1. The Business Plan
& the art of
Getting Funded
Naeem Zafar
CEO Bitzer Mobile
Haas Business School, University of California Berkeley
www.NaeemZafar.com
www.startup-advisor.com All rights reserved © Naeem Zafar 1

2. Purpose of Business Plan
• “In battle, the plans are useless …. But the
planning was indispensible”
» General Dwight D. Eisenhower
www.startup-advisor.com All rights reserved © Naeem Zafar 2

3. Personal Background
• Faculty at Univ of Calif Berkeley Haas business school
• Founder www.Startup-Advisor.com advisory to entrepreneurs
• CEO of four companies: now Bitzer Mobile
• Worked in engineering, research, marketing & sales
• Experience at one large multinational & 6 startups
• One IPO (Initial Public Offering)
• Four acquisitions, One merger, two “wind-down”, One “restart”
• Raised over $70M in multiple ways (VC, asset sale, debt, angel)
• Advised over 1,000 entrepreneurs, boards of 10+ companies
• Traveled to 76 countries, lived in 3 (including South Africa,
Kenya, Tanzania, Zimbabwe, Botswana, Morocco, Algeria …)
• Brown University engineering 1981, Univ of Minnesota MSEE
www.startup-advisor.com All rights reserved © Naeem Zafar 3

4. Agenda
• What do I need to get funded?
• What is a business plan
• Why do I need one
• When is it needed
• How long should it be
• What topics must it cover
www.startup-advisor.com All rights reserved © Naeem Zafar 4

5. What is a Business Plan
• Summation of your research & discovery
process
• You don’t start with a business plan …. You
get to it!
www.startup-advisor.com All rights reserved © Naeem Zafar 5

6. How Long Does it Take?
2-6 months 2 – 8 months 1-12 months
• Homework • Bootstrap • Prod dev
• Market research • Fund raise • Go-2-market
• Customer discovery • Team build issues
Business
plan
www.startup-advisor.com All rights reserved © Naeem Zafar 6

7. Steps for Starting Up
Market
research Create
Find unmet need Investor
Materials
Validate need
Find team Write Biz Plan
www.startup-advisor.com All rights reserved © Naeem Zafar 7

8. Why Write a Business Plan
• To organize, debate & validate reasons to start
a business
• To convince yourself, and others, why this
business will make money
– (hence worth an investment)
www.startup-advisor.com All rights reserved © Naeem Zafar 8

9. What Will Investors Require?
• Not a business plan
– Perhaps later in the process a junior associate will ask for it!
• Executive Summary
• 10-15 slide presentation
www.startup-advisor.com All rights reserved © Naeem Zafar 9

10. Newsflash!
• You cannot write an executive summary
until you have thought through the
business plan
– You might as well write it!
www.startup-advisor.com All rights reserved © Naeem Zafar 10

11. Anatomy of Business Plan (I)
Section # of pages
Executive summary 2-3
The unmet need 2-3
Market size 1-2
Competitive landscape 1-2
Your idea (with magic sauce!) 2-5
Positioning 1-4
Business model 1-3
www.startup-advisor.com All rights reserved © Naeem Zafar 11

12. Anatomy of Business Plan (II)
Section # of pages
Your Team 2-4
Go-2-Market Strategy 3-6
Key financial assumptions & KPI 1-2
Financial projections 2-3
Use of funds 1-2
Status timeline and traction 1-4
Supporting data, research, resume, proxies 5-15
Total number of pages  23 to 58
www.startup-advisor.com All rights reserved © Naeem Zafar 12

13. How Long Does it Take
• Outline the plan
• Divide tasks to individuals
• Meet regularly to discuss & debate
• People may write sections
• One person (CEO) re-writes & integrates
• Have somebody check for accuracy &
readability
• Write exec summary
www.startup-advisor.com All rights reserved © Naeem Zafar 13

14. 2: Unmet Need
• Forget about your idea (for a week) & ask
what is real unmet need that your users have!
• Are you a solution looking for a problem?
www.startup-advisor.com All rights reserved © Naeem Zafar 14

15. Validating Unmet Need
• Six key questions:
1. What issues & problem customers face?
2. Why have they not filled that need?
3. How have they tried to look for a solution?
4. What should an ideal solution look like?
5. How will they buy it?
6. Why wont they buy it?
www.startup-advisor.com All rights reserved © Naeem Zafar 15

16. Where to Validate
• Personal interviews (at least 10 conversation
per fonder – preferably 20+)
• Online surveys
• Google Adwords
www.startup-advisor.com All rights reserved © Naeem Zafar 16

17. How to Validate
• Agree among founders on key data needed
• Agree on a list of questions
• Go talk to real people
• You are NOT allowed to start a company until
you have spoken to 10 users
www.startup-advisor.com All rights reserved © Naeem Zafar 17

18. 4: Who Needs Me More?
Market Segmentation
• Start by intense domain &
customer knowledge
• Articulate pain users have
• Who has more pain now!
Startup Workshop All rights reserved © Naeem Zafar 18

19. Linked In Search
Startup Workshop All rights reserved © Naeem Zafar 19

20. Results
Startup Workshop All rights reserved © Naeem Zafar 20

21. Write & Ask
Startup Workshop All rights reserved © Naeem Zafar 21

22. Questions
• Is there a real unmet need in this area (where your products address the
problem)?
• How does he/she want to see this problem solved?
• Why have they not solved this until now – what issues are preventing the problem
from being solved?
• If a solution (or a product) existed, what would it look like?
• Who will use this product (or service) – what are these users looking for? How
badly do they want it?
• What is the buying process (in other words, who needs to approve this purchase)?
• What are usually the selection criteria?
• What price point will make this decision a no-brainer? At what price point are we
likely to find resistance?
• What are the reasons somebody would decide not to buy?
• Why hasn’t the customer bought this solution from someone else until now?
• Who else may be interested in solving this problem?
• Who in the organization is the most likely to champion solving this problem – can I
get an introduction to them?
Startup Workshop All rights reserved © Naeem Zafar 22

23. Startup Workshop All rights reserved © Naeem Zafar 23

24. Google Adwords
Startup Workshop All rights reserved © Naeem Zafar 24

25. Doing Online Research
www.Zoomerang.com
www.SurveyMonkey.com
Sites.Google.com
Survey
Online
Drive traffic to Landing
landing page Page
• Google Adwords
• Facebook Ads Collect
Tell them Value Prop &
• Emails to targets contact
Link to take survey
www.constantContact.com
www.aweber.com
Startup Workshop All rights reserved © Naeem Zafar 25

26. 3: Market Size
• Look for publically available data
• Estimate total number of users and your
revenue per user
– Then estimate how many can you get to
realistically each year
– Proxies
• VCs don’t typically invest in small markets
www.startup-advisor.com All rights reserved © Naeem Zafar 26

27. Free Sizing Data: www.census.gov
Startup Workshop All rights reserved © Naeem Zafar 27

28. Startup Workshop All rights reserved © Naeem Zafar 28

29. 4: Competitive Landscape
• Pretend to be a “user” of YOUR product
• See what you find?
• Order products, sign up for information
• Put yourself in your customer’s shoes
www.startup-advisor.com All rights reserved © Naeem Zafar 29

30. Who Should You Be Looking For
• Differentiate between customer and user!
– Pre-teen products
– Medical & hospital products
www.startup-advisor.com All rights reserved © Naeem Zafar 30

31. 5: Your Idea & Magic Sauce
• Now you can tell what you do
• How is this different
– Based on what you heard from customers during
interviews
• Use pictures, diagrams and photos,
• Videos, website mockups, whatever it takes to
ignite imagination
www.startup-advisor.com All rights reserved © Naeem Zafar 31

32. 6: Business Model
• How do you make money?
– who pays you
– what channels
– what gross margins
Startup Workshop All rights reserved © Naeem Zafar 32

33. Good Business Model
$0.50 $4.00
Startup Workshop All rights reserved © Naeem Zafar 33

34. Business Model Drives Clarity
$3 User
Google Ad
$2 Your $9
Company
Licensing Customer
fee
34

35. 7: Positioning
• We are like_____, and unlike _____
• We are like ___ except this _____
• Positioning is “what you do” etched in
do
customer’s mind (& investors & employees)
www.startup-advisor.com All rights reserved © Naeem Zafar 35

36. How Will You Appear Different to
Your Customers
Startup Workshop All rights reserved © Naeem Zafar 36

37. 8: Team & Timing
• Why us?
• Why now?
• What is so special about us
www.startup-advisor.com All rights reserved © Naeem Zafar 37

38. 9: Go-to-Market Strategy
• To launch your product you need to make
many decisions
– Pricing
– Channel selection
– Alliances
– How to lock in your first “n” customers
– Support strategy
– Customer acquisition cost
All rights reserved © Naeem Zafar 38

39. Target Market
• Identify your • Find a sliver who
target market needs you more!
5/15/2009
all rights reserved Concordia Ventures LLC 39

40. 10: Assumptions & KPIs
• What key assumptions drive your company
• What will you measure
– # of visitors
– # of conversions
– Minutes spent per page
• For a restaurant
– % of tables occupied per week?
– Total spend per table?
– # of times table rotates per night
www.startup-advisor.com All rights reserved © Naeem Zafar 40

41. 11: Use of Funds
• What will this money allow you to
accomplish?
– Launch mobile client!
– Add sales team in USA
– Work on telecom customers
• You only raise enough money to get to the
next proof point (+ cushion to raise next
round)
www.startup-advisor.com All rights reserved © Naeem Zafar 41

42. De-Risk The Deal!
• You only raise
enough money to
A
get to the next
proof point
• At “A” there is Risk B
team execution
risk, market
acceptance risk, C
technology risk
time
www.startup-advisor.com All rights reserved © Naeem Zafar 42

43. 12: Financial Projections
• 5 year projections of
– Revenue
– Gross profit
– Expenses by department
– Special expenses
– Net profit
• Conservative initially, bold later!
www.startup-advisor.com All rights reserved © Naeem Zafar 43

44. 13: Time line & Progress
• Show last six months (or longer if applicable) & 18
months forward
– (unless your business requires longer)
• What progress is made and what mile stones are
expected
– Product launch
– Employees
– Beta starts
– First customers
www.startup-advisor.com All rights reserved © Naeem Zafar 44

45. 13: Time line & Progress
Seed $100K Series A $4M Series B $7M
Q4-’07 Q1-’08 Q2-’08 Q3-’08 Q4-’08 1H-’09 2H-’09 1H’10 2H’10
Start Milestone
e.g. 1st
company #4
Prototype
Milestone e.g. 1st e.g. 10
#2 alliance referenceable
signed Milestone accounts
#3 Milestone #5 Or
Reach profitability
etc.
betas
Alpha customer
Product acquisition Prod Launch
development
Employee count 4 6 11 18 22 29 39 54

46. 1: Executive Summary
• Now write this summary
• Same topics but one or two sentences
• Show some diagram or photo to make it look
interesting
• Same 7-10 topics as paragraphs!
• Most people will just read this Exec Summ
www.startup-advisor.com All rights reserved © Naeem Zafar 46

47. Tips & Suggestions
• Don’t be disappointed as no one will want to
read it (not even your spouse!)
• It was for you! (remember)
• Lots of white space & pictures plz
• Make it visually appealing
www.startup-advisor.com All rights reserved © Naeem Zafar 47

48. Develop Your Personal Filter to Screen Ideas
Many ideas
Unmet need
Market size
Differentiated Positioning
Scalable Biz Model
Why us & why now
Good ideas
www.startup-advisor.com All rights reserved © Naeem Zafar 48

49. www.FiveMountainPress.com
www.startup-advisor.com All rights reserved © Naeem Zafar 49

50. Essential Steps to Successful Startup
• www.NaeemZafar.com/free
• Sign up and get a free eBook
All rights reserved © Naeem Zafar 50