5 Things You Should do to get VCs to say “YES” - Secrets of Startup Fundraising

1. CONFIDENTIAL
How to get VCs to say
YES
Bonnie Cheung
April, 2018

2. CONFIDENTIAL
Since July 2010
500 Startups is an Active and Global Early-Stage Investor
5/13/2018 2
$390M+ in Capital Committed1 1,800+ Portfolio Companies
San Francisco
Silicon Valley
Los Angeles
Mexico City
New York
Miami
Sao Paulo
London Istanbul
Tel Aviv
Riyadh
Bahrain
Bangalore
Kuala
Lumpur
Bangkok
Ho Chi Minh City
Singapore
Tokyo
Taipei
Seoul
People
Countries Where
We’ve Invested
Primary Geographies
The various geographies highlighted in the map result from investments we have made across all 500 Startups funds.
Approximated as of 06/30/2017 and includes the following 500 Startups funds: (a) 500 Startups, L.P. and 500 Startups-A, L.P. (together, “Fund I”), (b) 500 Startups II, L.P. and 500 Startups II-A, L.P.
(together, “Fund II”), (c) 500 Startups III, L.P. and 500 Startups III-A, L.P. (together, “Fund III”), (d) 500 Startups IV, L.P. and 500 Startups IV-A, L.P. (together, “Fund IV”), (e) 500 Startups Annex Fund , L.P. (“Annex”), (f) 500 Luchadores, L.P. (“Luchadores”),
(g) 500 Durians, L.P. (“Durians”), (h) 500 Mobile Collective, L.P. (“Mobile Collective”), (i) 500 Kimchi, L.P. (“Kimchi”), (j) 500 TukTuks, L.P. (“TukTuks”), (k) 500 Startups JP, L.P. ("Japan”), (l) 500 Startups Istanbul, L.P. ("Istanbul”), (m) 500 Luchadores II, L.P.
(”Luchadores II”), (n) 500 Fintech, L.P. (“Fintech”), (o) 500 Durians II, L.P. (“Durians II”), (p) 500 Startups Vietnam, L.P, (“Vietnam”), (q) 500 Startups Canada, L.P. (“Canada”), and (r) 500 Falcons, L.P. (“Falcons”).

3. Bonnie Cheung is a Venture Partner at
500 Startup, focusing on investing in
blockchain and healthcare related
projects.
Before 500, Bonnie led strategic planning
for the Zuellig Group, holding company of
Zuellig Pharma and EBOS (NZE:EBO.
She is also an enterprise software veteran
at IBM, AT&T, HP, Deloitte etc. She is a
chartered CFA and holds a double major
B.A. in Engineering & Economics from
Dartmouth College.

4. CONFIDENTIAL
2000 vs 2018
• Cost of starting a company has decreased by more than
90%, essentially as a consequence of open source
software and cloud computing.1
• Internet speeds are now over 1000x faster than dial-up.2 .
A New Ecosystem: Lower Costs, Lots of Scale and Global Reach
1. https://bothsidesofthetable.com/it-s-morning-in-venture-capital-ac539cd5f0e8
2. http://money.cnn.com/2016/08/04/technology/internet-speed-broadband/index.html
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Global platforms are available for marketing, distribution, and monetization

5. CONFIDENTIAL
5 Things You Should do to
get VCs to say “YES”
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6. # 1 – Pitch to the Right Investors
Don’t waste people’s time!

7. Before pitching an investor…
• Research what stages (seed, Series A, B, C, etc),
check size, industries, categories, geography,
frequency the specific investors focus on
• Get warm intro from other investors (already invest in
you) or entrepreneurs they invest in
• Precise 1-min intro /email:
• Traction
• Painpoint
• Product/ Solution
• Team

8. CONFIDENTIAL
• 9/10 companies fail – looking for 1 winner
• Winner = needs to return 50/100/1000x
• Effective valuation for seed program = 2.5M; looking for companies who will sell for
$250M or more
• Fund big outcomes
• What we care:
• market sizing, strong problem
• On other hand..you can’t really tell what will have a big outcome at this stage,
but some things you can’t change:
• Team
• Unit economics / customer acquisition
500 Startups – Seed Stage Investor
5/13/2018 8

9. CONFIDENTIAL
• Equity & Tokens
• Pantera
• Hard Yaka
• Polychain
• Blockchain Capital
• Andreessen Horowitz
• Union Square Ventures
• Draper Associates
• BoostVC
Most Active Blockchain Investors
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10. # 2– Understand the Big Picture

11. CONFIDENTIAL
So do your homework
• Know your target customers
• Know your market potential
• Policy or legal environment
You Are Not the First One…
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13. #3– Pitch like a Pro
Why you and why now

14. Please cover the following during
your pitch
• Traction, traction, traction
• Revenue
• User download/ engagement
• Major signed partnerships
• Product demo (if you have it)
• Market size & target market
• Pain point
• Product
• Team (team, investors, advisors)
• Technology
• Business model
• Monetization model
• Competition
• Market Trends

15. # 4 – Tell Your Story with Purpose
Share a short, relevant and personal story that
make you uniquely over qualify for creating your
startup.

17. Great story tellers also
understand their audience, the
importance of relevance, and
being able to back up your
saying.

18. Show Passion & Honesty
You’re a human billboard of your startup
The “grit” factor -
I will do whatever
it takes and fight
to make this
happen.

19. # 5– Always follow up
Within 24 hours…

20. After the meeting…
Email follow up within 24 hours
• Thank them!
• Deck
• Current Traction
• Team
• Action items
• Your ask
• Ask for follow up meetings or phone calls

21. Bonus Tips

22. Inside VC’s mind
• Fundability
• Trends
• Grit in founders
• Cap table (snapshot of ownership)
• # of co-founders
• Balanced skills/ resources (serial entrepreneurs, domain
expertise, done product before)

23. CONFIDENTIAL
Others that make us walk away:
• Marketplaces
• Ecommerce
• Food delivery
• Sharing economy
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Buzz words that make us drool:
• Blockchain
• Machine Learning/ NLP
• AR
• health tech
Understand the Trends

24. CONFIDENTIAL
Downstream Investors & Acquirers
500 Startups companies have gone to receive investments from:
500 Startups companies have been acquired by:
The Companies and Firms represented here reflect investors into, and acquirers of, investments across 500 Startups funds and do not refer to investments to be held in Fund IV.
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25. 5 Things Great Startups Do to Get VCs to
Say “Yes”
# 1 – Pitch to the Right Investors
# 2– Understand the Big Picture
# 3 – Pitch Like a Pro
# 4 – Tell Your Story with Purpose
# 5 – Always Follow Up

26. CONFIDENTIAL
Additional References
• Venture Hacks
• Notes on raising seed financing by Chris Dixon
• A Fundraising Survival Guide by Paul Graham
• How to Create an Enchanting Pitch by Guy Kawasaki
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27. You can find me at:
• Email bonnie@500startups.com
• Twitter @bonkat
• LinkedIn www.linkedin.com/in/bonniehk
• WeChat

28. CONFIDENTIAL
THANK YOU

29. Appendix

30. CONFIDENTIAL
3 Unicorns ($1B+ in valuation)
* indicates company that has already exited
40+ Centaurs ($100M ~ $999M in valuation)
* indicates companies that have already exited
A Selection of Current Portfolio Wins
Companies are a select sampling of investments across 500 Startups funds and at least one 500 Startups fund has invested in one or more rounds of financing for each of these companies. The valuations listed herein are
estimated as at June 30, 2017 based on 500 Startups Valuation Policy. These numbers provide a snapshot of estimated valuation as at a particular time and may change. Further detail with regard to financing of companies listed
on this slide can be found on Crunchbase. A full list of 500 Startups companies is available upon request.
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*
* *
** * *