A Ye Chapter:Nigeria workshop on investment readiness delivered by Tomi Davies on the 20th Dec 2021

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Investment Readiness Workshop
20th December 2021
Nigeria

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● Introductions
● The POEM Framework
● Investment Readiness
○ What’s in a startup business plan?
○ How do you pitch to Investors?
○ What comes after the pitch?
○ What’s due diligence?
● Q&A
● Session Feedback
Agenda

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The POEM Framework®
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...a simple tool for understanding technology-enabled start-up ventures
Vision is the founders story about the problem and their innovation driven future commercial
solution to it as a startup business venture.
Proposition is the startups offer of products (or services) to a target customer base in a
specified market.
Organisation is the startups people, processes and technologies that deliver the proposition.
Economics measure the startups use of available capital for funding expenses to generate
revenues that create impact.
Milestones measure the startups achievements, challenges & targets from MVP to Series A.
CORE STRATEGIC AREAS
The POEM Framework® identifies core strategic areas for startup development

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What’s Investment Readiness?
Pitch Deck
● A pitch deck is a brief presentation that gives potential investors or
partners an overview of your business plan, products, services and
growth traction.
Business Plan
● A business plan is a written document that describes in detail how
your startup business defines its objectives and how you are to go
about achieving its goals.
Data Room
● An electronic due diligence data room, often referred to as a virtual
data room, is online cloud storage startups can use as a safe place
to house important data, such as contracts and corporate
documents so they can share their information securely and/or
confidentially with others such as with a potential investors.
★ The process of investment-readiness is about preparing
answers to some of the essential questions investors will
most likely ask from founders as part of their
pre-investment due-diligence.
★ Founders should research investors in their ecosystem
to understand their strategies and whether or not their
startup is a fit.
★ Investment-readiness is essential as it provides the
financial and fundraising capability that investors
expect from founders, thereby significantly increasing
the chances of being funded.
★ Founders need to prepare before they approach
investors in order to master their options and gain
credibility.
★ To do this Founders need to have up to date:
○ Pitch Deck
○ Business Plan
○ Data Room

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Using the POEM framework, your plan should
consist of these seven sections:
❖ Executive Summary
❖ Vision
❖ Proposition
❖ Organisation
❖ Economics
❖ Milestones
❖ References
What’s in a startup business plan?
★ A startup business plan is a written document
that outlines your ideas and strategies for
launching, managing, and eventually exiting
your new venture
★ It is a living set of documents created from
desk research, field research, discussions and
thinking you have done about your startup
and the industry segment it will be playing in,
showing the current market (as you best
understand it through the eyes of those that
know), and how you intend to fund and run
your startup venture.
Vision
Economics
Milestones
References
Proposition
Organisation
BUSINESS
PLAN

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What’s the Executive Summary?
★ The executive summary is a precis of your business plan and
the most read part of it by investors.
★ You write your startup business plan executive summary
based on your vision for your startup and how you envision
it being brought to life through its operational activities.
★ Keep it simple and precise.
★ Begin by writing a single sentence startup introduction that
showcases the essential customer need/pain point and how
your startup solves it.
★ Then summarise the details that can be found in the
different sections of the plan typically writing a paragraph
or two for each section of the plan.

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What are your vision, mission, and values?
★ The first step to writing a startup business plan is clarifying
your vision of what you want the startup to be.
★ Once you know what your startup does, ask yourself why.
What is your startup's mission? What problem will it help
customers solve? The startup's vision statement helps
define its reason for existing.
★ It’s usually expressed in a simple sentence, but can also be
written as a short paragraph.
★ Try to answer these questions: What value does your
startup create? How will it make money? How quickly do you
expect it to grow? Are there any significant events or
deadlines ahead that need to be met?

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What’s your startup’s proposition?
★ Your startup’s proposition is what will define your venture
and distinguish you from your competitors.
★ Writing your proposition is a great way to visualise, design,
and test how you can create value for your customers in
the market.
★ It’s what should excite your customers to do business with
you, and will play a significant role in determining if they
will choose your startups product or service instead of
your competitors.
★ Note that even an exceptional proposition can still fail if
your business model is flawed or your customer knowledge
is not accurate, appropriate, relevant or up to date..
PROPOSITION
● The Problem/Opportunity
● The Solution
● The Market, Regulation, Competition
● The Customers
● The Business Idea, Model
● The Products & Services.

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How’s your startup’s organised?
★ Founders tend to and should be the primary owners of
their startup with Board seats.
★ Most startups adopt a flat organizational structure in
the early years which gives them a good result.
★ Startups however grow faster than matured ventures
but some keep the structure the same.
★ This wrong decision slows the rapid growth of the
venture and can even put a stop to it.
★ The right organisation to keep the success sustainable
must be based on the stage that the startup is as in
each stage, it needs different organisation
ORGANISATION
● The Ownership
● The Governance
● The Executive, Management, Employees
● The Organization, Ecosystem, Partners
● The Strategy, Plan, Process, Procedures
● The Marketing, Sales, Distribution
● The Operations, Logistics
● The Technology, Security

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What are your startup’s economics?
★ When planned carefully, your startups economics can set it up
for success
★ You should be aiming to do this analysis as soon as you are
confident about your startup vision and co-founder
selections, or at the very latest, before raising external
funding.
★ Many startup founders prefer to focus on building a great
venture first and then figuring out the economics over time
which could be even more time and money wasted later if you
don’t get it right at the start.
★ Attention on the economic aspects of startups tends to focus
on the external measure of fundraising.
★ Yet before this, there are many aspects for founders to
consider about setting their startup up for economic success.
ECONOMICS
● The Capital Funding & Finance
● The Customer Economics
● The Revenue Model
● The Cost Profile
● The Financial Projections
● The Risks & Mitigations
● The Social Impact & Measurements

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What are your startup’s milestones?
★ Right from the beginning, founders need to identify the most
important events or actions that must occur to bring their vision
to life.
★ Some events are prerequisites to others and you need to develop
a critical-path milestone chart that displays their sequence.
★ Identify the significant assumptions on which the startup venture’s
success depends and how milestones will test each assumption.
★ As each event occurs and replaces assumptions with information,
review the planned future milestones adjusting as required.
★ Evaluate performance based on what you have learned and what
you can apply and design your financing, resource allocations and
rewards based on the results achieved.
MILESTONES
● The Achievements
● The Challenges
● The Current Status
● The Assumptions
● The Future Milestones

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What are your references?
★ For your pitch deck and business plan to secure funding for your
startup, you must cite your sources.
★ Your plan will have topics and statistics covering your target market,
population demographics, spending habits, market trends, market
growth etc. etc.
★ Investors know how to double check assumptions, and will have no
qualms about calling your bluff and stopping the funding if they don’t
believe your stats.
★ If you forecast increasing revenue, you’d better be able to document how
a similar product or service did the same, and why yours will follow suit,
and not crash and burn in a saturated niche market.
★ So do your research and develop your forecasts using that information
making sure you document your sources in references.
REFERENCES
● The Analysis
● The Plans
● The Forecasts
● The Surveys
● The Reports
● The Other Documents

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How do you pitch to Investors?
★ Keep your pitch simple and manage timing.
★ Tell your story and stay focused.
★ Convey the unique value of your product or service.
★ Let investors experience your product first-hand.
★ Be clear on who your target customer is and why
★ Know your numbers and be prepared to support any claims
★ Be passionate and enthusiastic about the opportunity
★ Present a solid pitch deck with a strong close
★ Build a strong support team to market your social value
★ Dress professionally and practice, practice, practice

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★ If the investors, like what they hear in the pitch, they will usually ask to meet
the founder to get more information.
★ If the startup venture and team match their investment thesis and risk
profile they will typically issue a Term Sheet which outlines the material
terms and conditions by which the Investor will invest in the startup.
★ It acts as a template which, when agreed by both parties, is used as a
reference point to develop a detailed set of legally binding documents.
★ In early stage investing, term sheets are given to successful candidates by a
Lead Investor once a Syndicate, Network or Fund has agreed to begin the
investment process and due diligence
★ The idea is that once the term sheet is agreed and signed, the only scenario
when an investment would not occur is if the founders have misrepresented
the startup venture and this is uncovered in due diligence.
What comes after the pitch?

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What’s due diligence?
Due Diligence is an investigation of the
startup company for possible investment by
an investor.
★ The first funding rounds for startups are
often by angel investors who invest their
own money and view risk differently from
venture capitalists.
★ Venture capitalists perform full due
diligence of the operating business,
whereas angel investors undertake soft
due diligence to see if the startup venture
and team match their investment-risk
comfort level.
Typical checks points for soft due diligence:
★ People
○ Getting to know the founders and team, their
capability and commitment!
★ Market
○ Understanding who the competitors are, and
what edge is needed to succeed in the market?
★ IP Rights
○ Do they have full control over IP, code, logos and
relevant domains?
★ Code review
○ Is the code well written, and is the platform
scalable?
★ Budget & forecasts
○ Are they in control of the financials!
★ Traction
○ Investigate actual revenue growth, user growth,
retention, churn etc.
★ Online profile
○ What image do they convey – e.g. do they attract
followers in social media?
★ Contracts
○ Check the essential key customer / employee /
vendor contracts!

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QUESTIONS?
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THANK YOU!

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From this Workshop
What…
❖ ... topic did you understand best?
❖ … topic did you understand least?
❖ … could have been better?
❖ … was missing?
❖ … other feedback?
Workshop Feedback