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The Plan and the Pitch

The pitch and business plan for


investors and partners
Received: November 8 2011
Arthur A. Boni
is John R. Thorne Chair of Entrepreneurship; Distinguished Career Professor; and Director, Donald H. Jones Center for
Entrepreneurship, Tepper School of Business, Carnegie Mellon University.

Abstract
This article covers the essentials of constructing and delivering a “pitch” of a business opportunity to potential
investors or corporate partners. We advocate constructing an effective pitch first and then using that as a guide
to prepare your business plan. The content of the pitch itself as described herein in effect comprises the elements
to be incorporated into a business plan as a more comprehensive documentation of the business. Therefore,
focusing efforts on creating and delivering the components of a compelling pitch will provide the essence of what
you will then need to put into prose as a business plan. So, our mantra is “pitch then plan,” i. e. don’t waste your
time writing prose until you know what you need to write. Furthermore plans change many times between the
first writing and successful implementation.
Journal of Commercial Biotechnology (2012) 18, 38–42. doi: 10.5912/jcb.509
Keywords: pitch; business planl investor; partner

INTRODUCTION special session to this topic (see article by Boni and We-
ingart in this special edition).

P
itches do not come easily, so our recommenda- In the Biotechnology Entrepreneurship Boot Camp
tion is to work up a pitch and practice it multiple we assemble two sessions to demonstrate how to give a
times with multiple audiences. This is an iterative pitch. The first is targeted at venture/angel investors and
process and as you proceed to try out your pitch with the second to corporate partners. We assemble panels to
diverse audiences (customers, partners, investors, team which CEOs give their pitch, and then get “grilled” in
members), you will receive questions and constructive real time by real investors and corporate partners. Seeing
feedback that will in effect help you to refine your under- this process in action provides a great learning experi-
standing of the market need, how to articulate the value ence for both the CEO and the participants in the boot
that you create, your go to market strategy, etc. Plans camp. This article will illustrate that the pitches basically
don’t sell opportunities; people do via their pitch. Inves- contain the same elements, but that the elements of fo-
tors typically invest in management teams — especially cus for a venture pitch and a corporate pitch may dif-
those with good opportunities and an ability to articu- fer somewhat. Distinctions will be made in the article.
late that opportunity. It is well known by most experi- Unfortunately we cannot simulate the real time learning
enced investors that a business strategy changes many experience in this article, but the information contained
times from inception to successful execution. Therefore, in this article is provided to the audience, to the present-
at the “end of the day” most will invest in a team that ing CEOs, and to the VC/partner panels prior to the Boot
can survive, grow, and thrive in the face of incredible Camp itself.
uncertainty and risk. The team is so important that our The setting for the pitch is that you have been able
Biotechnology Entrepreneurship Boot Camp dedicates a to get an introduction to an angel investor, venture capi-
talist, or potential corporate partner. This personal in-
troduction or referral is generally required, especially
for a venture or angel investors since they are deluged
Correspondence: Arthur A. Boni, Ph. D., John R. with plans and requests for audiences. They are not going
Thorne Professor of Entrepreneurship, Tepper School of to be able to spend the time reading through a business
Business, Carnegie Mellon University, Pittsburgh, PA plan (or perhaps even an executive summary) to decide
15213 US. Email: boni@andrew.cmu.edu whether or not to meet with you. It is also helpful with

38 Journal of Commercial Biotechnology ht tp://www.CommercialBiotechnology.com


the corporate partner since it may not be clear whom to
contact in a large organization. Therefore, an introduc-
tion from someone whom they know, trust and respect
Know your Pitch a
will help with setting up a meeting and also prevent
audience Business
your hard work from ending up “in the wastebasket or
shredder.” There will generally be a short phone call to
the appropriate person in the organization and this is
Clarify
your first opportunity to deliver your “elevator pitch.”
Stay short statements
The ability to deliver a short compelling summary of and focused with
your opportunity sets the stage for engaging your audi- business
ence. We cannot stress enough the importance of being relevance
able to do this in the short amount of time (comparable
to a ride on an elevator) when you encounter someone
for the first time. Your passion and dedication need to Figure 1: Preparing for the pitch
come through. It’s not the pitch itself, but your ability to
articulate your venture concept, why you think it is dif-
ferent and will succeed, and what you plan to do in a few your pitch should consist of 10 slides,
short sentences. You can convey the importance of the 20 minutes, and 30-point font. You can
problem, the uniqueness of your solutions, and the criti- generally make all of your points on 10
cal skills that you and your team will bring to the success slides, but you may need additional slides
of your opportunity — and why this would set the stage as backups to get into detail as questions
for making money and for the corporate partner to find are asked. A first meeting will generally
a significant opportunity for their portfolio. The purpose not last more than an hour, so 20 minutes
of the elevator pitch is to convince them that they want of planned presentation will expand to an
to hear more in a meeting and perhaps request some hour or so with questions and discussion.
preliminary information such as an executive summary A 30 point font means that you should not
prior to the meeting. cover a slide with so much material that
Now, at the meeting, you must convince them that it really can’t be read by someone with
your opportunity is a good one for them. You won’t get a normal vision. Use pictures or simply
second chance to make a good impression. Therefore, be- graphs/charts so that they will listen to
fore the meeting you should prepare yourself as follows: what you are saying (instead of reading
ahead and getting confused). You should
• Know your audience and prepare for high- know the key points that you want to make
stakes selling. Anticipate the questions so that you don’t need to write down every
that may be asked and prepare answers point that you will want to make verbally.
to them. Do some market research on the • Kawasaki1 also advises that the
firm and see what deals they have done, entrepreneur ask himself or herself
what they like, what they don’t like. Talk to the question “so what?” That advice is
someone who has done business with the particularly pertinent to the technologist
firm previously including the contact that who assumes that the audience is as
you used to get the meeting. familiar with their jargon as they are.
• If you are talking to a venture capitalist Anticipate that the audience may or
be prepared to pitch a business and not may not understand the significance of
a product. They invest in businesses. something that you understand very well
Corporate partners tend to be more but that they do not. So anticipate this and
interested in products since most typically explain the significance of what you have
the partner will bring the product to just said in terms that they understand
market thru their organization. However, with a “for instance” to really make your
they will need to be convinced that your point.
business is a viable partner that will be
able to deliver the product to them over
time.
• Stay short and focused. Guy Kawasaki1
in “The Art of the Start” suggests that

Apr il 2012 I Vo lu m e 18 I N u m b er 2 39
The Anatomy of a Pitch Title
Current Slide
Problem
At the start of your pitch, the first objective will be to get Status
the attention of the audience and have them in effect an-
ticipating to hear more about the opportunity and your Finances Solution
team. This is the objective of the Elevator Pitch. This first
part of the Elevator Pitch should be short and comprise
the first “15 seconds or so.” This first part is to engage Business
the audience and make sure that you highlight what you Competition
Model
do, explain why it’s important, and say something that
validates the authenticity of the opportunity. Hopefully Market Team
the audience will now be engaged and want to hear more.
Technology
You then proceed to the next part of the elevator pitch,
which should take about 60 seconds more. It should cov- Figure 2: The ten necessary slides
er the following points:

• The opportunity is big and unsolved and will need to know who you are and how to
the need is compelling contact you. This slide is just used as a visual
• Your solution is unique (can be while you give your elevator pitch. Some people
differentiated) and has a competitive may include a picture or some other object on
advantage this slide that illustrates something about them
• Identify the customer and why they or their opportunity.
care — talk about the value that you create 2. The Problem. This slide should be used to
(or the pain that you take away) illustrate a clear and compelling market need.
• How you are going to make money (and What is the “pain” or compelling need in the
return it to the investor) marketplace? How is that need addressed
• Why this CEO and team? today, what gaps exist, and who are the
customers? The goal here is to get everyone
In the elevator pitch and in the pitch itself (which in the room to buy into the problem or need,
follows) you will need to be enthusiastic, passionate, and that it really exists, and that it is significant.
authentic. If you don’t have an answer to a question don’t Often time some presenters use a “persona” to
fake it. Just say that you’ll get back with them, and then illustrate the problem in the form of a fictitious
do. or real person who can be used to make the
Your pitch should be organized into ten sections problem personal in the context of people who
as shown below (remember Kawasaki’s 10 slides). These we really know. Make it real!
topics should look familiar to you since they comprise 3. The Solution. Simply said this slide explains
the main elements of any business plan as outlined in how your proposed solution solves the
any book that includes a discussion on construction of problem, how it works, why is it different, and
business plans; c. f. Timmons and Spinelli 2, Kaplan and what are the demonstrated outcomes of the
Warren3, Dorf and Byers4 for example. The slides (as do concept as it currently stands. Why is this
you) need to communicate enough information to ex- a better solution than the alternative? For a
plain your material and also enlist intelligent questions partner, get them thinking about synergies
from the audience, while encouraging them to the next with what they do and what they need. For
step in evaluating your opportunity in subsequent meet- an investor, get them thinking of how this
ings and in the due diligence process. Keep in mind that solution will result in fast customer acquisition
you will not walk out of this meeting with a deal in hand. and market penetration.
Moving forward to a term sheet (and deal) is an iterative 4. The Business Model. The business model can
process and will take a period of time. VCs and corporate be defined as how you arrange the elements
partners each have their own process that takes months, of your business to create, deliver and capture
not days. value in the market. There are four elements:
customers, your offering (product/service),
1. Title Slide. This slide lists the name of the the infrastructure, and the financial viability.
organization, address, contact person and any See Osterwalder5 for a very compelling and
other pertinent information that your audience visual description of how business models are

40 Journal of Commercial Biotechnology ht tp://www.CommercialBiotechnology.com


constructed. You will need here to talk about competitive advantage. Also anticipate how
who is your customer, how many are there, your competition will respond to your market
the value that you create, how it is different, entry. Keep in mind that there are always
significant and sustainable, your value competitors even if it’s getting the job done in a
proposition, how you access customers (access different way.
to market channels), and how you make money 9. The Finances. You will be expected to produce
(the revenue model). For the investor this a five-year pro forma with profit & loss, cash
slide will get them thinking about exit paths flow, and balance sheet (for the business
through M&A or IPO. For a corporate partner plan). Have these in a back-up slide, but in
it will show where you sit in the value chain this section use a chart to show revenue and
and where they sit and capture or share value. cash needs over time. Some also use this chart
5. The Management Team. Most entrepreneurs to illustrate funding needs, tranches, and
want to address the management team early in value inflection points. You will be expected
the presentation since the management team is to address key metrics such as customers,
so essential to the opportunity. You will want products sold, market penetration rates, etc.
to address the issue of “why this team” in this appropriate for your business. You might
section. Identify who is on your team, list their also want to have a backup chart to list key
relevant experience(s) and expertise that is assumptions that you have made.
needed to advance your opportunity. Also list 10. The Current Status. Explain what you have
your Board of Directors and Advisors and note accomplished to date, and what still needs to be
your existing investors if you have any. We accomplished (tasks and current milestones) —
recommend that you recognize gaps in your development, IP, clinical, team, etc. Indicate
team and address how they will be filled — it is how much money you will need over time and
better to anticipate this question proactively. how you will reduce risk in technology, team,
6. The Technology. Explain your technology in market, clinical, etc. Talk about how risk is
simple terms, how it is unique and protected reduced and value created at each milestone
(yes patents are essential in biomedical over the 5-year period (investors think in terms
companies in particular and also in most of value created for each funding tranche).
technology companies), current status of your Talk a little about how you are building value
IP, and the current state of development and in your company, but be aware that investors
demonstration in the lab, clinic, etc. Are there will be thinking about how to monetize that
other technologies in development that might value in an exit — what IRRs are possible here?
be competitive or synergistic? The less text You may also want to start a discussion here
here the better. Use charts, pictures, etc. Have about next steps with the investor or corporate
backup charts or white papers available as partner.
backups.
7. The Market. What are the social, economic As final advice we recommend that you practice
and technological factors (SET Factors) or your pitch repeatedly, learn to pitch at the right level
drivers that create this market opportunity? to get the next meeting. Sell the team, the opportunity
Who are your target customers? Talk about and the synergies for the corporate partner. Have lots
market size, growth rates, market segments, of backup slides for answers to the questions (and have
market entry points, what will drive adoption, them organized and indexed for easy retrieval)! Then use
and how you acquire customers. In this latter these to write your business plan. But don’t put it into a
regard how do you drive customer awareness, bound volume since it will change many times over the
consideration, choice and retention? How lifetime of your venture. Things change frequently and
much does it cost and how long will it take to unexpectedly in the real world.
make a sale? You can also talk about regulatory
and reimbursement issues in this section.
8. The Competition. Overview the competitive The Business Plan
landscape — who is in this market, what are
the product lines, competing technologies The above can be assembled into a business plan that
in development? Show how you compare / demonstrates that your business is based on the follow-
differentiate against the competition, state your ing principle anchors as described by Timmons and Spi-
barriers to entry and reiterate your sustainable nelli2:

Apr il 2012 I Vo lu m e 18 I N u m b er 2 41
The Context
1. Creates or adds significant value to a customer (SET
or user Factors) Market Drivers, Competition
2. Solves a significant problem in a large and
growing market
The Team, Technology,
3. The opportunity can be differentiated and Infrastructure Finances,
a sustained competitive advantage can be (Resources) Current Status

developed
The Foundation Problem, Solution,
4. The market has the potential for good margins
(Opportunity) Business Model
and moneymaking characteristics
5. There is a good fit with the founders and
Figure 3: Building blocks for a winning business
management team at the time with a balance
of risk and reward — and alignment of interest
with all constituents including investors to partners, and equity ownership is important for entre-
preneurs. A good deal is further differentiated by many
The plan itself may be visualized in three layers: factors. These include with respect to the founders and
management team, but are not limited to: ability to com-
• The Foundation or Pillars of the Business municate, passion, conviction, perseverance, willingness
(Opportunity) to be coached, and ability to work in a collaborative team
·· Opportunity: The Problem (need), The environment that incorporates diverse skills sets and
Solution (your offering), The Business perspectives.
Model

• The Infrastructure that enables execution References


(Resources)
·· Resources: The Management Team, 1. Kawasaki, Guy, “The Art of the Start”, Portfolio,
The Technology, The Finances, Current published by the Penguin Group (2004)
Status 2. Timmons, Jeffrey A. and Spinelli, Steven, “New Venture
Creation: Entrepreneurship for the 21st Century”,
• The Context (Social, Economic and McGraw-Hill Irwin (2007)
Technological Drivers) 3. Kaplan, Jack M. and Warren, Anthony C., “Patterns of
·· The Market, The Competition Entrepreneurial Management”, John Wiley and Sons,
Inc. (2010)
The descriptions of the appropriate content for the 4. Dorf, Richard C. and Byers, Thomas H., “Technology
business plan are outlined in the above section on the Ventures, From Idea to Venture”, McGraw Hill (2008)
pitch. These sections may be augmented with Appen- 5. Osterwalder, Alexander and Pigneur, Yves, “Business
dices and supporting documentation drawn from the Model Generation”, John Wiley & Sons, Inc. (2010)
backup slides used in your slide deck for the pitch.
In concluding it is important to stress that biotech-
nology investment opportunities fall into the general
class of entrepreneurial deals. Deals are done every day
in all sectors of the economy and there is extensive lit-
erature on what constitutes a good deal and what does
not. That is beyond the scope of this article. However
what is important to stress here is that in biotech deals
science and technology is very important (and must be
differentiated carefully), however, the quality of the deal
is based on many more factors, and these must be evi-
dent in your pitch and your plan. Above we have stated
the importance of the team (and its advisors). A good fi-
nancial deal is good for all parties concerned so interests
must align well — at the time of the deal and into the fu-
ture. Financial return and its magnitude and timing are
important for investors, winning products are important

42 Journal of Commercial Biotechnology ht tp://www.CommercialBiotechnology.com


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