benefit from having a Darwinian selection of ideas, from which the best solution wins. So how about the cost? While the prize has to be big enough to attract enough attention, the overall cost of the combined research going into the problem is very likely to be much more than the prize. For example, the amount of money that was spent by all the teams competing for the X-prize was well above the $10 M offered!

After open source, open expertise might very well be the next wave. What remains to be seen is who really benefits from the trend.

Company: Innocentive
Comany location: Andover, MA
CEO: Darren J. Carroll
Funding received: $9M
Investors: Spencer Trask Ventures, Lilly Ventures, Omidyar Network


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Gaming, Web 2.0, Google Maps and Areae.net

Former Sony Online Entertainment’s Chief Creative Officer, Raph Koster starts Areae, a combination of virtual worlds and entertainment. Areae means many places or “many worlds” in Latin. Susan Wu describes it as Second Life meets Web 2.0. Areae received funding from Crescendo Ventures and Charles River Ventures, but the amount was not disclosed.

There have been rumors that Google expects to open up Google Maps and SketchUP for a meshup to create your own cities and google life.

There is clearly a need for more MMOG (massively multiplayer online games) and as more and more communities discover the joys of the game, the participation is bound to go up. I don’t buy the hype of alternate economies (most of the numbers you hear about people making zillions of $$ in these games are fake) but the concept has a great value as an entertainment franchise, and I am glad that the developers are fostering it.

(via Susan Wu’s VC blog and Gamebizdaily)

Company: Areae Inc.,
Investors: Crescendo Ventures and Charles River Ventures
Amount of funding: Not disclosed.
Location: San Diego


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