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How to Raise Money from VCs: Best Practices & Worst Practices


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Lessons on how to how to fund a company, wow investors, manage the diligence process, and manage VCs post investment. Slides taken from a class taught by Ambar Bhattacharyya is a Senior Associate at …

Lessons on how to how to fund a company, wow investors, manage the diligence process, and manage VCs post investment. Slides taken from a class taught by Ambar Bhattacharyya is a Senior Associate at Bessemer Ventures, the oldest VC firm in America. Learn more from the experts by visiting

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  • 1. presentsAMBAR BHATTACHARYYA@AmbarBhNOTE: Advice in this deck is distributed by Ambar Bhattacharyya,and does not reflect the views of Bessemer Ventures.How to RaiseMoney 101
  • 2. • How venture firms work – roles, responsibilities, process, timelines• The setup – how to get a meeting• Delivering the pitch – what to say, what to avoid• The follow-up – what to do after the initial pitch• How to deal with an immediate “no”• How to think about diligence• Q&AAgenda
  • 3. Relevant characteristics of VC firms – identify your target1. Size2. Location3. Round4. Sector5. Business modelVC FirmCharacteristics…
  • 4. • Partner?• Vice President/Principal?• Associate?• Analyst?• All of the above?Understand everyone’s roles and responsibilities.Who should I talk to?
  • 5. • Investment champion• Internal communications• Monday meetings• Types of decision-making processes1. Seed rounds2. VC roundsWhat is the investment processlike within a VC fund?
  • 6. • Investment memos/presentations• Q&A• Valuation discussions• Process• Selling, selling, sellingEntrepreneurs have to give VCs theinformation become internal sales advocate ofyour company even when you aren’t there.What happensbehind the scenes?
  • 7. Where can I meet aVC?Happen-Stance•  Conferences•  Office hours•  Panels•  Cold emailWarm Leads•  Through people you know•  Through people you meet•  Through trustedentrepreneurs•  LinkedIn•  Facebook
  • 8. • The pitch!• No one reads business plans…but everyone flips through a 10-15 slidedeck• Tips– Prepare 2 decks – short version (for use in initial pitch) and long version (for follow-ondiligence or to call upon during Q&A)– Know what your ‘ask’ isOk, so I got a meeting with aVC…now what?
  • 9. SLIDE 1: WHAT WE’RE DOINGTwo sentences, 22 words, plain English. One buzzword, but used appropriately. Immediately conveys the idea.SLIDE 2: TEAM SLIDE 3: THE PROBLEMPlain English describes the problem and why current solutions are a pain in the ass.SLIDE 4: THE SOLUTIONClear description of what this product/service would allow me to do. Concise, but makes it intuitively obvious why this solution would offer real value.SLIDES 5-8: 2 EXAMPLE PROBLEMS AND SOLUTIONS Very discrete real world illustrations of how I might experience the problem in the course of my life and how the app would solve it. In the absence of a demo,the slides describe how the app works and why I would like it.  SLIDE 9: MARKETTell me what markets you’re going after, what the different segments are, and which ones you’ll target first and why. As well as who you will be competingagainst.SLIDE 10: BUSINESS MODELTell me how you think customers are willing to pay and how the business scales.SLIDE 11: INVESTMENT OPPORTUNITY How much you want to raise and why?SLIDE 12: USE OF PROCEEDSAnd key milestones. Tell me how long the money will last without any revenue.*Thanks to Mike Hirshland for the broad frameworkWhat to say in yourdeck*
  • 10. • Passion, passion, passion• Know the details• Describe customer/user pain point & and how you can solve it• Talk up the team• Show what you’ve tried that hasn’t worked - “lessons learned”• Capital efficiency – who doesn’t love scrappiness?• Demonstrate at least one thing that you’ve accomplished in this (or a pastbusiness) that shouldn’t have been possible• Urgency, urgency, urgency!What to touch onwith VCs…
  • 11. • Not mentioning the competition (VCs know!).• Use a hockey stick, but not a crazy one. What matters are marginsat scale.• Market sizes that are so large that they are unbelievable. Whatmatters - market segments and different products.• Use humor…but not too much.• Your dedication to your other full-time job.What to avoidtalking about
  • 12. VCs are notoriously bad at following up.So how do you get them to prioritize you?Recent winsNew dataPressCompetitor actionCreate a sense of urgency, momentum - andscarcity!The Follow-Up
  • 13. • That is OK!• This means “not now”, not “never”• What can you do to keep in touch?1. Quarterly updates2. Bi-annual check-ins3. Updates on other investors who are ‘engaging’ youRaising money can be a multi-step process that takes time – you can use that for your advantageWhat if they say no?
  • 14. Diligence process• Think in advance of what data they might want and arrange it in advance (model,web stats, cohort analysis, etc.)• For questions that they don’t have answers to, have ways to find out quickly –and cheaply!• It is a process, so managing it with care – over-communicate, spoon-feed, and bewilling to listenAlways keep the ball moving forward• If you get to a ‘no’, understand where the lack of comfort is.• It’s not easy to get people to take a leap of faith now, but think back to the lastslide – it can be overcome with time (baby steps)If you get to a ‘yes’, congrats!• Sign up for Negotiating Your Series A Term Sheet JWhat if they areinterested?
  • 15. Course TitleCourse TitleINSTRUCTOR NAME