Section 2

PRESENTING


YOUR OPPORTUNITIES... 


Section 2
 

PRESENTING 

YOUR 

O P P O R T U N I T I E S 

TO EQUITY 

INVESTORS 

Company/Technology/Product 

Market Assessments 

Goals and Objectives 

Challenges/Requirements/Opportunities 
PRESENTING YOUR OPPORTUNITIES TO EQUITY INVESTORS 

Advanced Organizer
 

Most ATP-funded firms are positioning themselves to become high-potential ventures. Issues related to financing, developing joint ventures, and commercialization 

strategies were addressed in preparation for submitting an initial ATP proposal. 

Advanced technology firms often have a long-term appetite for capital, however, 

and must be diligent in their efforts to attract it. A diligent but reasoned approach 

to investment will increase the likelihood that private sector funds will be available 

when needed for your company’s growth. The objective of this section is to provide 

guidance on a method for succinctly representing your opportunity in an oral presentation to private sector investors. 

The section begins with a description of the typical contexts in which such 

presentations are made. These include: (1) presentations to groups at national 

and/or regional events; (2) presentations to local groups of business angels; and (3) 

presentations to potential partners/investors. This chapter deals ONLY with personal presentations and does not address other approaches to finding potential 

allies/investors, such as press releases, computerized matchmaking, or advertisements. Although these can be useful adjuncts to other initiatives, personal presentations provide both parties with the opportunity to assess the individuals involved 

and to begin the development of a relationship. 

The remainder of the section consists of a fictitious presentation to potential equity investors. A set of viewgraphs, sample narrative, and explanatory notes 

are included. It is just an example, and can be modified to meet individual needs. 

It is important for busy entrepreneurs to develop a procedure that will 

allow them to qualify potential partners/investors quickly and to diligently pursue 

promising ones while graciously closing the loop with others. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 117
 
Opportunities for Making Personal Presentations
 

Presentations at National and/or Regional Events 

Once you have developed your business plan, creating a set of presentation materials that you can use to bring your business opportunity to the attention of potential 

strategic allies and investors is invaluable. Although such presentations are often 

made within the context of individual meetings with qualified leads and referrals, 

national, regional, and local investment events provide an ideal context for making 

a presentation to numerous organizations concurrently. If it appears that historically 

a specific event has attracted the types of organizations that are of interest to your 

firm, it will be cost-effective to participate in that event. At the same time, you 

should exhibit restraint in making any public presentations when preparing for an 

Initial Public Offering and/or if you have signed a “stand-still” agreement. Legal 

restrictions apply in these situations. 

Calendar of Events 

Many investment events are promoted within industry trade journals. A sampler of 

annual events that might be appropriate for well-prepared entrepreneurs to attend 

is listed below. In some cases, geographic and/or topic restrictions apply. Most of 

these events involve a screening process to select viable participants based on a preliminary review of an executive summary and/or business plan. You should anticipate participation fees of between $200 and $900. Names of some of the more well 

known investor events are listed below: 

◗ 

◗ 

◗ 

◗ 

◗ 

◗ 

◗ 

◗ 

◗ 

◗ 

◗ 

Arizona Venture Capital Forum 

Bio Investment and Partnering Conference 

Florida Venture Capital Conference 

The Great Midwest Venture Capital Conference 

Illinois Venture Capital Conference 

MidAtlantic Venture Fair 

North Coast Growth Capital Conference and Technology Showcase 

Pittsburgh Venture Capital Conference 

Software Investment Conference 

Upstate New York Venture Capital Forum 

Venture Market East 

118 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Presentations to Local Business Angels
 

Many communities have groups of business angels and institutional investors which 

meet frequently to learn about new business opportunities. These events tend not 

to be well advertised. The best way to find out about them is to contact your local 

Chamber of Commerce. Inquire whether there is a local venture capital or investment group that meets regularly. Indicate that you are interested in presenting your 

business opportunity and would like to contact the person responsible for scheduling presenters. For example, if you were to contact the Rochester Chamber of 

Commerce, you would find that a Venture Capital Breakfast has been held there on 

a monthly basis for several years. There is room on the agenda for each of these 

breakfasts for three local businesses to present their business opportunities. The 

audience typically consists of 30-40 people, including service providers and potential investors. Most large communities have such groups. 

Although larger events run by institutional investors tend to be much more 

effective than smaller, more local events, the value of participating in local investment events is that they provide a context for you to appear in front of the community’s establishment. The contacts you make here may know people in larger financial communities, and may be able to assist you with networking. 

Individual Presentations During Site Visits 

A presentation made within the context of an investor or partnering event is the 

first step in developing a successful relationship. A desirable outcome is for a potential investor/partner to request a site visit. 

Before your visitor arrives, be sure to determine the objectives of the visit 

and whether others will accompany him or her. It is important to understand both 

the roles and objectives of the visitors so that you can determine what information 

is important to share with them. 

Information that you provide must be relevant to your visitors’ goals. If the 

people making the site visit represent a corporate venturing area and have a strong 

background in marketing and sales, it would be inappropriate to spend a great deal 

of time talking about research and development. It would be far more important to 

talk about value creation and marketing and sales initiatives. Provide your visitor 

with materials that they can use to sell up-line. Decisions regarding partnering 

and/or investing are rarely made by one person. Others need to be convinced of the 

value your opportunity has for their organization. Therefore, always provide an 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 119 
appropriate packet of information that he or she can share on your behalf. If the 

visitor has not signed a confidentiality agreement, be certain that you share only 

non-proprietary information. 

Preparing a Winning Presentation 

If given in its entirety, a 

presentation addressing all 

the topics covered in this 

section could run between 

30 minutes and an hour. For 

a shorter presentation, such 

as is typical for presentations to a group of potential 

investors, you will need to 

modify your viewgraphs 

based on the needs of your 

audience. 

Irrespective of where you are making your presentation, you will find it invaluable 

to have a well-prepared set of slides or transparencies to draw upon. In this section, 

we provide guidance on how to prepare and deliver a presentation to investors. The 

following opportunity by Soarrell Medical Systems is fictitious. It is based upon 

issues and trends in information systems as they apply to health care. 

This section includes topics and sample slides or transparencies designed to 

assist potential investors in quickly previewing the business opportunity of your 

company, product, or division. (The term viewgraph will be used throughout and 

will refer to either slides OR transparencies). 

Keep in mind that you will want to vary your presentation depending upon 

your audience and your commercialization strategy. For example, if you are one of a 

diverse group of firms making a presentation to potential investors, your audience 

will need to pick up key concepts about diverse business opportunities quickly. 

Within an hour, your listener might hear a presentation on a new fiber optic material, a golf course, and a new medical cure. Your goal must be to focus the potential 

investor quickly on your opportunity, create a favorable impression, teach the listener key concepts, and provide financial information to serve as the basis for further 

discussions. In order to do this effectively, you must control the sequence of information and its manner of presentation. 

The potential investors for whom this presentation is appropriate include 

venture capitalists, investment bankers, potential strategic partners, and upper management within your corporation. 

If you are presenting your opportunity in a more homogeneous context, 

e.g., all of the presentations at the event relate to one focused area, you could spend 

less time “teaching” the audience about pertinent industry drivers and instead 

focus on the unique implications that your opportunity may have. This would avoid 

redundancy across presentations. 

The presentation following outline can be used to reflect the business 

opportunity of an entire company or a strategic business unit within a larger firm. 

When deciding upon the scope of the business opportunities being presented, your 

goal should be clarity. Often, individuals in contract research and development 

120
 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
firms try to represent the business opportunities spanning their entire company. 

This can be confusing. If your company is involved with highly diverse technologies, it may be best to focus on the opportunity related to a Strategic Business 

Unit (SBU). 

Sample viewgraphs for each of 25 topics follow, accompanied by explanatory 

notes. The set of viewgraphs presents an opportunity for one fictitious firm— 

Soarrell Medical Systems. If you wish to obtain a sense of the overall business case 

being made, scan the set of viewgraphs and the accompanying narrative first. Then, 

refer back to the accompanying notes associated with each viewgraph in order to 

understand why the presentation was developed in this fashion. 

If you are unfamiliar with making business presentations, or if you wish 

to try a new approach, it is recommended that you try to emulate the set of viewgraphs presented. Once you have a “rough cut” of this set and are familiar with the 

approach, you can pick and choose and re-sequence the viewgraphs to meet the 

needs of different situations or personal preferences. The feedback we have 

received consistently from hundreds of investors over the last several years is 

that this format makes it very easy for them to form an initial impression of an 

opportunity. They can then start a one-on-one conversation at a higher level 

with companies in which they have an interest. 

Visuals 

The visuals that follow are grouped into four categories: 

Company/Technology/Product; Market Assessment; Goals and Objectives; and 

Challenges/Requirements/Opportunities. Each viewgraph page contains explanatory 

notes with the following subheadings: 

WHAT A clear description of the type of information to be
 

included on this viewgraph
 

WHY An explanation as to why that information is important for 

the investor’s decision-making process 

PITFALLS TO AVOID Typical mistakes frequently made by 


technology entrepreneurs
 

VARIATIONS Variations on the theme to be expressed 

VIEWGRAPH # A sample viewgraph. Please note: Soarrell 

Medical Systems is a fictitious company and the data provided 

are fabricated. Do not use these data as a source of information. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 121 
Some information in this 

section is taken from a proprietary document called 

Knock Their Socks Off: 

Making Winning 

Presentations to Investors, 

by Jenny C. Servo and Paul 

D. Hauler. 

NARRATIVE Accompanying script for the reader to see how the 

verbal presentation and the accompanying visuals work together. 

HIGHLIGHTS Points that should be included in this section of 

your presentation. 

The viewgraphs are intentionally brief. Remember: readers are not listeners! 

The goal is to capture the audience’s full attention. The viewgraphs you ultimately 

produce must emphasize and support key points that will be discussed during your 

presentation. The viewgraphs should not duplicate all the information you plan to 

express verbally. 

You should aim to represent key concepts visually in 25 words or less. The 

reason for imposing this limit is to provide a simple index for assuring that you do 

not present too much information visually. Remember, the more words added to the 

viewgraphs, the greater the probability that the audience will become readers, 

rather than listeners. You will lose momentum and, more importantly, lose the 

opportunity to move potential investors through the first decision gate. That gate 

opens communication with the audience after the presentation. Use a pie chart, a 

simple table, or a picture to express a concept, whenever appropriate. Images are 

much easier for most listeners to retain. 

When reading this section, your goal should be to understand the nature 

of the presentation. Before actually making the presentation, assess the unique 

characteristics of the audience, the opportunity, and the time constraints presented. 

Modify the final presentation as appropriate, by removing or adding materials. 

Keep in mind that this outline is intended to serve as a guide, not as a straight 

jacket. The presentations developed will be variations on the theme provided. First 

master the theme—then, improvise, as appropriate, to connect with your audience. 

122
 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
1 Company/Technology/Product 

Viewgraph 1:
 

Title Viewgraph
 

Viewgraph 2:
 

Mission
 

Viewgraph 3:
 

Management Team
 

Viewgraph 4:
 

Technology/Product
 

Viewgraph 5:
 

Product Feature, Advantages, 


and Benefits (FABs)
 

Viewgraph 6:
 

Success Ingredients
 
COMPANY/TECHNOLOGY/PRODUCT 

■ 	

■ 	

■ 	

■ 	

Who are you? What is the nature of your opportunity? 

What does your company do? What gives it a unique edge in the marketplace? 

Who are your management team? What are their strengths? 

What technology/product/service are you selling? What are its key features? 

Can you present a visual picture? 

© DAWNBREAKER PRESS, 1998	 EQUITY INVESTORS 125
 
VIEWGRAPH 1 

Viewgraph 1: Title 

SOARRELL MEDICAL SYSTEMS 

An Equity 

Investment Opportunity 

for 

organizations interested 

in enhancing patient care 

and managing costs 

Joan Smith, Ph.D. 

President 

What 

A title viewgraph simply presents who 

you are, the organization with which you 

are affiliated, and the nature of your 

opportunity. State on the title viewgraph 

whether this is an equity, joint venture, 

or licensing opportunity. Then provide a 

generic statement that describes the type 

of partner(s) or investor(s) in which you 

are interested. Unless you are able to 

easily produce slides or color transparencies, it is best that you not date the title 

slide or specify the event for which the 

viewgraphs have been prepared. That 

way, your viewgraphs will be reusable. 

Why 

When making a presentation at a partnering or investment event, there is often a 

flurry of activity among speakers as audience members enter and/or exit. A title 

slide gives the audience time to move about and re-orient. In this way, they will be 

focused when you begin to address substantive parts of your talk. 

The title slide alerts the audience to the set of filters they should apply 

when listening to your opportunity. Depending on your commercialization strategy 

and how it relates to their interests, the audience will want to know more about 

specific parts of the presentation. 

Pitfalls to avoid 

Select a title that demonstrates that you know what is important to the 

audience, i.e., investment and/or partnering. If you select a title that only emphasizes the technology or the industry, it sends the message that your approach is academic, technical, and one-sided (what’s in it for you). In this type of presentation, it 

is important to establish oneself as a businessman or woman, and to convey the 

opportunity as a benefit to those you wish to involve. 

126 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Narrative 

Good morning. I’m Dr. Smith, the President of Soarrell Medical Systems. In the next few 

minutes, I will highlight those factors that make our opportunity worthy of your consideration. Soarrell Medical Systems is positioning itself to become a dominant player in the 

Computerized Patient Record market focusing on two niches: portability of patient records 

and patient education. We are seeking either a strategic alliance with a large HMO or an 

infusion of venture capital funds that will take us through initial product introduction. Long 

term, we are looking to be acquired by a larger supplier of practice management software. 

Highlights 

Notice that this presentation does NOT repeat information presented on the viewgraph. Instead, the narrative embellishes the key points in the visual presentation. 

The best presentations are those in which the speaker doesn’t read from a text, but 

rather elaborates upon the viewgraphs in a predetermined fashion. The result is a 

presentation that looks impromptu, but is highly polished. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 127 
VIEWGRAPH 2 

Viewgraph 2: Mission 

SOARRELL MEDICAL SYSTEMS 

Mission Statement 

■ develop, produce, market, and support 

■ proprietary patient-oriented software tools and devices 

— biometric smart cards & readers 

■ interface with computerized patient record (CPR) systems 

■ patient education within medical practices	 

What 

A mission statement is a clear, succinct 

statement describing: 

◗ 

◗	 

◗ the market or industry in which 

you operate 

the business functions your company 

performs, i.e., research and development, marketing, manufacturing, 

distribution 

your company’s sustainable 

competitive advantage 

Why 

In order to shape how the investor 

listens to your presentation, it is important to clarify at the outset what is most fundamental to your company—its mission.

If you do not identify what your company does, the listener will spend time trying to 

ascertain this during the first few minutes and will miss other important information. 

Lead with the most fundamental information. Indicate which business functions your 

company or division performs: contract research and development, manufacturing, 

customer service, marketing and distribution. Clarify what is unique about your company and what will give your firm an edge in the marketplace, i.e., your sustainable 

competitive advantage. Also, name the market or industry in which you compete. 

Presenting this information at the outset provides the investor with a frame of reference and allows him or her to listen to your presentation intelligently. Also, be sure 

to mention the nature of your commercialization strategy. 

For assistance in developing 

your mission statement, see 

Workbook Activity 4. For 

assistance in articulating 

your sustainable competitive 

advantage, see Workbook 

Activity 2. 

Pitfalls to Avoid 

Many times, entrepreneurs confuse “vision” with “mission.” Although a vision 

statement is important, do not present it in this presentation. Vision statements 

tend to be “soft.” Many new start-ups tend to focus on the creation of a culture in 

their vision statements, rather than emphasize business issues. The culture is of no 

interest to an investor, although it may be very important to you. If you talk about 

128 EQUITY INVESTORS 	 © DAWNBREAKER PRESS, 1998 
“vision,” you are likely to get yourself into trouble, as the investor may attach 

unwanted stereotypes to you and your company. 

Also, DO NOT make statements that would give the listener the impression that your mission is fragmented or unfocused. Statements like, “We are a contract research and development firm that performs cutting-edge research in any 

field” is a killer. What you have told the investor is that you chase research and 

development money and will do anything. Investors want to create value and not 

simply fund research and development. 

Narrative 

Soarrell Medical Systems develops unique software and hardware devices that interface with 

computerized patient record (CPR) systems. We are organized to provide excellent customer 

support. We also share the risk with clients and facilitate the shift to a new patient-practitioner relationship through training. 

Highlights 

Although the printed mission statement is somewhat dense and abbreviated, it 

clearly provides the potential investor with the appropriate frame of reference. The 

investor immediately knows what business functions Soarrell Medical Systems performs and what is unique about the firm. In the accompanying visuals, key words 

are clearly laid out and correspond with the unique features highlighted. Although 

the presenter does use some jargon (CPR), it is defined. 

Variations 

If you are presenting a business opportunity for a new strategic business unit, a 

spin-off business, or a division, it will be important to show your relationship to the 

parent organization and to clarify the mission of that organization. You might find 

that you need to add another graphic to show the relationship between this entity 

and others. Keep both the explanation and the graphics simple. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 129 
VIEWGRAPH 3 

Viewgraph 3: Management Team 

SOARRELL MEDICAL SYSTEMS 

Management Team 

■ Dr. Joan Smith-President 

■ Led 2 successful start-ups in medical industry 

■ Dr. Reginald Bolton-Vice President, Tech Transfer 

■ Skilled Practitioner, advocate of CPR, Inventor 

■ Mr. Trevor Baker-Vice President, Finance & Admission 

■ Twenty years’ experience in medical business administration 

What 

Investors prefer management teams to 

individual proprietors for company management, as the latter are usually more 

vulnerable and less well-rounded. In this 

viewgraph, mention facts related to: 

◗ 

◗ 	

◗ 	

◗ 	

management experience 

intellectual property developed 

by members of your team 

experience in your chosen 

marketplace 

other unique characteristics of your 

team that are relevant to investors 

Why 

Investors look for Grade A management teams, so it is important that you promote 

yourself. This is accomplished by making statements that will engender confidence 

in the ability of your management team to implement the business opportunity you 

are presenting. Establish credibility at the outset! Highlight the strengths of your 

team and their knowledge of the marketplace. Mention any unique intellectual 

property your firm may possess. 

Pitfalls to Avoid 

Although scientists and engineers have a natural tendency to highlight certain 

things that are significant to them—including the number of articles they have published, or the number of papers they have presented at international conferences— 

DO NOT feature this type of information. It reinforces in the investor’s mind the 

stereotype of the scientist who is interested in obtaining funds for research and 

development, but who isn’t really interested in creating value. While some readers 

may find this counter-intuitive, the point cannot be overstated. 

130 EQUITY INVESTORS 	 © DAWNBREAKER PRESS, 1998 
Variations 

If, prior to receiving your ATP award, you primarily performed contract research 

and development, highlight the unique scientific credentials of primary players in 

your company. Combine this information with statements regarding successful performance on contracts, successful commercialization through licensing, and patent 

protection acquired. Such information will demonstrate to potential strategic 

alliance partners that you are experienced in these areas and will engender more 

confidence regarding teaming arrangements. 

If your company is small and lacks a diversified management team, draw 

attention to the members of your Board of Directors, Advisory Board, or consultants 

and staff. Experience provides investors with confidence! If you do not have it, 

actively try to recruit such people to your company prior to making your presentation to investors. 

Narrative 

Soarrell Medical Systems is based in Boulder City, CO. Two members of our management 

team—Dr. Joan Smith and Dr. Reginald Bolton—have been with the firm since its formation in 1996. Mr. Baker was explicitly recruited to our management team earlier this year. 

Dr. Bolton, Vice President of Tech Transfer, currently chairs a national CPR specification committee, practiced family medicine for 10 years, is the inventor of Soarrell’s portable 

patient verification card, and is responsible for developing our training packages. 

Mr. Trevor Baker is the most recent addition to the team and comes to us from the 

Alliant Health Systems Network. He has 20 years of hospital administration experience. In 

the CPR arena, he has a particular interest in patient confidentiality. 

I’m Dr. Joan Smith, the President and founder of Soarrell Medical Systems. This is 

my third start-up company. In 1988, I started a software development firm that was 

acquired by Microsoft in 1993. In 1994, I was brought in as the CEO of a 5-year-old firm 

which specialized in archiving information for records management. Between 1994 and 

1996, I led that company in a new direction which resulted in a 200% increase in sales. In 

1996, I founded Soarrell Medical Systems with Dr. Bolton. 

Highlights 

It is important to mention the location of your firm, because many investors 

limit their investments to firms that are within a two-hour distance from their 

office. Small start-ups are risky by their nature; you should highlight the amount 

of time your company has been in existence as appropriate. Mention those features 

of your management team’s experience that will contribute favorably to investor 

confidence. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 131 
VIEWGRAPH 4 

Viewgraph 4: Technology/Product/Service 

What 

Once you have made your mission clear 

to investors (Viewgraph 2), and have 

given them a reason to listen to you 

(Viewgraph 3), you are ready to tell them 

about your technology, product, and/or 

service. Include a graphic representation 

of your product at this point. If your 

product is small in size, or if you have a 

small-scale model of the larger item, it is 

better to display the real thing. Nothing 

makes an impact like holding up a sample of the product. Depending upon 

your product’s complexity, a series of 

viewgraphs may be valuable at this 

point. Without being overly complex, you need to convey to the listener what you 

have, before you move on to the next topic. 

SOARRELL MEDICAL SYSTEMS 

Products 

ANNUAL PHYSICAL & 

PATIENT VERIFICATION SYSTEMS 

■ Portable patient verification cards and software 

— biometric voice encryption 

■ Patient education archives-Annual Physical 

— CD-ROM and internet 

Why 

For the most part, investors are looking to reduce risk. The more tangible the product or service, the less risk likely is associated with the project. Many investors are 

only interested in companies that are already selling products, as this shows market 

acceptance. If you are selling the product, make sure that it is abundantly clear in 

your accompanying dialogue. 

Pitfalls to Avoid 

The most common mistake made by scientists at this point in their presentation is 

to include either too much or too little information. Those who include too little 

tend to err on the side of paranoia. Those who include too much information do so 

because this area is their comfort zone. Whatever you do, DON’T fail to include a 

visual of your product. The worst presentations we have seen are those which have 

no visual aid regarding the technology, product, or service. Remember: the investor 

has to learn quickly about your company. If you fail to provide enough information, 

132 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
he will make an assumption (which may be faulty) about the product, or become 

distracted by trying to figure it out. Do not try to include a video in your presentation: switching mediums often results in fumbling and loss of momentum. 

Variations 

If your company has a family of related products, present a schematic that demonstrates what is common to the product family. The unifying factor may be a proprietary component that is used in a variety of products, or a technology base which is 

applied in different areas. Strive to demonstrate what it is that unifies your products 

or services; otherwise your opportunity may appear fragmented. Fragmentation 

presents a bad image to investors. They appreciate focus. 

Narrative 

Our initial product entry is a package that contains two items: a patient smart card and a 

computer archive with both internet and CD-ROM access. This package is called the “Annual 

Physical and Patient Verification System.” The Portable Patient Verification CardTM was 

designed by Dr. Bolton and uses a combination of known technology and patented biometric 

voice encryption algorithms. As you can see, this card looks like an ordinary credit card. This 

smart card has the patient’s picture, name, and address on the front. Embedded in the card is 

an integrated circuit that contains pertinent information regarding the individual’s immunization status, chronic problems, drug allergies, relevant family medical history, medical 

insurance status, and the like. Smart cards have read-write capability. Our unique biometric 

voice encryption algorithm assures that information on the card is activated and verified 

only by the patient, and that this is done on an annual basis. Health smart cards will be of 

great value to patients. Instead of a medical alert card, the individual will carry the patient 

smart card in his wallet. In case of an emergency, the card can quickly be scanned by ambulance or emergency personnel, or by modified home security systems of bedridden patients. 

We have piloted the use of this card in a number of medical practices that are currently using computerized patient record software. It is used within the context of the Annual 

Physical Exam episode. Prior to the physical exam, a member of the clinician’s staff reviews 

the relevant information that is contained within the CPR system with the patient, allowing 

the patient time to note any errors. This procedure is much akin to the process used at a bank 

for verifying on-line information regarding one’s bank account. Once verified, a photo is 

taken and the patient is issued the Portable Patient Verification Card. Every year, prior to 

the physical exam, the information on file is reviewed for accuracy. It also is updated, and a 

new card issued. 

The other component of this “Annual Physical and Patient Verification System” is 

an archive containing information regarding the most common ailments detected during a 

physical exam. The archive is stored in local libraries (CD-ROM) and/or on a server for the 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 133 
doctor’s home page. Printed copies are also available from the vendor upon request. 

When the result of the annual physical is mailed to a patient, the postcard lists both 

a URL and the library locations that have the CD-ROM. If the patient has internet access, he 

can look up relevant information from the remotely accessible server. If internet service is not 

available, he can review materials in the library or request that a copy be mailed to them. 

Following a review of relevant information regarding ailments, the patient would either call 

or E-mail the doctor’s office to schedule a face-to-face meeting to discuss his questions and the 

recommended course of action. In subsequent years, scheduling of appointments could be handled electronically or by phone depending upon the individual’s preference. 

Highlights 

You will notice that the presenter did not provide much information on the technical aspects of the product. The focus was on what the system does. Visuals were 

used to provide “face validity,” i.e., to demonstrate that a real product exists. If your 

audience consists mostly of research and development personnel, it will be appropriate to spend more time elaborating upon unique features of the system. 

However, avoid sharing any proprietary information during a public presentation. 

134 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
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© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 135 
VIEWGRAPH 5 

Viewgraph 5: Product FABs 

SOARRELL MEDICAL SYSTEMS 

Features, Advantages, Benefits 

ANNUAL PHYSICAL & PATIENT VERIFICATION SYSTEM 

Feature 

1. Annual physical 

2. Interface w CPR 

3. CD-ROM/internet 

4. Utilizes staff 

5. Voice encryption 

Advantage 

1. Consistency 

2. Consistency 

3. Versatility 

4. Minimal MD impact 

5. Security 

Benefit 

1. Update Verification 

2. Simplicity 

3. Accessibility 

4. Better patient care 

5. Mistake reduction 

What 

The acronym FAB stands for Feature, 

Advantage, and Benefit. A Feature is an 

element or property of the product or 

technology. The Advantage answers the 

question “so what?” and indicates the 

value of this feature. A Benefit describes 

the value to the customer or end user, as 

he or she would perceive it. Frequently 

FABs are best expressed in tabular form, 

often contrasting the product or technology with those of your competitors. 

Why 

For assistance in 

developing FABs, see 

Workbook Activity 7. 

First and foremost, the articulation of 

FABs assures that you are moving away from a subjective view of the technology to 

a perspective that focuses on the customer’s needs. In developing these FABs, talk 

with both customers and end users to assure that the features of your product, technology, or service do indeed have an expressed benefit to them. The terms “customer” and “end-user” are NOT synonyms. “Customer” is defined as the person 

or organization that will purchase something directly from you. The “end-user” is 

the person that will ultimately use the product. The “end user” may or may not 

also be your customer. For example, suppose you wish to license computerized 

patient record software to a hospital. Your licensee will be your customer. The enduser is the person who ultimately uses the software, perhaps the office staff person 

who enters patient information. Understand the needs of both your customers and 

the end-users, as defined above. 

Talking about FABs in your presentation makes it easier for the potential 

investor to see what is distinctive about the product and demonstrates that you are 

“getting close to the customer.” 

136 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Pitfalls to Avoid 

Don’t skimp on this part of the presentation. Develop FAB tables only after speaking with potential customers and end-users. Don’t assume that you know what the 

customers want without speaking to them. 

Variations 

Sometimes this section will take the form of talking about competing technologies 

or different ways of addressing the problem you are solving. In this case, you would 

highlight the features, advantages, and benefits of your technology as compared 

with others. In such instances, you may need to use more than one viewgraph. 

Don’t make your visuals too complex. The listener must be able to clearly ascertain 

your message. Remember the “KISS” acronym: Keep It Simple, Stupid! Just as 

complex theories indicate that it’s time for something more simple and elegant, so it 

is with graphics. If a visual requires too much explanation, it’s too complex. 

Change it! 

Narrative 

There are several unique aspects of this system which make it extremely easy for a physician to 

add to an existing office management software suite. The Soarrell software used in producing the smart cards interfaces easily with the most commonly used CPR systems, including 

M.D. Workbench, SMART-MED, MedTrac, and SOAPware. The software can be used with 

any PC, with Mac G3’s, and with Unix systems. Another feature of this system with great 

appeal to MDs is that it makes better use of para-professionals in the office and helps limit 

the MD’s involvement to patient care. 

Highlights 

Note that the presenter did not go over every item listed in the viewgraph, but 

instead elaborated upon only a couple of items. This approach makes the presentation more interesting. The other information is there for the audience to read 

quickly or note. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 137 
VIEWGRAPH 6 

Viewgraph 6: Success Ingredients 

SOARRELL MEDICAL SYSTEMS 

Success Ingredients 

■ Incentive payments based on patient satisfaction 

■ Computer platforms and CPR software supported 

■ Board of Advisors 

■ Intellectual property 

■ Physician in primary care role 

What 

In this viewgraph, tell the audience why 

your company will succeed. Statements 

must be comparative in nature, but need 

not necessarily single out specific competitors by name. For example, you can 

indicate a cost savings of 40% without 

naming the competitors. Delay specifics 

until later in this presentation to focus 

the listener’s attention on the one item 

you wish to emphasize at this point: 

ingredients for your success. 

Why 

An investor or strategic partner is looking 

to create value. This can be accomplished if you have products, technologies, or 

services which are unique (such as patent-protected products), and/or which are 

price or performance competitive. Success ingredients can also refer to items such 

as management team experience, established distribution networks, and the like. 

Pitfalls to Avoid 

Many scientists are accustomed to being cautionary in their statements and to qualifying everything they say. If you listen closely, you will hear scientists use qualifiers 

such as “may,” “should,” and “it seems.” This use of qualifiers is often accompanied by the tendency to mention all the things that could go wrong and to be very 

guarded about conclusions. It is inappropriate to color the comments with such 

statements. Know what makes your company distinctively positioned for success. If 

you don’t, you are not ready to make this presentation. Clearly, and without hesitation, state the advantage of your firm with respect to success. Later, address issues 

and contingencies for dealing with them. Don’t be tentative in business. You must 

be knowledgeable, focused, and bold. 

138 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Variations 

The nature of your success ingredients is related to your company’s mission, your 

management team, and your FABs. The items chosen as ingredients for success will 

vary from company to company. 

Narrative 

Soarrell’s management team has the requisite experience for making this opportunity a significant financial success. As was indicated previously, the team has led start-ups before and our 

knowledge is deep with respect to the health care industry. In addition, Soarrell has proprietary technology that is perfectly positioned to become available at the right time. We are not 

too early or too late for this market opportunity. Our system is versatile and not limited by 

computer platforms or choice of CPR software. More importantly, we are willing to share a 

risk with our customers and to accept milestone fees based upon minimum disruption to the 

office workflow and increased patient satisfaction. 

Highlights 

In this example, the presenter used the opportunity to reemphasize the experience 

of the management team, as well as some of the FABs mentioned previously (i.e. 

versatility of platforms and software). Sharing the risk with the customer was a new 

concept that was introduced. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 139 
Market Assessment 

2 

Viewgraph 7:
 

Business Environment
 

Viewgraph 8:
 

Customer
 

Viewgraph 9:
 

Market Segmentation
 

Viewgraph 10:
 

Total and Served Available Market
 

Viewgraph 11:
 

Market Trends
 

Viewgraph 12:
 

Competition
 
MARKET ASSESSMENT 

■

■

■

■

■

■

What is the market need you are addressing? 

Who are your customers? Who are your end-users? 

What market segment are you pursuing? 

What is the size of this market segment? 

What are the market trends for this segment? 

Who are your competition? What are they doing? 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 143 
VIEWGRAPH 7 

Viewgraph 7: Business Environment 

SOARRELL MEDICAL SYSTEMS 

Business Environment 

■ Slower move to CPR than expected 

■ Decentralization 

■ Growing apprehension about cost of hardware 

■ Lack of programmers 

■ Acquisitions 

■ Flattening of savings by HMOs 

What 

Now that your audience knows about 

your company’s mission, management 

team, product, and ingredients for success, you will begin transitioning to discussions regarding the market. Do this in 

a staged fashion, describing the target 

market from a distant aerial view first, 

and then moving closer to the defined 

target. Carrying this analogy a little further, the business environment is the 

aerial view. It is the big picture that 

affects not only your market, but others 

as well. 

The business environment statement should make reference, where appropriate, to 

things such as: 

◗ 

◗ 

◗ 

◗ 

◗ 

◗ 

◗ 

Economic drivers 

Technology innovations 

Regulatory drivers 

Federal legislation and Executive Orders that will effect your market 

Federal, state, and local incentives, such as rebate programs 

Movements such as the quality control movement 

Changes in tax law 

Keep in mind that these are sweeping movements which affect not only your market, but other industries as well. For example, the Patient Access to Responsible 

Care Act has an impact on the following industries: Heath-care delivery, 

Information Systems, and Legal. (This list is illustrative, not comprehensive.) Only 

mention those items that affect your market. For example, in the viewgraph provided, only Federal, state, and local policies are mentioned, since these have the greatest single impact on this opportunity. 

144 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Why 

What you are selling is only half the equation for commercial success. What people 

are buying is the other essential half. Examining your market from different vantagepoints increases the likelihood that you will understand those factors that affect 

your ability to compete. Such examination also helps determine if there is an existing market for your product and/or when one should emerge. Starting at this most 

distant perspective helps you to understand the more generic needs of potential 

customers. Aim selling efforts at matching your products with your customers’ 

“needs.” Keep in mind that “selling” is also involved when you are licensing. In 

the case of a license, you are selling to a potential licensee and must understand the 

market for the product into which the licensee will sell. 

Variations 

Depending on the factors at play in your business environment, you may wish to relabel this viewgraph “Federal, State, and Local Policies” or “Environmental 

Analysis.” Also, in some presentations it makes more sense to mention the business 

environment before mentioning your opportunity. This may be the case if you are 

pursuing a licensing strategy. 

Narrative 

The major driver affecting the market for Soarrell’s products is the need for cost containment 

of health-care delivery systems. In a report by Decision Resources, it was noted that in 1990, 

25% of health care costs were administrative and most were associated with the management 

of patient information. As a response, information technologists focused on a bevy of issues 

associated with computerized patient records (CPR). In 1995, the Medical Records Institute 

went so far as to predict that the medical industry would spend up to $5 trillion on computerized patient record systems between 1995 and the year 2000. 

This has not happened. Problems plaguing the adoption of such systems include cost 

of hardware and software, lack of trained IT specialists, the Year 2000 problem, issues of 

client confidentiality, lack of standardized definitions of medical terms, and the fact that 

MDs would rather use software in running their business than in delivering their service. 

Nonetheless, headway is being made, but at a slow pace and with twists and turns. 

There is a trend toward decentralized rather than centralized record keeping, with much 

headway being made in practitioners’ offices. It has become increasingly recognized that 

informed patients are less expensive patients; i.e., they require fewer post-op doctor visits, 

develop greater trust of doctors, and have higher satisfaction and shorter recovery time. 

For the most part, the general public is unaware of the changes taking place at the 

information technology level. Once the public becomes aware, it is likely that they will also 

become concerned about the type of information in the system, the correctness of the information, and how it will be used. The Annual Physical and Patient Verification System 

addresses this need. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 145 
VIEWGRAPH 8 

Viewgraph 8: Customers 

SOARRELL MEDICAL SYSTEMS 

Customers 

■ Medical practices already utilizing CPR 

■ Piloted program in Salt Lake City 

— 200 patients in 5 practices 

— increased customer satisfaction 

— highly rated for ease of use by clinical staff 

What 

Before discussing the size of specific 

markets, identify who the customers are 

for your technology, product, and/or service. Be very clear about the definition of 

“customer.” Remember that the customer is the entity that purchases products directly from you. Your firm might 

have more than one type of customer. 

For example, you may wish to license to 

some customers, but sell components 

that you manufacture directly to others. 

If you have a variety of customers, indicate this. Highlight the factors that 

affect your customers’ buying decisions, 

as well as information regarding sell cycle, key product features, and your sustainable competitive advantage. 

Why 

Fundamental to commercial success is knowledge of your potential customers. 

Demonstrate to potential investors that you have clearly identified your customers 

and have spoken to them regarding the FABs (mentioned earlier). Remember, the 

investor and/or strategic ally is interested in creating wealth. This can only be 

accomplished if you have customers and if you have an intimate and documented 

knowledge of their needs. 

146 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Pitfalls to Avoid 

If you haven’t met personally with potential customers, you are not ready to make 

this presentation. 

Variations 

For assistance in developing 

this section of your presentation see Workbook Activity 8. 

If you are planning to license, break this discussion of customers into two 

sections—one about customers, and the other about end-users. Keep in mind that 

customers are entities that pay your firm, while end-users are the individuals or 

companies that actually use the product. Many times the end-users are not the individuals who purchase your product. For example, the end-users for a CAT Scan are 

highly skilled technicians in hospitals. However, they are usually not the individuals responsible for making the purchasing decisions regarding the CAT equipment. 

Narrative 

We will be focusing our initial marketing efforts on medical practices that already utilize a 

CPR system. We have just completed a beta test of our system in five medical practices in the 

Salt Lake City area. Our goal in this beta test was to determine ease of use for the various 

levels of staff in the medical practice and the patients’ degree of satisfaction. There was minimal disruption of workflow in the medical practices during set-up. 

Patients were surprised to know that the medical practitioners had computerized 

patient records and were pleased with the opportunity to verify their information. Errors 

were found in five percent of the cases. Twenty percent of the patients had internet access, and 

subsequent to receiving the results of their physical, downloaded relevant information from 

the practitioners’ servers. Forty percent of the patients requested printed copies of reading 

material which we supplied; others asked to purchase a copy of the CD-ROM rather than 

using it in a library. Based on this input, we are considering making a copy of the medical 

archive directly available to patients at a reasonable charge. 

Highlights 

The presenter used this opportunity to clarify that there had been initial market 

acceptance of the system during a beta tet. The presenter further used the results 

of the beta test to indicate that there had been a change in strategy based on customer feedback. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 147
 
VIEWGRAPH 9 

Viewgraph 9: Market Segmentation 

SOARRELL MEDICAL SYSTEMS 

Market Segmentation 

■ Existing CPR users 

— Multi-site, largest number of general design features 

— Clinical Master, Dr. Chart, Encounter, Health 

Probe, PAL/MED, Pearl, Practice Partner, QD 

Clinical, Smart-Med, and SOAPware 

■ Individual sites, less functionality 

What 

“Segmenting your market” refers 

to the process of grouping potential 

customers together in meaningful 

ways. The reason for grouping is to 

assess how large and how accessible 

the potential customer base is. 

Determine whether the customer base 

can be reached through affordable 

advertising programs and whether this 

cluster or segment is large enough to 

sustain your business. If it is not, go 

back to the drawing board and try segmenting your market in different ways. 

Segmenting the market appropriately is an art and takes considerable time and effort. When the market for your 

product, technology, or service is emerging, segmenting it is especially difficult. 

Some of the most common ways are by: 

◗ 

◗ 

◗ 

Standard Industrial Classification Code (SIC) and/or North American 

Industrial Classification Codes (NAICS) 

Technology 

Product characteristics—high, medium, or low-end 

Again, this list is illustrative and not exhaustive. 

Why 

The reason for segmenting your market is to make it more approachable and less 

amorphous. That is part of the process of carving out the domain for your business. 

148 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Pitfalls to Avoid 

For assistance in 

developing this section of 

your presentation, see the 

Workbook Activities (7, 8 , 

and 9) under Customers/EndUsers and Market 

A common mistake, and one that most first time entrepreneurs make, is to segment 

the market in such a way that it appears “really big!” Individuals who seek venture 

capital funds are most likely to make this mistake. They have often heard that the 

venture capital community won’t be interested in an opportunity unless the market 

is substantial. Such entrepreneurs feel more comfortable saying that market Y is a 

$2 billion industry and we will get 1% of that, rather than saying that market Y1 is a 

$50 million market and our goal is to obtain 20% of that. The entrepreneur naively 

assumes that the investor would rather see a poorly defined $2 billion market than a 

more tightly defined $50 million market that is still within the range of investment 

interest. The reason for this error is the conceptual leap that only 1% of a huge 

market should be easy to attain, whereas stating a goal of 20% of $50 million 

implies, “Oh my! We have to get real specific about how we are going to DO this.” 

Yes, you do! 

You should aim at defining your market in such a way that it’s small enough 

for you to dominate and large enough to be profitable. Forty percent is better than 

one percent. The size of the market is obviously also important. Some markets are 

clearly too small to pursue. 

Narrative 

The computerized patient record market is rapidly emerging. Given that our software, smart 

card, and reader all interface with CPR systems, we decided that the best way to segment our 

potential market is to base it on the existing pool of medical practice CPR users. A number of 

surveys have been conducted by vendors of CPR systems, with the most recent being a survey 

completed in December 1997. The major vendors, the products, prices, and installed bases 

were described in that study. 

Highlights 

The presenter has provided a clear conceptual definition of the market that it will 

pursue, i.e., the installed base of CPR systems—focusing on those serving multiple 

sites and those with the greatest number of design features. Selected software programs with which it can interface are listed. 

© DAWNBREAKER PRESS, 1998 EQUITY INV ESTORS 149
 
VIEWGRAPH 10 

Viewgraph 10: 

Total Market and Served Available Market 

150 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 

SOARRELL MEDICAL SYSTEMS 

Served Available Markets 

Patient Education 

Smart Card Readers 

Office Customization 

Smart Card Software 

Cards 

Cards 

Smart Card Software 

Office Customization 

Smart Card Readers 

Patient Education 

$40 M 

$10 M 

$10 M 

$20 M $40 M 

$120,000,000 in 1998 

What 

The phrase “size of the market” or 

“market size” refers to the annual potential of the market expressed in dollars, 

units, or both. This concept is applied to 

all segments for which the product is 

appropriate. 

Another important concept to 

consider when sizing the market is the 

difference between the total market and 

the served available market. The served 

available market defines the market 

niche in which the company will operate 

in more precise terms. By contrast, the 

total available market is the larger, related market in which one is operating. The served available market is a subset of the 

total market. 

Why 

If the size of the served available market is too small, a potential investor will not 

be interested in investing because the return on investment (ROI) will be unattractive. If the market size is fairly small, the entrepreneur should reconsider whether 

the technology, product, or service is worthwhile pursuing or whether he should reconceptualize how he or she has segmented the market. As indicated previously, 

market segmentation is fluid and has profound “decision implications” for everyone 

involved. If the market is truly small, the entrepreneur may still decide to conduct 

business in this market. However, he should realize that if the market has a potential of under $50 million and holds little promise of growth, it is unlikely that he 

will find an appropriate strategic partner or investor. 

Pitfalls to Avoid 

For assistance in developing 

this section of your presentation, see the Workbook 

Activities (7, 8, and 9) under 

Customers/End-Users and 

Market 

Sometimes naive entrepreneurs define the market size in numbers that 

represent a composite for “X” number of years, rather than in annualized figures. 

A better approach is to show the market size at a given point in time and then show 
predicted rates of growth. Just as a balance sheet is a snapshot of your financials at a 

given point in time, so is market size. 

Entrepreneurs selling a system component typically make another error. 

More often than not, when estimating the size of an emerging market, their tendency is to define the market size in terms of the annual sales of systems rather than 

the sales of components. When inducing market size in such situations, base your 

estimate of market size upon a sound model that reflects the projected selling price 

of the system and the number of components comprising the system. 

There is also a tendency to confuse served available market with sales projections. Sales projections are tied to your goals for market share, not to market size. 

All you are doing by using the concepts of total market and served available market 

is attempting to define and quantify your market segment more tightly. You should 

revisit your definition of your market segment annually, and see if it merits redefinition. The entrepreneur’s knowledge of the marketplace improves with experience, 

so it is common to redefine his or her market niche. 

Narrative 

We have used a market build-up method to estimate the size of the market potential for 

our system in 1998. We have come to a conservative but justifiable estimate of the market 

potential based on the number of doctors’ offices which appear to currently be using a CPR 

system. The survey of CPR vendors indicated that eight of the most popular CPR vendors 

had their software in more than 100 sites and that they had multiple installations at most 

sites. Since we will be segmenting the market based on the installed base of the most popular 

CPR software, we decided to use these data. We assumed that the eight most popular systems 

were currently being used in over 800 sites (100 sites x 8 vendors), and that each served 5 

different sites. If we estimate the cost of each component and multiply this by the total potential number of sites that would use this in 1998, we come to an estimated market size for 

1998 of $120 million. 

Highlights 

The presenter has built upon the information provided in the market segmentation 

viewgraph, and has provided the audience with an idea of the magnitude of the 

niche that will be pursued. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 151 
Viewgraph 11: Market Trends 

 

SOARRELL MEDICAL SYSTEMS 

Market Trends 

$600 — 

$500 — 

$400 — 

$300 — 

$200 — 

$100 — 

1998 1999 2000 2001 2002 

VIEWGRAPH 11 

What 

Market trends include both historical 

data and future predictions regarding the 

rate of growth in selected markets. 

Why 

Market conditions frequently change 

due to shifts in demographics, technology, regulations, and other economic conditions. Your company’s economic health 

is partly a function of these changes. If 

significant downturns are predicted in 

the market you are targeting, you should 

reconsider whether this is a good market 

to enter. Market trends will affect an 

investor’s decision making regarding which investments will be made. Aim to enter 

a healthy, growing market, rather than one which is receding. 

Pitfalls to Avoid 

If the market associated with your business is taking a “nose-dive,” don’t put all of 

your efforts into this one market. Seek market opportunities in healthier industries. 

Narrative 

The estimates of the rate at which the CPR market will grow are wildly divergent. Again, we 

have taken a conservative view and have estimated the rate of growth for our market niche, 

which is related not only to CPR software, but also to the use of patient education software. 

152 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
VIEWGRAPH 12 

Viewgraph 12: Competition 

SOARRELL MEDICAL SYSTEMS 

Competition 

■ Precis Healthcare Smart Card System 

■ Software & Systems International Limited 

■ Alladin Knowledge Systems 

■ Patient Education Computer Software 

What 

You have presented information regarding the size of the market opportunity to 

your potential investors. Your presentation demonstrates that you have considered the various markets for this technology, product, or service and have defined 

an appropriate niche in which to grow 

your business. To interest a prospective 

strategic partner or an equity investor, 

the market upon which you have settled 

should be of sufficient size to merit an 

investment. Once your playing field is 

defined, you can begin the process of 

describing who else is in this arena. 

Why 

Your success in making sales in the market you have defined will depend upon various factors. One important factor is who else is playing in this market. You need 

knowledge of your competitors in order to develop sound strategies and tactics that 

will enable you to take market share away from your competitors or to collaborate 

with them to jointly develop an emerging market. 

Pitfalls to Avoid 

For assistance in preparing 

this section of your presentation, see Workbook 

Activity 13.

This topic is often not adequately addressed. In thinking about competitors, some 

firms limit their discussions to companies that have a similar profile (i.e., other consulting engineering firms), or to companies that are working on the same solution 

(i.e., the same technology). Both approaches are inappropriate. There are many 

ways to fulfill a need—perhaps with your technology, perhaps with a quite different 

approach. For example, a company with a machine vision technology for sorting 

blemished fruit on a conveyer belt competes with human beings who visually scan 

citrus. These are clearly very different approaches for solving the same problem. 

You should consider as competitors all other individuals or firms working on the 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 153 
solution to the same problem, even if they are using totally different approaches. 

The profile of the company doing the work is totally irrelevant to their definition as your competitor. Any firm working on the solution to the same problem as 

you are is your competitor, irrespective of its size, its mission, or its technology. 

Variations 

If you are conducting unique research in a critical technology area, it may be appropriate for you to omit names of competitors while highlighting differences among 

the approaches being taken to solve the problem and drawing attention to the 

advantages of your approach. If you are working in a more established field, you 

will want to draw attention to specific competitors and spell out how your technology, product, or service compares on FABs. 

Narrative 

This market is evolving in a very unusual way. Smart cards were developed in France and 

have been around since the late 1970’s. Most commonly they are used as Loyalty cards or 

Electronic Wallets. A few companies have been using these in the health care industry including Healthcare Smart Card System and Software and Systems International Limited. 

However, none of these have the voice encryption algorithm, the patient verification focus, or 

the integration with patient education that our system offers. Another company, Patient 

Education Computer Software, focuses on patient education, but has nothing to do with 

smart cards. We believe that, for such health care related services, consumers would rather 

deal with a company that specializes in health care, rather than a smart card company which 

receives most of its revenue from other applications of smart cards. In addition, Soarrell’s 

biometric voice encryption technology provides the firm with a strong competitive advantage 

over other health care systems products. 

Highlights 

There are always competitors. The presenter has used this viewgraph not only to 

introduce the competitors, but also to differentiate his product from the competitors’ by highlighting his sustainable competitive advantage. 

154 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Goals and Objectives
 

3 

Viewgraph 13:
 

Goals
 

Viewgraph 14:
 

Objectives: Marketing and Sales
 

Viewgraph 15:
 

Marketing Communication Plan
 

Viewgraph 16:
 

Objectives: Research and Development
 

Viewgraph 17:
 

Research and Development Milestones/Timeline
 

Viewgraph 18:
 

Objectives: Manufacturing/Production 


Viewgraph 19:
 

Customer Service
 
GOALS AND OBJECTIVES 

■ 

■ 

■ 

■ 

■ 

What are your company’s goals for market share and return on investment? 

What are your major milestones for marketing and sales? 

What are your marketing tools? 

What R&D needs to be completed? What is the timeline? 

What are the manufacturing/production milestones? What is the timeline? 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 157 
VIEWGRAPH 13 

Viewgraph 13: Goals and Objectives 

SOARRELL MEDICAL SYSTEMS 

Company Goals & Objectives 

■ To be the dominant supplier of Patient Verification 

Software Systems to provide medical practices. 

■ Grow that market by 15% yr. 

■ 20% ROI by year 5 

What 

Up to this point, everything in your 

presentation can be considered as background, leading up to the punch line. 

The punch line starts here and crescendos throughout the rest of your presentation. With the first 10 slides, you told 

your potential investor about your mission, your technology, and the marketplace that you have carved out. The 

balance of your presentation is used to 

unfold your plan for creating value 

for both yourself and the investor(s). 

Begin by defining what your company 

will look like in five years. Focus on 

quantified terms that relate strictly to creating value. Common company goals 

include the following: 


◗ 

◗ 

◗ 

◗ 

◗ 

Introducing X new products
 

Achieving X% market share
 

Achieving ROI of Y%, ROI of X%
 

Becoming the vendor of choice in Y arena


Licensing X% of products into targeted markets
 

Why 

“If you don’t know where you are going, you will probably end up somewhere else.” 

—Laurence J. Peter (Thomsett, 1990) 

The plan of action that will unfold during the balance of this presentation is one 

that you articulated in your business plan. Its intent is to maximize the probability 

of realizing the goal that you have defined. 

158 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Pitfalls to Avoid 

The goals are not something that you just pull out of the air. They have a direct 

relationship to your mission, your knowledge of your market, your competitors, and 

your ambition. The plans you develop must be realistic in directing you in the successful attainment of your goals, in accordance with your mission. 

Narrative 

Our goal is quite straightforward. By using the “Annual Physical” as the episode of focus, 

our goal is to become the dominant supplier of Patient Verification Software Systems. The 

CPR market is very dynamic. It is our intent to take a strong lead in growing this market. 

We plan to obtain approximately 40% of the market within five years. By year five, we are 

targeting an ROI of 20%. 

Highlights 

The presenter uses this viewgraph as an opportunity to reconfirm many messages 

introduced earlier regarding the market and Soarrell’s intent to become a dominant 

player. The presenter conveys an aggressive stance in the marketplace and, therefore, poses specific information regarding financial objectives, percent market share 

desired, and the ROI targeted. 

The ATP requires that proposers include goals and objectives in ATP proposals. However, during the post-award period, a company is expected to become 

more quantitative in the details provided. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 159 
VIEWGRAPH 14 

Viewgraph 14: Objectives - Marketing and Sales 

SOARRELL MEDICAL SYSTEMS 

Objectives: 

MARKETING & SALES 

■ Develop marketing and sales tools 

— 1st Quarter, 1998 

■ Establish nationwide distributors 

— 3rd Quarter, 1999 

■ Obtain initial orders 

— 3rd Quarter, 1999 

What 

The next series of viewgraphs includes 

specific objectives for each functional 

area, with accompanying milestones 

and timelines. An objective is a statement that implies an action plan. This 

action plan indicates what will be done 

and when. Such expressions must be 

quantitative and NOT qualitative. 

Since the presenter will not have much 

time to spend on these topics during a 

20-minute presentation, the discussion 

of objectives is limited to the 12-month 

period following the presentation. 

Why 

In order to reach the company goals, the entrepreneur must develop a series of 

well-conceived action plans. These action plans start with the expression of objectives for each functional area. Value creation is the consequence of sales in the 

served available market that was defined earlier. Thus, your marketing and sales 

plan is pivotal to the success of your company and of utmost interest to potential 

investors. The specific roles and responsibilities of employees in each functional 

area should be keyed to the objectives expressed in this section. 

Pitfalls to Avoid 

Most technology entrepreneurs err on the side of being too general in the expression of their objectives. Objectives must be quantified and indicate both what will 

be done and a timeline for when it will be done. 

Variations 

The form your marketing and sales objectives takes relates both to your company’s 

mission and to the commercialization strategy which you have selected. For example, if the business function that your firm performs is strictly contract research and 

160 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
development and if you have selected licensing as your commercialization strategy, 

the nature of your marketing and sales objectives will be quite different from that 

of a manufacturing firm such as Soarrell Industries, which is illustrated below. In 

the licensing case, your customers would be potential licensees. Your marketing 

efforts would, therefore, involve the development of materials to be used in prequalifying and courting potential licensees. Your sales objectives would all relate to 

developing licensing agreements. 

When making a presentation to potential licensees, exclude your action 

plan for marketing, distribution, and volume of sales from your presentation. 

Including such information would be akin to telling a customer for a car what your 

strategy is for selling it to him. However, your business plan should clearly identify 

this information. 

Narrative 

Let’s take a look at our marketing and sales objectives. During the first quarter of 1999, we 

will be developing specific marketing and sales tools to service a nationwide network. These 

tools will be in place by March 1999. John Doe’s task during the second and third quarters 

will be to develop a cohesive set of 30 U.S. distributors. This is a formidable task. However, 

one of the larger CPR software developers has agreed to work with us. 

Once the distribution network is in place, our task will be to obtain initial orders 

from each of the distributors. 

Highlights 

The presenter has indicated when each of these objectives would be fulfilled and 

has also quantified each objective. Such quantification will make it easier for the 

entrepreneur to chart progress during the year. This quantified information also 

helps potential investors begin to assess the adequacy of your action plan and its 

potential to create value. 

Notice that the presenter subtly weaves in information that reveals existing 

collaboration with CPR software developers. This is useful information to share 

with potential investors because it reduces perceived risk. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 161 
VIEWGRAPH 15 

Viewgraph 15: Marketing Communications Plan 

SOARRELL MEDICAL SYSTEMS 

Objectives: 

MARKETING & SALES 

Develop marketing tools 

Train distributors 

Attend Trade Show 

Advertise 

1 2 3 4 5 6 7 8 9 10 11 12 

Months 

What 

In defining a marketing communications 

plan, describe the development of materials that will be used in sales, and occasions for presenting these materials to 

potential customers. Processes for qualifying and closing sales to potential customers presume the existence of a marketing communications plan. Common 

elements of a marketing communications 

plan include: 

◗ development of marketing and 

sales literature, videos, and training 

materials for use by direct and 

indirect sales staff 

◗ 

◗ 

◗ 

participation in trade shows 

direct mailing campaigns 

press releases and advertising in trade journals 

This list is illustrative, not comprehensive. 

Why 

Without a marketing communications plan, the investor cannot adequately assess 

your degree of preparedness for marketing and sales, or the adequacy of your 

staffing plan and the financial resources allocated for this task. Marketing and sales 

issues are of fundamental interest to potential investors. 

Pitfalls to Avoid 

Technology entrepreneurs tend to underestimate the amount of effort required to 

make sales. They also skimp on the marketing initiatives. For example, one might 

assume that advertising once in each of four different trade journals would be an 

effective way to generate sales. However, a far better way would be to carefully 

select one trade journal and advertise in it four times. Repeated exposure to a 

162 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
message is required for your potential customers to even notice that it is there. 

The other error that technology entrepreneurs make is to keep the marketing 

communications plan too general. Name the specific journals in which you will 

advertise, specify the dates and locations of the trade shows you will attend, and 

include appropriate cost estimates for all aspects of your marketing plan in your 

pro forma financials. 

Variations 

The specific items included in your marketing communications plan depend 

upon who your customers are and the most cost-effective way to reach them. 

Narrative 

This slide provides a timeline for execution of our marketing communications plan. As you 

can see, once the marketing and sales tools have been developed, training of our distributor 

network will begin. We will introduce the Annual Physical and Patient Verification Software 

System at two trade shows—The Healthcare Information and Management Systems Society 

show to be held in St. Louis in February and another trade show in Phoenix in September. 

We will begin promotion in print media at the end of the first quarter and will run a series of 

four advertisements in two trade journals starting in April. 

Highlights 

The presenter provided a fairly general graphic, drawing attention to the specific 

activities listed on the ordinate and adding mention of some specific information 

regarding events and dates. Given the brevity of time, the treatment of this topic is 

adequate and demonstrates to the investor that the entrepreneur has developed a 

detailed plan to communicate with his or her potential customers. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 163 
VIEWGRAPH 16 

Viewgraph 16: 


Objectives - Research and Development
 

SOARRELL MEDICAL SYSTEMS 

Objectives: R & D 

■ Smart card & reader tested to complete specifications 

— 1st Quarter, 1998 

■ Complete compliance with ISO 7816-4 guidelines 

— 4th Quarter, 1998 

What 

In parallel with the marketing objectives 

mentioned earlier, the research and development objectives clarify what research 

and development will be done in a given 

time frame. You will notice that these 

objectives are fairly macro in nature, but 

still retain elements of specificity. 

Why 

The reason for expressing your objectives on a macro level is limited time. 

However, it is still important to mention 

research and development and demonstrate to the potential investor that you 

have a plan for each functional area, i.e., research and development, engineering, 

and manufacturing, as well as sales. Delays in research and development, engineering, or manufacturing affect the rate at which sales can proceed. Therefore, it is 

important to demonstrate to your audience that all functional areas are working in 

consort to assure timely delivery of product. 

Pitfalls to Avoid 

The major risk for technology entrepreneurs is spending too much time on the discussion of research and development. If this is the presenter’s area of strength, he 

has a natural inclination to focus on it. A benefit of being brief is to minimize the 

likelihood of divulging any proprietary information. 

164 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Variations 

If you have selected licensing as your commercialization strategy, it may be appropriate to include research and development objectives in your presentation. How 

you handle this topic depends on your licensing objectives and the stage of development of the item that you wish to license. For example, if you are looking to 

license your technology and also to obtain developmental funds to complete the 

final stages of development, it would be important to map out what needs to be 

done with these funds. However, if you have a finished product that is ready for 

licensing, the research and development plan would be inappropriate. 

Narrative 

Most of the true research and development has been completed. It focused on the development of 

a biometric voice encryption algorithm. Specifications testing with respect to the smart cards 

and reader remain to be accomplished. We have developed both of these fully cognizant of the 

ISO 7816 guidelines. We do not anticipate any problems—but some could be encountered. 

Highlights 

The research and development objectives are handled in a simple, straightforward 

fashion. The primary message conveyed to the investors is that little research and 

development remains to be done. This is important to convey at a time when the 

company is seeking funds to gear up for product introduction. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 165 
Viewgraph 17: 


Research and Development Milestones and Timeline
 

 

SOARRELL MEDICAL SYSTEMS 

R & D Milestone & Timeline 

Smart Card 

Reader 

ISO compliance 

1st Q 2nd Q 3rd Q 4th Q 

—

---

—

---

—

---

— 

VIEWGRAPH 17 

What 

This is a typical milestone and timeline 

chart. Again, you will notice that its purpose is to be illustrative, rather than 

comprehensive. A milestone chart displayed in your presentation will be much 

less detailed than that contained in your 

business plan. Simplicity will help the 

audience absorb information quickly and 

effectively. 

Why 

Everything that you present about your 

research and development is aimed at 

building momentum towards a predisposition to invest in your opportunity. It is unlikely that potential investors will be 

able to retain many details from a brief presentation, so don’t provide them. 

Instead, present illustrative information that shows you have a comprehensive plan. 

Details can be discussed later in private, and hopefully during site visits which to 

follow. This presentation is like your first date. The goal is to have many more so 

that you have the opportunity to mutually assess your interest in collaborating. The 

presentation is not everything—it is merely the first step! 

Pitfalls to Avoid 

To be effective in this part of the presentation, you must refrain from becoming too 

detailed. Provide specific examples of the degree of accomplishment you have 

attained toward research and development objectives. Momentum will be lost if 

you provide too much detail. Your goal should be to give your audience a reason to 

talk with you individually after your presentation. 

166 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Variations 

The variations to be made in this approach are a function of your technology and 

commercialization strategy. If you are seeking a licensing agreement with developmental funds to continue work on your product or technology, it would be appropriate to provide more details. Some of the other topics, such as marketing and sales 

objectives would be omitted. 

Narrative 

I’ve included a summary milestone and timeline chart to show you some of the specific items 

that we are working on. We are ahead of schedule on the evaluation of the smart card circuitry and are presently working on a few modifications to the reader. Although we have allowed 

ourselves three quarters to finish these tasks, I feel confident that we will complete the work by 

the end of the second quarter. 

Highlights 

Notice that the presenter did not mention each item on the viewgraph. That wasn’t 

necessary given that the overall objective was to illustrate the items to be accomplished and to convey the message that the company was ahead of schedule. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 167 
VIEWGRAPH 18 

Viewgraph 18: 


Objectives - Manufacturing/Production
 

SOARRELL MEDICAL SYSTEMS 

Objectives: Production 

■ Patient education archive 

■ Final review by content experts (2nd Quarter, 1998) 

■ Completion of manual to accompany Patient Verification Software 

— 3rd Quarter, 1998 

■ Low volume production run (smart cards; reader) 

— 3rd Quarter, 1998 

What 

If your firm will be producing a product, 

either directly or through suppliers, it is 

appropriate to describe briefly your manufacturing, production, or service delivery plan. If you will not be producing a 

product, skip this section. 

Why 

There’s a world of difference between 

saying that you can produce X and being 

able to deliver a high-quality product or 

service reliably. If you have not manufactured, produced, or provided a product or 

service before, this activity poses a high 

degree of risk. Investors, customers, and suppliers need to be confident that you 

can deliver the volume of a quality product or service stated in your projected sales 

goals. Providing insight into your manufacturing or production plans will either foster confidence or engender dismay. 

Pitfalls to Avoid 

If you are producing only part of the product, don’t skip this section! Even though 

you are not manufacturing a product in its entirety, you may still have points to 

make. Stakeholders will want to know how quality control will be maintained; if 

you have back-up suppliers; how good your suppliers are; and if you are planning to 

shift from a “buy” to a “make” strategy over time. 

Variations 

Use the most appropriate terminology in the title headings; i.e., don’t always use 

the word “manufacturing.” If you are producing a widget, manufacturing would be 

appropriate. However, if you are talking about software, then “production” is a 

168 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
more appropriate term. If you are delivering training, talk about materials development and production. When building a plant, a project development plan or a site 

plan would be a more appropriate way to refer to the activity. 

Narrative 

Soarrell will be producing the software containing our proprietary voice encryption algorithm, the patient education CD-ROM, and the internet materials. We will have a license 

manager associated with the software to prevent its inappropriate proliferation. By contrast, 

we have decided that it is more cost-effective to outsource the production of the patient smart 

cards to Siemens, under an appropriate secrecy agreement. Siemens is a leader in this field, 

and is able to meet our needs reliably at the appropriate quality level. All shipments of 

smart cards will be accompanied by a quality control report. All software and hardware will 

be shipped from our facility, under our label. 

Highlights 

What is important to notice is that the presenter uses this viewgraph to mention 

positive attributes regarding company activities. He does not merely present a 

litany of manufacturing objectives. The viewgraph is clearly laid out in a simple format, consistent with the style used for representing the marketing and research and 

development objectives. 

If the company will be implementing a complex manufacturing plan, it is 

recommended that this viewgraph be followed with a manufacturing milestone and 

timeline chart. Since the manufacturing plan is not complex in this example, a 

Customer Service viewgraph is substituted. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 169 
VIEWGRAPH 19 

Viewgraph 19: 


Customer Service Objectives and Milestones
 

SOARRELL MEDICAL SYSTEMS 

Customer Service 

■ Attract and retain multi-functional team 

■ High quality on-site client orientation 

■ Proactively call client 

■ Internet support 

■ Fill orders within 1 day 

Narrative 

Customer Service will be a critical element of 

Soarrell’s “Annual Physical and Patient 

Verification Software.” Up to this point, I 

have mentioned production of components 

only for sake of clarity. Our Customer Service 

is what will make this package acceptable and 

will differentiate Soarrell from component 

providers. 

In pricing Soarrell’s product, our 

customers and we have decided to take a risk 

by accepting milestone payments. One upfront fee is followed by milestone payments 

during a six-month period, as measured by 

minimal disruption to the medical practice 

and increased patient satisfaction. In order to be successful with this approach, Customer 

Service is pivotal. 

Our objectives are to attract and retain paramedics to be a part of a multi-functional sales and customer service team. Each team will consist of a paramedic and a software 

specialist. Other objectives are highlighted on this slide. I would be happy to discuss them in 

greater detail following this presentation. 

170 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Challenges/Requirements/Opportunities 

4 

Viewgraph 20: 

Risks and Contingencies 

Viewgraph 21: 

Constraints 

Viewgraph 22:
 

Human Resource Requirements
 

Viewgraph 23:
 

Financials: Income and Expense
 

Viewgraph 24:
 

Financials: Cash Flow from Operations
 

Viewgraph 25:
 

Financing Needs
 

Viewgraph 26:
 

Investor’s Return
 
CHALLENGES/REQUIREMENTS/OPPORTUNITIES 

■ 

■ 

■ 

■ 

■ 

What are the risks of failure? What are your constraints? Use this discussion 

as an opportunity to show you are prepared! 

What are your human resource requirements? What is your timeline for 

acquiring them? 

When will you achieve positive cash flow? 

How much financing do you need and for what purposes? 

What will be the investors’ return on investment? 

© DAWNBREAKER PRESS, 1998	 EQUITY INVESTORS 173
 
VIEWGRAPH 20 

Viewgraph 20: Risks and Contingencies 

SOARRELL MEDICAL SYSTEMS 

Risks & Contingencies 

Event 

Failure to 

have Customer 

Service Department trained 

& in place 

when needed 

Impact 

Loss of 

30% revenue 

Probability 

20% 

Response 

1. Increase 

recruitment 

2. Increase 

internal training 

3. More emphasis on CD-ROM 

sales 

What 

The risks and contingencies section of 

business plans and presentations often 

differentiates the mediocre from the 

excellent. There are always risks associated with business. The goal is to anticipate and prepare for them in advance, so 

that you can forestall many potential 

problems. Risks are associated with each 

functional area. There could be critical 

research and development tests that fail. 

Sales could proceed at a slower rate than 

predicted. Your competition could launch 

an aggressive price war to erode your 

market. In business anything is possible. 

It is wise to assess the probability of occurrence of various events that could negatively impact your business. Prepare, try to forestall the events, or map out alternative plans of action for those situations that are beyond your control. 

Why 

Investors know that there are risks associated with their investments. It is important that they be able to assess the risks and determine if they wish to proceed. 

The biggest single risk for an investor is management. However, if you have done a 

thorough job of planning, you should be able to appropriately convey the strengths 

of your management team and minimize concerns about management risk. 

Pitfalls to Avoid 

To many technology entrepreneurs, sharing information about your risks is counterintuitive. In fact, it may not seem beneficial at first blush. However, by sharing 

information you convey your degree of preparedness. The discussion of risks and 

contingencies has to be presented in a positive light. Assure that your narrative 

doesn’t come across as a litany of negatives; that would certainly be harmful! 

174 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Variations 

The nature of the risk that you select to discuss will again vary depending upon 

your company’s mission and commercialization strategy. Do not be comprehensive 

in your treatment of this topic; use illustrations. 

Narrative 

When launching a new product, it is of utmost importance to evaluate the risks and contingencies relative to this new direction. We have evaluated all of the major foreseeable risks and 

have assigned a probability to each of them ranging from 0-100%. For those risks which we 

evaluated as having a probability of 20% or greater, we have developed a contingency plan. 

As an example, we took a look at the potential risk associated with our Customer Service 

Department not being in place on time. We evaluated the probability of occurrence at 20%. 

The potential loss to Soarrell would be approximately 30% of our income, given the manner 

in which we are sharing risk with the customer. By the way, our pricing method is a new 

trend in this field—and one that we have to use in order to break into this market. 

We are not waiting, but have implemented three actions. We have (1) accelerated the 

rate of recruitment to the Customer Service Department, (2) enhanced internal training of 

our staff by Dr. Bolton, and (3) made a stronger thrust into selling CD-ROMs directly to 

patients. There is no risk sharing with direct customers of this sort. 

Highlights 

Notice that the presenter discussed only one risk and used this as an opportunity to 

reinforce that the company is prepared. It was clear that the assessment process 

used had already resulted in risk reduction; i.e., the three-step program involving 

Customer Service. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 175 
VIEWGRAPH 21 

Viewgraph 21: Constraints 

SOARRELL MEDICAL SYSTEMS 

Constraints 

■ Customer Service Ranks 

■ Funds for adequate Marketing & Sales 

■ NOT all key functional areas are in place 

■ Unpredictable sell cycle (1 year) 

What 

The discussion of constraints is similar to 

the topic of risks and contingencies. In 

this section you are acknowledging those 

factors which could impede the growth 

of your firm if not addressed carefully. 

Why 

By describing constraints on your ability 

to meet your goals, you are in essence 

saying that you recognize that there are 

certain aspects of your firm which need 

to be strengthened. Investors will see 

this, once they start probing. By raising 

the issue, you are acknowledging its 

existence and taking the first step to overcome it. 

Pitfalls to Avoid 

Avoid being negative. Present the information as a sign of your strength and wisdom. Do not say things like, “We know that we’re lousy with marketing and sales; 

that’s why we’re looking for a partner,” or “We’re technical people and we want 

someone else to do that other stuff.” This also sends a negative message—and it 

doesn’t work! The reason we are belaboring this is we have heard too many people 

initially address their constraints in this fashion. 

176 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Variations 

Depending on the audience and the nature of your commercialization strategy, you 

may decide to omit this viewgraph. Such frankness is useful when seeking equity 

investors, but is not relevant if you are presenting a licensing opportunity. Also, you 

could combine the discussion of constraints with the treatment of contingencies and 

then eliminate this viewgraph. 

Narrative 

Realistically, one must look inwardly and evaluate the overt constraints on the success of 

Soarrell Medical Systems. The key to our success is that we recruit talented individuals to fill 

the positions identified in the organizational structure that I will show you momentarily. We 

also recognize that, given the dynamic nature of this field, we could either experience a slow 

sell cycle initially or such a fast one that it outstrips our capabilities. Key to our success in 

overcoming the constraints is the timely infusion of first-round financing. 

Highlights 

Note the tone of the narrator and that what he is saying does not exactly duplicate the words in the accompanying viewgraph. The messages compliment each 

other well. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 177 
VIEWGRAPH 22 

Viewgraph 22: Human Resource Requirements 

SOARRELL MEDICAL SYSTEMS 

Human Resources Requirements 

Tech. Transfer 

Sales 

Customer 

Service 

New Products Distributor 

Marketing 

Hardware 

Production 

Finance & 

Administration 

President 

Suppliers 

QC 

= 1998 

= 1999 

= In place 

What 

The purpose of this particular viewgraph 

is to show the human resources that will 

be required to attain the goals and objectives you have set forth. 

Why 

It is common for technology entrepreneurs to underestimate the resources 

that will be required to bring products 

to market successfully. The reason for 

including a phased organizational chart is 

to demonstrate that you have anticipated 

the resources that will be required to 

drive your company. A phased organizational chart allows you to show in one graphic what the company will look like over 

the next three to five years. The key, evident in the upper left-hand corner of the 

viewgraph, enables you to show when functions will be added. If you wish, you can 

place numbers in each box to indicate the number of hires in each functional area at 

each point in time. 

Pitfalls to Avoid 

With the numerous discussions in the popular press about organizations becoming 

flatter, some technology entrepreneurs have been representing their organizational 

structure in novel ways. They tend to show that there is little differentiation 

among people. Such a chart may be useful internally, but for conveying resources 

to potential investors, it is better to represent your organizational structure in a 

more conventional manner. Your organizational charts should show roles and 

responsibilities and a chain of command. 

178 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Another common error that many entrepreneurs make is to put their name 

in all the management positions. Again, this is not viewed favorably. One person 

cannot adequately grow all aspects of a company beyond a very limited point. If 

you plan on accelerating the growth of your firm, it would be safer to represent 

functional areas without names and to seek additional staff promptly. 

Variations 

Another common way to represent human resource requirements is by 

using a table. List years as column headings, and use functional areas as headings 

for each row. Then enter the number of people that will be working in each functional area by year into each table cell. Be sure to include staff totals at the bottom 

of each column. 

Narrative 

Soarrell Medical Systems has a sound plan for growth. Currently, we have three key people 

on the management team in place in Tech Transfer, Finance and Administration, and overall 

company management. In order to accelerate the market’s awareness of our products, in 1999 

we will be adding people to marketing, customer service, and distribution. We are looking to 

expand our cultivation of the market further by teaming with a large CPR provider who has 

an existing distribution network in place. Since our near-term focus is product introduction, 

we will be adding a fourth party to our management team during the fourth quarter, to head 

up the Customer Service Area. 

Highlights 

Notice that the presenter is beginning to weave in themes that were mentioned at 

the outset. Here again, he indicates an interest in teaming with a CPR provider who 

has existing distribution networks. At this point in your presentation, begin to add 

narrative that relates back to the business opportunity. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 179 
Viewgraph 23: Financials - Cash Flow 

 

SOARRELL MEDICAL SYSTEMS 

Cash Flow from Operations 

$5 — 

$2.5 — 

$0 — 

-$2.5 — 1998 1999 2000 2001 2002 

VIEWGRAPH 23 

What 

For emphasis, Cash Flow is represented 

graphically, since lack of cash represents 

one of the key reasons why companies 

fail. Cash flow is an index of your company’s health and is therefore of great 

interest to investors. Cash flow is not the 

same thing as profit. Profit is calculated 

by subtracting expenses from sales, 

while cash flow is the difference 

between actual cash receipts and cash 

payments. 

Why 

Many companies fail because of the lack 

of cash. It is important for investors to see how long the cash flow will be negative 

and thus how long outside funding such as loans, venture capital infusions, and the 

like will be required. When your company begins to have a positive cash flow, 

investors can begin to realize a return on their investment. 

Pitfalls to Avoid 

This chart is based on the pro forma cash flow analysis made in your business 

plan. Financial projections are based on reasonable and clearly articulated 

assumptions. Be sure when calculating cash flow that the income is based on 

cash receipts and not sales. The reason for this differentiation is that payment for 

sales usually lags product delivery by one to three months. Thus, a sale does not 

constitute cash on hand until you have received the actual funds for the sale, 

reflected in cash receipts. 

180 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
The years indicated on the horizontal axis should correspond with the dates when 

you anticipate an infusion of funds from your potential funding source. 

Narrative 

We will need an infusion of funds during each of the next two years to cover the costs associated with product introduction and customer support. In 1999, as our early sales are made 

into the markets, we begin to see a positive cash flow. With the development of a teaming relationship with a major player in the CPR industry, our projected sales will accelerate. By 

2002, we will have a very healthy cash flow position. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 181 
VIEWGRAPH 24 

Viewgraph 24: Financials - Income and Expense 

SOARRELL MEDICAL SYSTEMS 

Income and Expense Statement 

In $000 Year 1 Year 2 Year 3 Year 4 Year 5 

Sales $30 $2000 $6000 $17,500 $35,000 

Cost of Sales* 45% 40% 30% 22% 22% 

Gross Margin* 55% 60% 70% 78% 78% 

Operating Expenses* 65% 55% 59% 58% 56% 

Income from Operations* (-20%) 5% 11% 20% 22% 

Net Income* (-17%) 3% 10% 18% 20% 

*Expressed as %’s of sales 

What 

The most common elements of an 

income and expense statement are listed 

below: 

SALES 

COST OF SALES 

Materials 

Labor 

Overhead 

Total 

GROSS MARGIN 

OPERATING EXPENSES 

Marketing 

Research and Development 

General and Administrative 

Total 

INCOME (LOSS) FROM OPERATIONS 

INTEREST INCOME 

INCOME (LOSS) BEFORE TAXES 

TAXES ON INCOME 

NET INCOME (LOSS) 

182 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
There are many variations on this theme. However, you need to keep things simple 

so that the information can be grasped quickly and retained. 

Why 

This is indeed the bottom line. You must present your financial highlights clearly 

and simply. 

Pitfalls to Avoid 

Avoid presenting too much data. You don’t want to lose your audience. Although 

this presentation is simplified, the financials in your business plan should be well 

developed and comprehensive. 

Variations 

You can represent the financial information in absolute numbers and/or percentages. 

In the viewgraph presented on the following page, absolute numbers were provided 

for the sales forecasts only. Everything else was represented as percentages of sales. 

To make the message more salient, some elements of a typical income and expense 

report were omitted. 

Narrative 

In year one, our projected sales will be modest. However, our distribution channel will be in 

place and sales volumes will accelerate. By year five, we project sales of $35 million. At the 

outset, the cost of sales will be relatively high, as we will be developing a new distribution 

channel and selling to a somewhat conservative market. However, a variety of enabling complementary technologies that are expected to become available during the next two years will 

provide the impetus for more rapid growth. When we finalize our teaming arrangement with 

the CPR provider, our cost of sales will decrease. By 2002, the fifth year of operation, our net 

income will stabilize. In that year alone, our net income is projected to be $7 million. 

Highlights 

Notice that the presenter only draws attention to the most salient items in this verbal presentation. Details can be addressed individually in one-on-one conversations. 

As appropriate, the entrepreneur may want to compare these percentages to industry standards. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 183 
VIEWGRAPH 25 

Viewgraph 25: Financing Needs 

SOARRELL MEDICAL SYSTEMS 

Financing Needs 

■ $2 million in two definitive stages: 

■ First-round financing $1 million for customer 

service and product introduction 

— 3rd Quarter, 1998 

■ Expanded Marketing and Sales 

— 3rd Quarter, 1999 

What 

You must articulate clearly what your 

financing needs are. Tell potential 

investors how much money you need, 

when you need it, and how it is to be 

used. Also mention other needs potential 

investors might help you meet—for 

example, expertise, contacts within the 

industries of interest, and the like. 

Why 

Although it should be obvious why 

potential investors need to know this, 

some entrepreneurs refrain from clearly 

articulating this information in their 

presentation. 

Pitfalls to Avoid 

Be careful not to demand financing. Your presentation should be a request. The 

manner in which you present your financing need should clearly convey that you 

are looking for a partner, not just a backer. 

184 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Variations 

There are many possible financing arrangements. You should explore these options 

thoroughly during your business planning. 

Narrative 

We are seeking a total of $2 million in two rounds of financing. We need $1 million to attract 

and retain a multi-functional marketing and sales team, expand the customer support function, and begin the product introduction process. Ideally, we are looking for a venture capital 

firm with strong ties to the medical practice management industry to provide this first round 

of funding. Our preferred commercialization strategy is ultimately to team with a major 

medical practice management software developer and to be acquired by them in year five. We 

will seek our second round of financing from a strategic ally who will have the option of purchasing Soarrell Medical Systems in year five. The acquisition price would be twice sales OR 

at a capitalization rate reflective of this industry. It will be established by an independent 

third party at the time of the potential acquisition. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 185 
VIEWGRAPH 26 

Viewgraph 26: Investor’s Return 

SOARRELL MEDICAL SYSTEMS 

Investors Return 

Venture Capitalist 

Acquisitions in year 5 at 5-10x on initial investment 

Management buy-back 

CPR—Open up profitable, new market 

Prevent competition from gaining market share 

What 

This section of your presentation specifically addresses the financial return to the 

investor; i.e., the value created. (This is 

not the same as the social rate of return 

you were required to address in your 

ATP proposal.) Value may be expressed 

in numerous ways including Return on 

Investment (ROI), Return on Assets 

(ROI), and Book Value. The level of 

return investors seek will vary with the 

type of investor. Institutional investors 

typically want a minimum return of 5x 

on their investment within five years. A 

strategic ally will often accept a lower 

ROI (15-25%). This may occur when the capabilities of the potential acquisition 

enhance the ally’s competitive position or increase its revenue generation capabilities through savings or new revenue generation opportunities. The 20% ROI targeted by the Soarell management team would be acceptable to a potential strategic 

ally, but would not hold out much appeal to an institutional investor. Therefore, the 

company might want to buy back its stock in the event that the strategic ally does 

not acquire the firm, and/or the company might need to reconceptualize its commercialization strategy. 

The management team has presented a sound plan for growing this market 

and has a good intellectual property position. An investor with ties to the CPR market might see the potential in a different way and ask the management team to 

rework their numbers with a different set of assumptions. A more aggressive 

approach to the marketplace might result in a higher ROI. 

Why 

Value creation is at the core of an investor’s business. It must be addressed from the 

investor’s perspective. 

186 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998 
Pitfalls to Avoid 

The most common mistakes technology entrepreneurs make are: (1) failing to 

address the investor’s return at all in their presentation, or (2) announcing how 

much equity they are willing to give up in exchange for financing. Failing to 

address an investor’s return reinforces the belief that the technology entrepreneur is 

simply looking for a source of capital to continue research and development and is 

not interested in creating value. If you are seeking money from the private sector, 

approach the search responsibly and knowledgeably. 

The amount of equity that will be offered should be negotiated privately, 

after further meetings and greater understanding of investor’s requirement. A figure 

you pose in your presentation might be much higher than you would need to provide, or so small as to seem ludicrous. However, you should have made some private decisions about how much equity you are willing to relinquish and checked 

with colleagues knowledgeable about the financial community to determine if your 

decision is reasonable. Be prepared, but negotiate equity sales privately. 

Narrative 

As was mentioned earlier, we are looking to provide our investors with a 20% ROI. As this 

market continues to evolve, we will have to be a larger company to supply the market. 

Therefore, we are growing this business with the intent of being acquired within five years by a 

large firm in the practice management arena. 

Key to our success is forming a successful strategic alliance with a CPR firm that has 

an existing distribution channel. This partnership will bring an additional product to add to 

the distribution channel, and enhanced customer satisfaction, and increased market share. 

I will be available to talk with any interested parties after this presentation. I have 

an executive summary from our business plan and other literature which I will be glad to 

share with you. Thank you for your attention. 

Highlights 

The presenter has woven together a number of the themes and financial highlights 

mentioned previously in his presentation and has closed with a clarification of how 

value will be created for the equity investor and the strategic alliance partner. 

© DAWNBREAKER PRESS, 1998 EQUITY INVESTORS 187 
Synthesis
 

This sample presentation to potential investors or allies marks the end of this 

section. 

The following collection of activities can be used by the technology entrepreneur with or without the assistance of an experienced guide. The activities 

should be completed prior to preparing the viewgraphs or other documents used to 

present your business opportunity to others. Completing these activities will help 

assure that you are prepared to meet the challenges that lay ahead. 

188 EQUITY INVESTORS © DAWNBREAKER PRESS, 1998