8. Image: @Theodore Scott
This is what they want
Able to reach > $100m rev for Angels.
VCs want > $400m or > $800m
9. They don’t care
about the rest of
your business
Until they TRULY BELIEVE the
market size is big enough
10. Focus on WOWing these 4:"
There is a REAL & significant problem
for the customer"1"
2"
3"
4"
This company has a real solution. "
No other solution exists in the market"
People will pay "
(this company’s prices)"
This is a HUGE market"
13. Process with Angels"
Pitch & Demo"
They review Financials"
Due Diligence (If angel group)"3
Get all of their questions answered"4
Rapport & trust"5
Sign legal docs & close, close, close"6
2
1
14. !
VCs: A single VC firm"
! Pitch & demo!
! Meeting #2 to #4. !
! Sometimes with others at the firm!
! Present to Monday partner meeting!
! Get term sheet!
! Negotiate & sign term sheet!
! Sheppard details until big stack of legal docs signed!
15. !
Important (1 of 2)"
! Herd mentality:!
! If they see other investors moving and they might lose out, the
investor will move!
! True for both Angels and VCs!
! You need to force enough demand from investors to get the deal
closed!
! Have polished pitch deck, pitch and financials!
! Angel groups are good outside of the bay area!
! Quote from the bay area, “Pitching to a bay area angel group is a
sign of a bad company”!
16. !
Important (2 of 2)"
! Get a rent-a-CFO for Projected financials:!
! $150 to $270 per hour!
! 3 to 7 hours to create very detailed projected
financials!
! Asked for a fixed price project!
! Get a very high quality one. They don’t cost very
much more!
17. !
The “process” – aka many VC "
! Progress in batches of ~6 VC firms!
! Hold first meeting!
! See which progress!
! Start another batch as a smaller number progress to later stages!
! In 2 months, work to have several batches progress so more than one arrive
to a term-sheet!
! More than one greatly improves chances of any funding and improving terms!
! After 4 months, VCs will have heard about you and likely think you are a “stale
deal”. Then meeting with them will likely be ineffective!
18. !
Pre-Money Valuation"
If raising under $2 million…!
If raising over $2 million from VCs:!
! Often valuation above PLUS capital raised!
! Investors get ~33% to 48% of round!
19. !
Lessons about funding"
$1m to $2 round is often better than a $500k round!
Funding goes hot and cold!
! Startups are cheap to run early, but…!
! So it costs $50k to $70k per month!
"Year 1! "
" Fund raising is hard! Near impossible!"
"Idea !Validate! !Alpha !Beta !Launch! !Traction Building!
"Year 2! "Small traction !Medium Traction ! !Huge traction / Profitable!
Raising your series A after your Seen round closes!
22. Finding Angels"
! AngelList!
! BEST: Great advisors and your network!
! Top big law firms can make some intros!
! It is hard to scale, but doable. (Lots of work)!
! Requires tons of networking!
! Often with CEOs who have raised capital before!
! Move to the bay area for 5 months!
! Linked-In!
! Tons of scouting for people who fit the profile!
23. Finding VCs"
! Research to find WHICH ones you want to target first!
! Very important: Pitching VCs who don’t match will block
raising capital!
! Find ones that work at your stage, industry, etc.!
! Easy to find the list of VCs. TheFunded, AngelList, etc.!
! Top startup law firms can make intro, as a backup!
! Intro from CEO they funded is the best!
! Target the right partner. !
! Start with Partner and above. Not associates!