1.
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Ask the VC!
#AskTheVC
Sean Foote
Managing Director
Co=Creation=Capital
Gadiel Morantes
Partner
EGFS

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3.
• Who is the buyer and who is the seller?
• Picking a VC
• The VC mindset – how do these weirdos’ brains
work?
• What do VCs look for?
• The VC process – why does it take so long?
• What makes for a great VC meeting?
• Lots of other questions you have…
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What do you want to talk about?
www.CoCreationCapital.com

4.
Buyers and Sellers
• A deal is a fundamental disagreement
about value
– Buyers think things are worth less, and
tend to minimize price
– Sellers think things are worth more, and
tend to maximize price
• But, Venture investing is not a zero
sum game
– A long-term relationship, like a marriage
• Pick investors that suit you, know
your space, invest at your stage, etc.
4www.CoCreationCapital.com

5.
The VC mindset
• VCs are rational
• VC is not “risk capital”
– The idea is to minimize risk and
maximize outcomes of
investments
• VCs particularly care about
your company if it:
– Generates economic value
– Provides good cocktail party
conversation
– Allows them to raise another fund
5www.CoCreationCapital.com

6.
VCs *need* homeruns
• VCs *need* homeruns
– To return 18% annual net to our investors, we need
30% annual gross return
– 30% gross return is 5x in 5 years for the entire portfolio
• Out of 10 companies
– Half go bankrupt (5 * 0x)
– 4 break even (4 * 1x)
– 1 remainder must be 46x in 5 years
• If it takes 3 years longer, must be over 100x!
6www.CoCreationCapital.com

7.
What do VCs look for?
• Typical answer: a laundry list of business school type issues:
– Great teams, defensible technology, market traction, large and
growing markets, growth and revenues, limited competition,
blah, blah, blah
• Each investor seems to have a hot button, which changes
over time
• Each company has a hierarchy of risks from largest to
smallest
7www.CoCreationCapital.com

8.
VC funding is hard…
• Currently, many momentum investors
• And many angel investors
– 20,000+ angel investments in 2014
– 1,200 VC investments
• Implication: VC funding is still wicked hard, so…
– Try to get VCs in seed rounds
– Vet angels on their ability to do follow-on
– Get to break even without VC investment
8www.CoCreationCapital.com

9.
The VC Process
9www.CoCreationCapital.com

10.
A great meeting is both an interview
and a first date
• Personal: Be yourself, be
engaging
– How you answer matters as
much as what you answer
• Prep: Be prepared
• Positioning: You are an
equal, not a buyer or a
seller
– Follow the lead
– Ask questions
10www.CoCreationCapital.com

11.
What you need to provide
• What pain we solve
• How we solve it
• Why we are the right team to solve it
• What we’ve done (so far) and will do (with
your help)
• Why we win vs competitors
• The amount of revenue/profit/scale
winning creates for our mutual benefit
11www.CoCreationCapital.com

12.
Thank You and Q&A
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Gadiel Morantes
415-234-3437
contact@earlygrowthfinancialservices.com
www.earlygrowthfinancialservices.com
Follow us @EarlyGrowthFS
Sean Foote
650-255-4134
sean@cocreationcap.com
www.cocreationcapital.com