If you're a college student, learn more about startup internships and careers. What roles are a fit for interns and recent grads, how do you find them, and how do you pick a good startup to work for? If instead you want to start your own business, how do you fund it?

1. 1
Intro to Startups and VCs
Jan 2017

2. Objectives
2
What are the tradeoffs in working for a startup?
How do I find startups?
How do I know a startup is a good one?
What is venture capital?

3. A quick bit about HPVP and me
Happy to chat more any time
3
• Twitter: @guyhturner
• Co-founded HPVP with Ira Weiss
• Mgmt Consultant
• Angel
• Engineer
• Cornell University (BS), Chicago
Booth (MBA)
• 2.0 kids
• Twitter: @hydeparkvp
• Early-stage software startups at
$0-3M ARR raising $1-6M rounds
• Midwest focus
• $25M Fund I, $65M Fund II
• Have invested in multiple
university seeded startups (U of I,
U of C, U of M, U of MN)

4. What Facebook, Google and other
BigCos/BigTechs want you to believe
- Secure
- High pay
- Clear career milestones
- Best senior leadership
- Unbelievable benefits
- Risky
- Low pay
- Undefined career path
- No mentorship
Startups BigTech

5. How I see it
Startups BigTech
“Don’t ask what seat,
just get on the rocket ship”

6. Reality is in the middle and about fit
- Secure
- High pay
- Clear career milestones
- More formal training
- Moderate risk
- Moderate pay with upside
- Accelerated learning curve
- It is what you make it
Startups BigTech
?
What’s the best fit for you?

7. Startup paths: Build or sell!
Developer Sales (and marketing)
Computer science
CE, EE
…or whatever…
Marketing
Communications
Economics
…or whatever…
… also analytics, data scientis, customer success

8. Here or there? …the real economics
Source: Angellist, http://money.cnn.com/calculator/pf/cost-of-living/
95
70 70
115
85 90
$0K
$20K
$40K
$60K
$80K
$100K
$120K
$140K
Developer Sales Marketing
Early Career Salaries - Nominal
Chicago SF
143
105 105
115
85 90
$0K
$20K
$40K
$60K
$80K
$100K
$120K
$140K
$160K
Developer Sales Marketing
Early Career Salaries - SF Dollars
Chicago Adjusted SF
Quality of life a major consideration

9. Where do you find startups?
Startup career fairs
VC Portfolios
Midwest Everywhere
Ann Arbor Minneapolis
CincinnatiNebraska
Madison St. Louis
hydeparkvp.recruiterbox.com

10. What should you look for?
• Do you like the people?
• Do you trust leadership?
• Do you like the culture?
• Can you learn from your
direct supervisor/team?
• Do you love the product?
Fit with you The 5 Ms
• Industry experience
• Leadership/scaling/startup experience
• Been there done that
• Size (>$500M?)
• Growth rate (>10%?)
• Level of competitiveness
• Business model fit to market/customer
• Are they selling? More now than before?
• Are they building barriers? Partnerships?
• DO THEY GET STUFF DONE?
• Strength of business model
• Uniqueness and resulting barriers
• IP
• 18 to 24 months of runway
Market
Mgmt
Momentum
Magic
Money

11. Screening shortcut: the VC screen
VCs invest in <1% of deals they see… but they also make lots of mistake!
Sourcing Screening
Due
Diligence
The Deal
Portco
Mgmt
3000
1000
30
10
5
On the radar
300
Initial meeting
Second meeting
Deep dive
Terms/TS
Deal closed
Let the VCs do the work for you.
Look for funded startups!

12. Now it’s time to negotiate:
Meet TransparentCareer.com
• Find what others exactly like you are getting paid
• Find where your peers are going
• Arm yourself with information

13. Startups or BigTech not interesting?
Then start your own and raise $$$!
…but how?

14. Why raise VC? Growth requires $...
14
Startup
$0-10M
Growth
$10-50M
Developed
$50M+
Amount
Type
Purpose
Friends &
Family Angels
Small
VCs
VCs Venture
lenders
Private
equity
PublicBanks
Test
idea
Test
marketing
approach
SCALE!!
Liquidity for founders,
employees and investors
$250K <$1M $2-3M $5-10M Sky is the limit
What does “scale” mean?
• Build products before they’re sold
• Hire people before they “produce”
• Pursue customers before they pay
Rev

15. … from different types of investors
15
Who they are
Hold
period
Why they invest
Friends
& family
Angels
VCs
Venture
Lenders
Private
equity
Obvious
Individuals and groups
$25M - $1B funds with
institutional money
$100M - $1B funds with
institutional money
$250M - $10B funds with
institutional money
They love you!!
For fun and $$
Want 30%+ returns;
Invest on growth
Want 18%+ returns;
Invest in cash flows
Want 20%+ returns;
Invest in cash flows
with equity and debt
???
5-10 yrs
5-10 yrs
5-7 yrs
2-5 yrs

16. Tiered equity structure grows with $
16
Founders
Founders
Angels
Common
Common
Options
F&F
Founders
Options
F&F
Common
Angels
Founders
Options
F&F
Preferred
Preferred
VCs
Common
Debt?
TechS
TechS TechS

17. Mechanics: Pre/post money valuation
17
Pre-money
valuation
Round size
+ =
Post-money
valuation
Ex: $5M $2M $7M

18. Entrepreneurs weigh money/terms and
“value add” when choosing VC
- Strategic and opp advice
- Customer, financing,
acquirer connections
- Brand signal for talent,
other funders, etc
- Valuation
- Size of round
- Other financial terms
- Control terms
Money Value add
In the end, relationship matters the most.
It’s a marriage.

19. So what do VCs look for…
Scalable
- Software
- High fixed cost, low
marginal cost
- Tech dev and customer
acquisition greatest cost
- Invest capital now for
profit at scale later
- >75% gross margin
Not scalable
- Service
- Low to high fixed
cost, high marginal
cost
- Scales with bodies
- <<50% gross margin
- Profitable at small
scale
In between
- Tech enabled service
- Medium fixed and
medium marginal cost
- Scales with bodies
and capital
- 40-60% gross margin

20. … fit and 5Ms (same things you should
look for)
• Stage (seed or A)
• Round size ( $0.75M – $2.5M)
• Industry (any that is “scalable”)
• Geography (Midwest)
Fit with fund strategy The 5 Ms
• Industry experience
• Leadership/scaling/startup experience
• Degrees, etc (eg, signals)
• Size (>$500M?)
• Growth rate (>10%?)
• Level of competitiveness
• Business model fit to market/customer
• Are they selling? More now than before?
• Are they building barriers? Partnerships?
• DO THEY GET STUFF DONE?
• Strength of business model
• Uniqueness and resulting barriers
• IP
• Price and other terms
Market
Mgmt
Momentum
Magic
Money

21. How do I get to VCs?
21
Descendingorderofvalue
1 Current / past portfolio company CEO
Example introduction sources
2 Trusted colleague, partner, friend of investor
3 Another investor in the current round
4 Advisor / mentor from founder’s network
5 An investor who’s not investing
Cold outreach6

22. 22
Thank you!
Please reach out with any questions
guy@hydeparkvp.com
Twitter: @guyhturner