General Assembly Class:  Insiders Guide to Seed Stage Pitching
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General Assembly Class: Insiders Guide to Seed Stage Pitching

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The slides from a class at General Assembly on the do's and don'ts of pitching for seed stage fundraising.

The slides from a class at General Assembly on the do's and don'ts of pitching for seed stage fundraising.

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General Assembly Class:  Insiders Guide to Seed Stage Pitching General Assembly Class: Insiders Guide to Seed Stage Pitching Presentation Transcript

  • To all who attended Mon night at GA: Thanks! Hope you enjoyed it and gained something.Feedback welcome. Know any great start-up or founders? I would love to hear about it.If you send me an email, I will put you on my list for occasional updates. Follow me on LinkedInand/or Twitter for updates, etc. (Page 16 of this deck has my details) .Cheers, -TW The Seed Stage Pitch: Mastering the Art and the Science Insights on successful pitching from an active angel investor and fellow entrepreneur General Assembly Seminar Tom Wisniewski RosePaul Investments Monday, April 15th, 2013
  • Agenda I. Kick-off and Introduction II. Pitching to Prospective Investors III. Additional Q&A, Feedback and BeveragesSeptember 2011 1 confidential
  • I. Kick-Off and Introduction Seminar Rationale: Why are we hear? What’s the Problem? The odds are against you as an entrepreneur pitching investors: the "1 in 100 get funded” ratio is a reality. Raising seed-stage money is tough. Poor communication is perhaps the most important driver of the dreaded investor "pass", the "ding", the un-returned email. Having experienced (and delivered!) a lot of *bad* pitches, I have become a "student" of the pitch and of effective communication generally. Entrepreneurs make a lot of avoidable mistakes and miss opportunities. Pitching is more than a good 10-page PowerPoint. There is *no* shortage of advice on how to pitch, but it is often conflicting and overwhelming. (WTF????) What would help? Understand the basics. Review some examples the good and the bad. Understand the rationale, the "why” Study. Practice. Pitch. Repeat. Everyone can improve their pitch. Channel some energy and become a "student" of the pitchingSeptember 2011 2 confidential
  • What would I like you to walk away with? Better understanding of pitching. A set of specific insights that will *change* your pitch. A “to-do” list: starting point(s), actions, things to try. A set of recommended resources to consult and learn more from. A few new relationships with others in the NYC start- up/fundraising ecosystem: fellow entrepreneurs, investors, etc. Answers to specific questions about pitching that you might have.September 2011 3 confidential
  • Tom Wisniewski: My background Born in NYC; grew-up in Montclair, NJ Physics and Philosophy major undergrad (Clark University); MBA at Tuck School (Dartmouth) 1st Job: Programmer at Morgan Stanley then moved to Investment Banking After B-school: joined a start-up management consulting firm Mitchell Madison Group; focus on Strategy/Operations/IT for financial services, tech, outsourcing, private equity/VC clients (1993 to 2000) Walker Digital: helped set-up and run an early “internet incubator” (2000) Independent Advisor / Turn-arounds: Advised VC and PE Firms on portfolio company strategy and new investments; joined the management team of two companies Currently: • Early stage investor and advisor to start-ups • Investor and advisor to VC and PE funds • Member and director at New York Angels Recent Investments: LiveLook (Saas, live collaboration, co-browsing); Movio (Digital “RedBox” ); Bizodo (Saas, paperwork automation); Wanderu (“Kayak” for Ground Transportation), Social Starts (seed fund for start-ups); Brooklyn Bridge Ventures (Charlie O’Donnell); Entrepreneurs Roundtable Accelerator (ERA)September 2011 4 confidential
  • So .what questions do you have about Pitching? Jen How detailed financials ? Olga: How to pitch before reves and product Ranjan: How much focus on team vs. ??? George: What’s more effective call or email? Alex: How should a deck be? Maury: How not to get screwed? Deekron: Exit scenarios?September 2011 5 confidential
  • II. Pitching to Prospective InvestorsSeptember 2011 6 confidential
  • Communication is Critical Why? “Finding Diamonds in the Rough” problem. There is no shortage of supply: lots and lots of ideas, pitches, people, etc. • The problem for investors is finding the “diamonds”. The “first minute” problem. If you loose someone’s interest in the “first minute”, you usually loose them. • “First minute” = “first minute” sometimes first 30 seconds! • “First minute” = a conversation, a meeting, anything • I need to quickly figure out whether I should “spend” more time/effort with you, or move on to something else. The “0 to 60” problem. Potential investors (or potential employees, customers, etc.) usually start out knowing nothing about you or your venture. • Getting someone “from 0 to 60 mph” is very challenging: too much to say, don’t know where to start. A Pitch is a “Sale”. You not just trying to “describe”, you are “selling”. Easy to tell people what you are doing; harder to get them to ‘buy”. • You are selling your “product” to prospective “customers”. Product = your company and the opportunity it presents. • You are interviewing for a new job. Product = you and your team.September 2011 7 confidential
  • Principles of Communication: A Starting Point To start, lets use a simple framework: Audience, Messages, Storyline, Goals, Situation. Audience. Who is the audience? Who are you selling to? If you don’t understand someones “perspective” you will be ineffective • For example: “they have 6 Saas investments vs. they can’t spell Saas” • People generally understand things by association (to things *they* know). Messages. What points you are making? What is the single key thought you are trying to impart with each page? • “the market is huge and growing” is a message; a chart, some stats, some explanation is what makes up the page Storyline. What is the narrative story you are building with the collection of messages? Does the story flow well and get to your conclusions? Goals. What is the goal of this specific meeting? • Unlikely it is getting a “check”. Getting to the next step in the process. Situation. What the format of the pitch? What are the constraints? • 2 minute elevator pitch vs. 10 minute Power Point pitch vs. email attachmentSeptember 2011 8 confidential
  • The Communication Pyramid Level of Detail in Level of Detail in a Different Document Documents The Executive 1 page summary Summary First Page of Each 10 –page deck “Chapter” Each Chapter 20 –page deck Each Chapter with 20 page deck, +++ all the Back-upSeptember 2011 9 confidential
  • “Good” Pitch Deck From “Triple Play” of VC Presentations by Adapted from “10 Slides to an Awesome Mark Suster (former entrepreneur, now VC) Pitch” by Dave McClure, 500 Start-Ups Slide 1 – Team Bio 1. Elevator Pitch Slide 2 – 50k foot view of your company 2. The Problem Slide 3 – Problem Definition 3. Your Solution (Demo Here!) Slide 4 – How do you solve the problem? 4. Market Size Demo Web Version and 5. Business Model ($) a Demo Video Example 6. Proprietary Tech Slide 5 – Market Sizing 7. Competition Slide 5 warning: (Market Sizing Pitfalls) 8. Marketing Plan Slide 6 – Competition 9. Team / Hires Slide 7 – Customer Adoption / Traction 10. Money / Milestones Slide 8 – Team Slide 9 – Financial projections Slide 10 – Use of Proceeds Slide 11 – Fund raising process / Next steps Appendix – Back-up slides How to deal with the dreaded question of valuation? http://www.bothsidesofthetable.com/pitching-a-vc/ http://www.slideshare.net/dmc500h ats/how-to-pitch-a-vc-sept-2010September 2011 10 confidential
  • Examples of “Good” Pitches http://bitly.com/bundles/royrod/2September 2011 11 confidential
  • Common “Forms” of Pitch Communication. What are they? Which should I use? “Document” Simplistic Description Common Situation/ Use 1-pager “1 pager Exec Summary, Word • Email attachment or handout doc” • Online platforms e.g. Gust, AngelList Email Brief “Teaser paragraph of text / bullets” • “In the intro email” (w/ attachments) Business Plan “10-40 page Word doc” • Detailed discussions (similar use) • Stand-alone, due diligence Pitch Deck “10 page PowerPoint • “15 minute stand-up presentation” presentation” • Email attachement Long-Form Pitch “20-40 page version of 10 pager; • “60-90 minute follow-up meeting with Deck PowerPoint presentation” smaller group” Elevator Pitch “No document, just you talking for • Your quick intro after you meet 60 seconds” someone in person “Video” Pitch “10 minute video of your deck/ • Email attachment demo w/ you voice” • Online platforms e.g. Gust, AngelList Due Diligence Docs “All the detailed spreadsheets, • For detailed discussions with data, etc. that back-up your pitch” interested investors, usually post- e.g. Financial Projections, Sales term-sheet Funnel, Legal Docs • Online platforms e.g. Gust, AngelList The Good News: • you don’t need to have all of them (maybe ever, certainly 1 or 2 to start is fine) • much of the content, messages, storylines can be shared and reusedSeptember 2011 Preparing thoughtful docs • refines your thinking and your venture. 12 confidential
  • Key Success Factors and Take-Away’s Find Fit. Does this investor have “fit”? Do they invest in ventures like mine? ......if not, then move on. (or at least prioritize accordingly) Prepare! Don’t be lazy; invest some time. • Steve Jobs: 30 hours to develop, 30 hours of practice 30 minutes of presentation. • For example : “Audience”. What have they invested in? Recently? What can you find out about their background? Interests? Hot buttons? - How? Duh .Google: Blogs, Quora, YouTube, CrunchBase; talk to people they know, better talk to those they have invested in. Pitch, Get Feedback, Revise. Repeat. No venture idea was built in a vacuum. The ONLY way to develop business ideas is to share them, solicit feedback, make adjustments, develop/refine/add and ..DO IT AGAIN! • 1 part “studying” pitching, 1 part “doing” pitching, 10 parts repeating both this is becoming a “student”September 2011 13 confidential
  • What would I like you to walk away with? Better understanding of pitching. A set of specific insights that will *change* your pitch. A “to-do” list: starting point(s), actions, things to try. A set of recommended resources to consult and learn more from. A few new relationships with others in the NYC start- up/fundraising ecosystem: fellow entrepreneurs, investors, etc. Answers to specific questions about pitching that you might have.September 2011 14 confidential
  • III. Additional Q&A, Feedback and Beverages Feedback on this class: What did you like most about this seminar? What could be added and improved to make it better? What other topics would you like to see a seminar conducted on ?September 2011 15 confidential
  • Thanks! Thomas Wisniewski Contact Info Email: twisniewski@newyorkangels.com LinkedIn: http://www.linkedin.com/in/thomaswis Twitter: @thomaswis This presentation: http://www.slideshare.net/Thomaswis/ New York Angels www.newyorkangels.com New York Angels Educational Meetup: http://www.meetup.com/NY-Angels/September 2011 16 confidential
  • Additional SlidesSeptember 2011 17 confidential
  • II. Pitching to Prospective Investors Sources of Investment: Seed Fundraising, Angels and VC’s Earlier Stage “Seed” Later Stage “You” Friends and aka Bootstrapped Angel Investment Venture Capital Family “Seed” VC “Traditional Series A” VCRound Size $: • $10’s of K • $100’s of K • $500K to • $5M-$15M to $100K to $1M+ $1.5MInvestment Size $: $5K – $10’s of K • $25K – $75K • $250K-$750K • $3M – $5MValuation (Pre- • < $1 M • $1 – 5 M • $5-10 M • $10 – 25 MMon):Stage (Pre-Round): • An idea, initial/rough • Detailed b-plan, • Significant variation among firms• Expected to b-plan • Key founders (bus & tech) full-time but . Angel req. +: have: • Initial founders, key • Prototype/alpha done and tested, - Anchor clients on board, revenue advisors • Some piloting (paying?) growth (B2B), • Path to ??? customers, some revenues?, - Growing base of users, with strong • All legal documentation in place, usage trends (B2C) board of directors - ..Growth potential! Credible • Path to break-even or next funding path to $100M Rev• Don’t Expect: • $ Rev, Customers, • Income (e.g. cash flow positive); • Income (e.g. cash flow positive) Minimum Viable all key management ; completely Product (MVP); full developed business model (e.g. legal documentation understand it will change)Who/what are • People you already • Experienced early stage • Firm with multiple professionals thatthey? know, that trust investors (individuals or a group) raises, invests and manages you, and (maybe) • Accredited Investors. individual funds (other people’s $) understand your • Angel investing is not their “job”; • Working F/T (this is their job ) venture may not be F/T endeavor • E.g.: Greycroft, RRE, Union SquareSeptember 2011 • E.g.: NY Angels, GoldenSeeds 18 confidential
  • Given this landscape, how do I get to the pitch? Who are the “right” investors? Where is there a “fit”? • Reality Check. “people invest in things that they understand and have experience with” - Target find Fit: Find investors that come from industries, sectors, business models etc. that are same/similar to your venture and your customers How to “get” a pitch meeting? • Connect. The hard part. - Avoid “cold-calls”; look for “warm introductions” - Networking. Who do you know that knows them? - Find them at an event. (Email sucks!) Really you should be thinking How do I build a relationship first? • Pitching by its very nature can be awkward. “This guy wants something from me.” • Most investors mean-well, and would like to help but are busy Solution: Build a relationship before you need to pitch. OK, How? • Give, don’t Ask: what can you do for them? • “Ask for advice, not money” • Debate / Discuss a topic, Ask opinion about X. • Find ways to “show” rather than “tell”:September 2011 19 confidential
  • Who are these “Angels”? What do they look like? Experienced, successful entrepreneurs: frequently multiple exits • Some from “tech-start-ups” some from other businesses • Usually some link to Successful “corporate” business people: CEO or CxO-types Older: most are in the 40-60 age group. But there are also notable angels in their 20’s and 30’s e.g. newly minted start-up millionaires 3 – 10+ Angel Investments ~10% of investible capital in Angel Investments Differ *widely* in: Industry/Functional Experience, Investment Expience, Interests, Target Sectors/Stage, Investment $, Risk Tolerance, personal do’s/don’ts and hot buttons. Lists? Not many. All are partial. AngelList? Gust? Other?September 2011 20 confidential
  • NY Angels Profile www.newyorkangels.com Member Profile: ~80 investor/members; several early-stage funds; Member backgrounds are generally representative of the tech / entrepreneurs / industries in NYC: software, e-commerce, ad-tech, finance, media Sector Focus: Internet, e-commerce, new-media, software; B2C and B2B. Mostly NYC Area. Stage. Mostly early stage (with some customers/revs), some seed stage (pre-revenue) Valuations/ Investment Size: NYA pre-money valuations tend to range from $1M – 4M; investments tend to range from $250K to $1M+; • For larger rounds, NYA often leads the deal and helps find the rest of the capital by sharing/syndicating the deal with other Angel Groups Group Structure / Investment Decisions. NYA core structure is as a group of individual investors. Individual investors “opt in” to deals and make their own investment decisions. • Typical member invests $25-50K in a deal. • In addition to the core “opt-in” model, NYA has just closed a small seed fund that will operate in parallel (using a “democratic model” for investment decisions) History/Background. NYA has invested $45M+ in 70+ companies. • We are very active in the NYC entrepreneurial / early-stage ecosystemSeptember 2011 21 confidential
  • Variations on the Theme: Other Players “Super Angel” (vs. Angels, Angel Groups). Sophisticated angel investor with a large portfolio of early stage investments (30? 50?) and that is investing frequently (10 + per year). E.g. David Rose, Fabrice Grinda Microfund or Micro VC Fund. Small VC fund ($1-10 M) often run by a single person typically making “angel” size investments in early stage companies. Seed Fund. VC fund focused on “seed” (aka Angel) stage investments: often pre-revenue, pre-product. Some VC’s that typically invest in “Series A” rounds will reserve a portion of their fund for seed investments: e.g. $250 – 750K investments at $1-5 Million valuations Incubator/Accelerator. Entity that provides non-monetary support/services (in addition to $’s) to early stage ventures. Typical support/services can include: space, IT infrastructure, shared admin service, advice/feedback, introductions/networking. Public vs. private, independent vs. captive. Examples: TechStars, ER Accelerator, DreamIT, Y-Combinator Strategic Partner/Investor. Some operating companies will invest in ventures. Typically it is in an industry/ sector / product-space similar to theirs (sometime with an eye toward potential acquisition in the future) Crowd Funding Platforms. Currently this is financing via donation or “pre-sale” of products. Equity financing under JOBS Act is TBD. Not obvious this will be a good match for most Tech AngelList. Similar to an angel group, but without centralized control. More of a open “marketplace” of individual investors and ventures to facilitate funding. Gust. Software platform that most angel groups utilize (and many small VC’s) to run their investment process and connect angel groups together to share deals.September 2011 22 confidential
  • Additional Thoughts .. Lots of start-up advice out there. Lots about the art of fundraising. • Huge volume of blogs, articles, Quora-posts, etc. • Well .that’s good, right? Yes. • But why doesn’t it help? - Overwhelming - Conflicting - Not specific - Not enough context - It’s just advice, ideas, ..not interactive, not experience. • Need to understand the “why” behind it all and adapt it to your venture, your situation. Beware of simple answers, absolutes. As you are reading and listening to all these opinions, data sources • For any “fact” “rule” “truth” if you don’t understand how it is both true/false, you don’t really understand the point. - Under what circumstances is this “rule for fundraising” “true”? Where does it apply well With whom? - How and when is it not true (Or less true)?September 2011 23 confidential