VC 101: getting to first base
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Getting funding from a venture capital firm requires preparation. You need to research the firm and build relationships before pitching your idea. The pitch deck should be concise, using bullet points and images to highlight the key aspects of your business proposition, team, market opportunity, competition, technology, financial metrics, and funding request. When meeting with VCs, passionately discuss your idea while being able to answer any questions about your numbers or plans.
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VC 101: getting to first base
- 1. VC 101: getting to first base Katy Turner, Eden Ventures
- 3. before you meet... figure out whether you should be taking VC $ if yes, do your research how much $ do they have? think about the VC value add read their website/blog/twitter feed
- 5. how to meet... try and get an introduction through their nw meet them at events get into conversation with them see if they offer open office hours talk to their existing portfolio companies build the relationship before you need the $ you need to provide a pitch deck
- 7. the pitch deck never ask a VC to sign an NDA documents shouldn’t be long or too text heavy use images and bullet points don’t use powerpoints full of text one section per slide whet their appetite
- 9. be focused: proposition & customers team market opportunity competition technology / defensibility financials / metrics funding
- 11. your first date be passionate and enthusiastic don’t read from a script be prepared to answer qs at any stage be all over the numbers get the VC to talk about their approach be sure you cover funding / milestones leave them wanting more
Notas do Editor
- some straight forward and easy tips on how to find a VC, how to approach them and how to engage with them on your business ideaMy background – Orange marketing, VC for 3.5 yrs, shortly joining Swedish StartupVideoplaza
- Trying to secure funding is like finding a date and falling in love – the dating analogy is often used to describe the fundraising process
- Figure out if you need VC $ - what level of ambition do you have / how big do you want to grow your business? Does this match with the VC’s view of the world? Look at all the alternatives for fundingIf yes do your research – what stage do they focus upon? What domains / industries do they have experience in? What does their track record look like?How deep are their pockets? – get investors in early who can follow their money – raising finance is v time consuming!What value can the VC add aside from money? – introductions, help with hiring, productisation, go to market strategies, follow on fund raising etcGet more info on them for their public presence and content – blog etc
- So how do you get to meet the right VC guy or girl?
- 150 plans per mth – 5 deals per yrNever funded a plan received coldBest deals come via the nwGet into conversation with themcomment on their blogtweet them
- In a market where VCs are oversubscribed how can you stand out from the crowd?One way after having made initial contact with them, is to get your pitch deck working as well as possible
- NDAs at the start of the fundraising process are really unnecessary – If VCs signed every NDA they were presented with, they would not be able to talk to anyone; equally the only we have credibility and a good brand in the market is by treating each plan confidentially. NDAs cause additional stress and time delays at this part of the process and are often entirely counter productive (i.e. you will piss the VC off before you have even spoken to them).documents shouldn’t be long or too text heavyWord docs 5 pgs maximumPowerpoint 10 slides maximumDon’t use powerpoints full of text – don’t for example put four slides on to one pageWhet their appetite – be clear and succinct, without going into every detail
- One of the biggest assets you have is your team and yourself – so its really important to sell the team and the vision clearly
- These are the areas I suggest covering in the pitch deck: Get the elevator pitch honed – be able to describe the proposition in one or two clear sentences. Always worthwhile tackling this from the customer’s viewpoint i.e. Who do you sell to, what is their pain and how can your solution solve their pain Sell the team and make it clear why this is the best team to build the business. Also be clear about how the team needs to develop going forwardswhats the market opportunity – top down using for example 3rd party data on mkt size, or bottom up thinking about how many users there and how much revenue you could generate from each of them.Technology/defensibility is concerned less with patents, than with the idea that your technology is not really easily replicable – we are interested in technologies that couldn’t be recreated in a few wks with a team of coders be really clear on the numbers and metrics which will drive the business- Funding - specify how much money you want and what you will use it for (milestones)
- One you have built the initial relationship, and sent through your deck, you may be ready to go on your first date with the VC. Fix up a meeting with VCs who you think have really complementary skills to you. Then, on the date, what should you focus on getting across?
- Be passionate and enthusiastic – you are selling yourselfDon’t read from a script – talk around the subject, don’t just read the words on the slideDon’t expect that you can run through a presentation without being stopped and asked questions all the way through – the VC will want to jump in and ask questions as they occur to them – they will not want to wait until the endBe all over the numbers – VCs get concerned by entrepreneurs that don’t have the key numbers in their heads – get really comfortable with being able to talk about revenues, costs, margins, and any other key metrics that drive the businessGet the VC to talk about their approach and ask questions – get them to sell to you. They should be impressed with your ability to negotiate with them, and assess them – it means you will be able to negotiate well when you strike deals for your businessMake sure you think about what you can achieve in very practical terms with the money you are raising – for example sign up x number of customers, get to Y revenue, deliver z partnerships, in 12 mths. Be very clear on where the money gets you to
- Hopefully if you have the right team, a great market opportunity and some interesting technology, you can navigate the fundraising process to build a lasting relationship with a VC who will help you develop your business in partnership with you – a long and happy marriage....