1. Investor Presentations
Gigi Wang
Managing Partner, MG-Team LLC
Board Member & Chair Emeritus, VLAB
HappyFarm Start-Up Workshops
12 November 2012

2. Different Types of Investors
 Silicon Valley has the most developed start-
up funding eco-systems in the world
 Different types of funding include venture
capitalists (aka institutional investors),
strategic/corporate investors, angel investors,
friends & family, and some governmental
grants/loans
 Many players in the eco-system provide intros
into investors – bankers, lawyers, etc

3. Friends & Family
 In addition to themselves, founders often
look to Friends & Family for initial seed
funding
 Amounts typically from $10K - $100K
 Valuation is usually deferred until a
round with professional valuation

4. Angel Funding - Individuals
 Individual angel investors invest their
private money into start-ups directly
 Best are super angels who have a lot of
experience investing in and mentoring
successful start-ups.
o includes Ron Conway (PayPal), Jeff Clavier
(Yahoo), and Mike Maples (Twitter)
 Angel investors often required a PPM
(private placement memorandum)

5. Group Angel Funds
 Some angel investors prefer to
invest with others --> Angel
Investor Groups
 Collaborative due diligence
 Valuation method varies:
1) setting valuation and taking % of
company (preferred), usually 10-
20% of early stage
2) convertible debt with preference
at Series A valuation

6. Venture Capital
 Venture Capital is the most well-known source of
funding in Silicon Valley
 Scores of VC’s in Silicon Valley
 VC’s vary in the stage of focus (early, late stage
companies, and industry focus)
 Tier 1 VC’s include Kleiner-Perkins, Sequoia
Partners, Mayfield Partners, Norwest Venture
Partners, and DFJ. Many want 25 – 40% of
company and board seat to have control.

7. VC: Money Going Into
Fund
G
GP
GP
LP P
LP LP LP GP G GP
P GP
LP LP LP GP
99% of 1% of
total total
LP = Limited Partner GP = General Partner

8. VC: Profits Coming Out
LP
LP LP LP GP
GP
G
P
LP GP G
LP LP GP
GP
P GP
80% or 20 - 30%
less of of total
total often
based on
reputation
of VC

9. Operating a VC Fund
 ~2.5% annual management fee
o Pays for office space, salaries, other G&A
o Incentive implications for small v. large funds
 All capital is repaid to LP before any profit is
shared
o ~80% of profit goes to LPs
o ~20% of profit goes to GPs
 An individual VC’s share of the total GP profit
share is called “carried interest”

10. VC Investment Cycle
 Deal sourcing and qualification: finding good opportunities
 Evaluation: deciding if there’s a good fit with investment
parameters; company history, business characteristics,
finances, business plan analysis, comparative analysis, pro
forma return model
 Term sheets: a nonbinding letter of intent
 Due diligence: ensuring that everything we believe to be
true, is true; research, references, financials, transaction
summary/approval, investment memo
 Closing: final signature and LP announcement
 Value offered: capital, relationships, management support

11. Strategic Investors
 Many corporations have Investment Funds –
they are called Strategic Investors
 Invest for two primary reasons:
o Aligns with business unit objectives (Motorola)
o To get a ROI on funds (Itochu Technology)

12. What Investors Want to Hear
About
1. What is the BIG Need or Opportunity ?
2. What is your unique solution and why is it
special? (Technology may be secondary.)
3. Who is the team that is going to make your
company a success? Who are we betting on?
4 Who are the competitors?
5. What are the revenue, business and
financial models? How much do you need?

13. 1. The BIG Need or Opportunity
 Different ways to illustrate
 Show size of the Total Addressable Market (TAM)
– big numbers
 If showing global need/opportunity, numbers on
map are good
 If showing an need in the market, graphics +
numbers would be good (ex: clean drinking water
in India)
Be creative, catch their attention
(video, skit/acting, demo)

14. 2. Compelling Unique Solution
 What is your solution? Make sure they
understand its value proposition
 Why is it so unique and compelling
about?
 It can be a really new technology that disrupts they
way things are being done (location based service)
 It can be a new business model for distribution (eBay)
 It can create new ways for social interaction
(Facebook)

15. 3. The Team
 The investor has to believe that the team can take his/her
money and successfully grow a business that provides
huge returns.
 A team that has passion and energy which is inspiring is a
must.
 Investors look for teams which have most of the
necessary skills for that company and its product to
succeed especially to adapt to change. The CEO is most
important since he/she is leading the team.
 A team with a track record of successfully starting up
companies has a BIG advantages over others

16. 4. Who Are the Competitors
 It’s necessarily to identify competitors.
 If you don’t, the investor thinks you don’t know
your market, OR that the market doesn’t have
enough potential for others to be in the business
 Look at both indirect and direct competitors
 User charts, tables, graphics and more to show
competitors and how they compare to your
company

17. 5. Financials – Business &
Investments
 Finally, it’s about how much money you are
going to return to the investor
The revenue model and the financial
projections give them insights on what you are
trying to achieve and how (Note: too many
revenue models is NOT good.)
If it’s a serious investor meeting, and it seems
like the investor is interested, have number ready
on what you want them to invest and for what
post-money valuation

18. The Three “T”’s Investors
Really Look At
 TEAM – a leadership that has a record of
experience and successes
 TRACTION – customers that have paid
and thus generated revenue
 TIER 1 INVESTORS – other investors
which are have good reputation in investing in
winning companies (minimizes risk)
*Investment guidelines according to Tim Chang, Managing
Director of Mayfield Partners

19. Accessing Silicon Valley
 Very rare that Silicon Valley investors invest in
companies outside of US unless they have
investment office there (ie China, India)
 They want to invest in things they are familiar
with and people they know and trust – remember
the 3 T’s
 Need to understand SV ecosystem and develop
network – start with Cultural Tourism – and have
deep meaningful meetings

20. Know Your Investor
 CHECK OUT WEBSITE –
 What are their areas of emphasis? Ex: Shasta
Ventures focuses on wireless, consumer, retail
 UNDERSTAND WHO IS IN THE
MEETING –
 Background of who is attending
 Observe who connects with which member of your
team
 ASK AROUND ABOUT VC–
 TheFund.com
 Feedback from other startup companies

21. Falling In Love
 Getting an investor to invest you is
like getting a guy or gal to first go out
with you, and then perhaps get
MARRIED …

22. THANK YOU!
Gigi Wang
Managing Partner, MG-Team LLC
Board Member & Chair Emeritus, MIT/Stanford
Venture Lab
<Gigi.Wang@MG-Team.com>