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Raising Startup Capital
Session 1- The Pitch


Nathan Beckord @startupventures
General Assembly
San Francisco
September 20, 2012
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        Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
  2     Nathan Beckord @startupventures        Sept. 20, 2012
Hi. My name is...
Nathan	
  Beckord,	
  CFA.	
  	
  Principal,	
  www.VentureArchetypes.com

  •   My	
  Job:	
  Startup	
  CFO,	
  Advisor,	
  and	
  BD	
  Guy

  •   100+	
  Startup	
  clients	
  over	
  the	
  past	
  eight	
  years
          •   E.g.	
  Kickstarter,	
  Clicker,	
  Autonet,	
  Zerply,	
  GetHired,	
  etc.

  •   Clients	
  have	
  raised	
  over	
  $98	
  million	
  in	
  seed	
  capital	
  and	
  achieved	
  5	
  exits
          •   Example:	
  I	
  ran	
  financial	
  modeling	
  for	
  Clicker.com,	
  which	
  raised	
  2	
  rounds	
  of	
  VC	
  
                 and	
  sold	
  for	
  $100m	
  in	
  3	
  years.

  •   Previously:	
  Technology	
  ValuaXon	
  |	
  Investment	
  Banking	
  |	
  Venture	
  Capital

  •   Chartered	
  Financial	
  Analyst	
  (CFA)	
  and	
  MBA

                     Raising Startup Capital -- The Pitch                GENERAL ASSEMBLY
      3              Nathan Beckord @startupventures                     Sept. 20, 2012
Why this matters




                                                                                  From	
  VentureHack’s	
  “Pitching	
  
                                                                                  Hacks”	
  PDF	
  /	
  Book:	
  h<p://
                                                                                  venturehacks.com/pitching



                        Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
                4       Nathan Beckord @startupventures        Sept. 20, 2012



What are we doing here? Ultimately, we are telling stories so we can successfully raise money at favorable
terms and valuation.

What form does our story take? In the form of our pitch.
The Full Pitch Package
            Written
             •    A one sentence (or sentence fragment) tag line
              •    A one or two paragraph email introduction to the business
              •    A 'one-pager' overview or teaser
              •    A 2-3 page executive summary
              •    a slide deck specifically designed to be handed out
              •    A thoughtful, comprehensive business plan: either (a) a traditional 10-20 page written plan, or (b) a carefully
                   prepared and annotated 'business model canvas'
              •    A finished (or prototype) marketing brochure

            Live
              •    A one sentence description
              •    A 30 second elevator pitch
              •    A 5 minute 'quick pitch'
              •    A 15-20 minute angel/VC PowerPoint/Keynote pitch deck
              •    A sub-15 minute foolproof product/site demonstration

            Online                                                                                          From	
  David	
  Rose’s	
  answer	
  on	
  
                                                                                                            Quora:	
  h<p://www.quora.com/
             •    A functional public web site
                                                                                                            Venture-­‐and-­‐Investor-­‐Pitches/
              •    A short video pitch                                                                      What-­‐materials-­‐or-­‐soIware-­‐
                                                                                                            should-­‐I-­‐use-­‐to-­‐pitch-­‐a-­‐VC
              •    A dedicated, controlled access, investor-relations web site

                              Raising Startup Capital -- The Pitch          GENERAL ASSEMBLY
                   5          Nathan Beckord @startupventures               Sept. 20, 2012



If you have nothing but time on your hands, here is the full list of pitch materials for you to work on...your Tag
Line, your Email Intro, your Teaser, your Exec Sum, Elevator Pitch, Business Plan, Pitch deck, Video, etc.
This will pretty much cover every possible situation.

But... youʼre busy startup founders-- so weʼre going to focus on the easiest to create, most commonly used,
and most versatile option, the pitch deck.
What is this...‘pitch deck’ you speak of?



                Pitch	
  Deck	
  ≠	
  Business	
  Plan

                Pitch	
  Deck	
  =	
  Business	
  Plan

                          Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
                 6        Nathan Beckord @startupventures        Sept. 20, 2012



So what is a pitch deck? In the “olden days,” i.e., like 4-5 years ago, we would draft an entire, thorough 20-30
page business plan, which is a deep dive into the business, and is what weʼd send along in advance of a
meeting, or use as leave behind. Then, weʼd distill that down to a super high level, crisp and simple, slide
deck to use during the live meeting.

Now, no one reads or writes business plans anymore. Yet you still need something to send ahead, and that
will be sent around the office of the VC, among the partnership. And it has to stand on its own and be
complete, and tell the entire story without your voice-over narration, so they can read it by themselves. So the
pitch deck, in this context, is now the business plan.

So essentially, you should have two different pitch deck—the deck for sending and circulating, and then what
you show them in the office. The main difference is level of detail.

Just a few tips for the deck you'll be sending: i) make it small file size, ii) have a screen shot in lieu of demo; iii)
avoid builds, iv) use white background; v) Use PDF if desired; vi) pack it full of pithy soundbites that the junior
analyst can plagiarize when she does her write up for the senior partners.
What is your “one thing?”

                “those	
  guys	
  were	
  killing	
  it-­‐-­‐	
  rocket	
  ship	
  trajectory	
  growth”

                “they	
  had	
  a	
  really	
  clever	
  solu9on	
  to	
  a	
  vexing	
  problem”	
  

                “I	
  don’t	
  remember	
  what	
  they	
  did,	
  but	
  the	
  team	
  was	
  
                bankable-­‐-­‐	
  	
  A-­‐players	
  all	
  the	
  way!”


                                                   Q:	
  what	
  makes	
  you	
  excepXonal?	
  

                         Raising Startup Capital -- The Pitch     GENERAL ASSEMBLY
                7        Nathan Beckord @startupventures          Sept. 20, 2012



So letʼs talk about how to build a pitch deck. We start by figuring out what is the single most unique,
compelling piece of your story.

Or, in other words, If you strip everything away...what will investors remember about you a week or two later?

In short, what makes you exceptional?
Are you exceptional?


              “investors	
   are	
   trying	
   to	
   find	
   the	
  
              excep%onal	
   outcomes,	
   so	
   they	
   are	
  
              looking	
  for	
  something	
  excep9onal	
  about	
  
              the	
   company.	
   Instead	
   of	
   trying	
   to	
   do	
  
              everything	
   well	
   (trac9on,	
   team,	
  
              product,	
  social	
   proof,	
  pitch,	
  etc),	
  do	
  one	
  
              thing	
   excep%onal.	
   	
   As	
   a	
   startup	
   you	
  
              have	
   to	
   be	
   excep9onal	
   in	
   at	
   least	
   one	
  
              regard.”	
  	
  	
  	
  	
  	
  	
  	
  	
  
                                                           -­‐-­‐Naval	
  Ravikant,	
  Angel	
  List
                                  Raising Startup Capital -- The Pitch                          GENERAL ASSEMBLY
                  8               Nathan Beckord @startupventures                               Sept. 20, 2012



Hereʼs a quote by Naval Ravikant of Angel list, on the importance of being exceptional in at least one area.
Let’s talk about...



                       Pitch Archetypes
                                                                                   From	
  Jason	
  Shen’s	
  blog	
  h<p://
                                                                                   www.jasonshen.com/2012/eleven-­‐
                                                                                   compelling-­‐startup-­‐pitch-­‐archetypes-­‐
                                                                                   with-­‐examples-­‐from-­‐yc-­‐companies/


                         Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
                9        Nathan Beckord @startupventures        Sept. 20, 2012



Ok letʼs now look at a couple ways to frame your “one thing” and tell your story by way of several “pitch
archetypes”

these archetypes are important, because how you frame your business and how you guide the discussion has
a big impact on how people react, what they retain and what message they will share with other investors.

Excertped from the excellent blog at: http://www.jasonshen.com/2012/eleven-compelling-startup-pitch-
archetypes-with-examples-from-yc-companies/
Archetype #1



                      Problem / Solution


                          Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
                 10       Nathan Beckord @startupventures        Sept. 20, 2012



This is the classic Sequoia outline, and probably accounts for 85% of the decks out there. Youʼve found a
valuable, rich pain point to solve. Painkiller vs. vitamin.

Itʼs Classic, itʼs familiar, but itʼs not always as relevant to web 2.0...is there really a pain point solved by social
checkins?

Weʼll look at the outline in a few moments.
Archetype #2



                             Traction Story


                        Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
               11       Nathan Beckord @startupventures        Sept. 20, 2012



Traction-- “Pitching the numbers”...Iʼm a numbers guy, so this gets me excited.

Here, we are focused on growth and rate of growth (slope of line) as way to validate your vision; what youʼre
actually doing becomes secondary. e.g. Fab.com

Bonus points if you can demonstrate the LTV > CAC. Online retail, gaming, etc. Then pouring money in
becomes a no-brainer and it makes sense to dump as much in as you can profitably spend.

As Paul Singh of 500S says, “Traction is the new intellectual property.” Thereʼs a direct correlation between
the strength of your traction story and the speed at which you raise funding.

Further reading: http://betashop.com/post/14249821547/behind-the-scenes-how-fab-raised-40-million-with-a
and http://www.slideshare.net/brendanbaker/how-to-communicate-traction-to-investors-with-brendan-baker-
and-hiten-shah
Archetype #3



                                               “X for Y”


                         Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
               12        Nathan Beckord @startupventures        Sept. 20, 2012



“X for Y”-- applying a proven model to a new market or application. You see this a lot now, and it can be
combined with Problem / Solution.

Here, X is the established model (e.g. Airbnb) and Y is the new market that the model is being applied to (dog
boarding). DogVacay.

Thus, X must be successful, Y must be large. The metaphors you use should also be well-known.

Risk of overuse. A variation on this is what I call the Hollywood Pitch, which is a mashup of two different
scripts. “Jurrassic Park meets Dirty Dancing”
Archetype #4



              “Scratched Your Itch”


                         Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
                13       Nathan Beckord @startupventures        Sept. 20, 2012



“Scratched your itch” (aka Personal Story)-- youʼve solved something that was vexing you. A lot of technical
companies get started this way, like Heroku or Dropbox or Github. Or, for example, Iʼm starting a company
called FounderSuite.com ...

Good if you know problem intimately + itʼs universal + VC has experienced it

Bad-- if too niche or specific.
Archetype #5



                                        Crystal Ball


                          Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
                14        Nathan Beckord @startupventures        Sept. 20, 2012



Crystal Ball (aka Evolution next / skate to where the puck will be / connect the dots / converging trends)--

Here, you walk investor through how a market has evolved, and where it will be. e.g. semantic web, cloud biz,
mobile biz.

Itʼs pretty compelling, as youʼre showing investors a peek into the future, and they love this stuff. So itʼs easier
to get a meeting vs. some of the other formats. The harder part is convincing them you have the solution,
<AND> you are flexible enough to execute around 1000 minefileds that are completely hidden...tech shifts,
user behaviour, legislation, etc.
Archetype #6



                Wouldn’t it be cool...


                         Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
                15       Nathan Beckord @startupventures        Sept. 20, 2012



Wouldnʼt it be cool if: describe something fun and interesting. Get investor to imagine with you...get a couple
cool use cases / anecdotes.

e.g. Zaarly, TaskRabbit: “Wouldnʼt it be cool if you could easily hire someone to wait in line at Apple store for
new iPhone?”

Uber: Wouldnʼt it be cool is you could hail a taxi from your phone and watch it drive toward you?
More Pitch Archetypes
                                                                                             Consumerification
                                New Biz Model                                                  of Enterprise


                The Pivot                                                       Dream Team

                                  Breakthrough                                                                         Service at
                                      Tech                                                                               Scale
            Further	
  Reading:	
  hJp://www.jasonshen.com/2012/eleven-­‐compelling-­‐startup-­‐pitch-­‐archetypes-­‐with-­‐examples-­‐from-­‐yc-­‐companies/

                                Raising Startup Capital -- The Pitch                   GENERAL ASSEMBLY
                 16             Nathan Beckord @startupventures                        Sept. 20, 2012



New biz model: Taking leveraging existing tech, and innovating in how youʼre monetizing. E.g. Sunrun,
GMAC, Square

Consumerifciation of Enterprise (Yammer, Asana, etc)...win by cheap software that continually gets better.

Dream team: assembled scientists with rare knowledge. Or, team with mega homeruns....banking on history
repeating itself.

Service at scale-- Wave doing SMB accounting or 99Designs doing cheap design.

Breakthrough Tech (w/bmodel): literally invented something that can be patented. A new solar film, or touch
screen interface.

Pivot-- Weʼve tried several things, and now somethingʼs working. Twitter, PayPal. PayPal famously had 5
pivots...cryptography for handheld devices, then a way to beam $$ among Palm Pilots, then emailing money,
then they merged with an online bank, etc. The archetype is explaining what you did to run into a dead end,
what you learned from that, and what new direction that set you off on.
Minimal Viable Pitch
                           What	
  you’re	
  doing	
  (and	
  why)

                                                    Who	
  you	
  are

                     What’s	
  going	
  on	
  (tracXon	
  /	
  growth)	
  

                             What	
  you	
  want	
  $	
  (and	
  why)	
  
                         Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
                17       Nathan Beckord @startupventures        Sept. 20, 2012



So now that Iʼve given you several different ways to frame it, here is the minimum set of information to cover in
the first meeting. I really want to drill into you the importance and value of keeping it short and simple.
Minimal = elegance.

Think of your first VC meeting as a first date... Keep in mind, this first meeting is really just a mutual-screening
process, to see if thereʼs mutual interest. in going on a second date.

Plus, you only have an hour...so this “uber-minimal” approach-- just focusing on most important things-- helps
you avoid “rat holes” that are very easy to fall into if you present too much info. Common ratholes are: i) too
deep into tech or product; ii) too much on competitive landscape.

And then finally, when you tell investors upfront that there are only 5 slides as opposed to 30, youʼll instantly
notice increased engagement on the part of the potential investors; this is important.
MVP (minimal viable pitch)                                                                                     Message:
         What	
  you’re	
   More	
  people	
  than	
  ever	
  (78M!)	
  have	
  dogs.	
  They	
                        ✓	
  Problem
                                                                                                                       ✓	
  Market	
  size	
  &	
  Trends
         doing	
  &	
  why spend	
  $2bln/yr	
  pugng	
  dogs	
  in	
  kennels	
  but	
  it’s	
                        ✓	
  SoluYon	
  /	
  Product
                                   expensive	
  &	
  dogs	
  hate	
  it.	
  We	
  are	
  “airbnb	
  for	
  dogs.”      ✓	
  Clear	
  &	
  big	
  Vision


                                   Samir-­‐	
  VP	
  Engr,	
  prev.	
  @Adobe;	
  Samantha-­‐	
  Designer,	
             ✓	
  Solid	
  Team-­‐-­‐Hacker,	
  	
   	
  
                                                                                                                             Hustler,	
  Designer
        Who	
  are	
  you          prev.	
  @Apple,	
  NYU;	
  Stewart-­‐	
  Stanford	
  MBA;	
  	
                      ✓	
  Pedigree,	
  Experience
                                                                                                                         ✓Peer	
  reference	
  /	
  
                                   Advisors:	
  Steve	
  Blank,	
  Andrew	
  Chen.	
                                        “social	
  proof”


        What’s	
  going	
   POC	
  in	
  SF,	
  NY,	
  Atlanta	
  (now);	
  Adding	
  3k	
  members	
  &	
               ✓	
  Thesis	
  Validated
                                                                                                                         ✓	
  TracYon	
  /	
  Growth
                     on	
   120	
  boarders	
  /	
  week	
  via	
  events,	
  AKC	
  partnership,	
                      ✓	
  MarkeYng	
  Plan	
  
                                   select	
  GOOG	
  ads.	
  	
  Avg.	
  booking	
  $55	
  x	
  7%	
  =	
  $3.85	
       ✓	
  Bus.	
  Model
                                                                                                                         ✓	
  Momentum


             What	
  you	
   $4m	
  Series	
  A	
  @$16m	
  pre	
  to	
  hit	
  6	
  more	
  geo.	
  mkts                ✓	
  Sensible	
  UOF
                                                                                                                         ✓	
  Strong	
  Future	
  Vision
                want	
   Burning	
  $75k/mo.	
  	
  	
  Cash	
  Flow	
  B/E	
  @	
  2k	
  bookings	
  /	
                ✓	
  Economics	
  Scale
                                                                                                                         ✓	
  Path	
  to	
  Profitability
                                   week	
  (2013).	
  	
  	
  LTV	
  >	
  CAC	
  	
  	
  ($145	
  vs.	
  $33).           ✓	
  RealisYc	
  ValuaYon

                               Raising Startup Capital -- The Pitch                       GENERAL ASSEMBLY
                  18           Nathan Beckord @startupventures                            Sept. 20, 2012



Here is a simple framework. Note that each of these could easily be a standalone slide, in 40 point font...add a
title, add a clever image or a supporting chart or diagram, and youʼre done. Killer MVP.

To note, I intentionally did not include a competition slide, as that can be a rathole. Make them ask about it,
make them bring it up. But def have a thoughtful analysis and appendix slide to answer.
Sequoia’s Outline
               1. Company Purpose                                                   6. Competition
               Define the company/business in a single declarative sentence.        List competitors & competitive advantages



               2. Problem                                                           7. Product
               Describe the pain of the customer (or the customer’s customer).      Product line-up (form factor, functionality, features,
                                                                                    architecture, intellectual property).
               Outline how the customer addresses the issue today.
                                                                                    Development roadmap.


               3. Solution                                                          8. Business Model
               Your company’s value prop. to make the customer’s life better.
               Show where your product physically sits.                             Pricing, Revenue model
               Provide use cases.                                                   Average account size and/or lifetime value
                                                                                    Sales & distribution model
                                                                                    Customer/pipeline list

               4. Why Now
               Set-up the historical evolution of your category.
               Define recent trends that make your solution possible.
                                                                                    9. Team
                                                                                    Founders & Management
                                                                                    Board of Directors/Board of Advisors

               5. Market Size
               Identify/profile the customer you cater to.
               Calculate the TAM (top down), SAM (bottoms up) and SOM.
                                                                                    10. Financials
                                                                                    P&L, B/S, Cash flow
                                                                                    Cap table, The deal


                             Raising Startup Capital -- The Pitch                GENERAL ASSEMBLY
               19            Nathan Beckord @startupventures                     Sept. 20, 2012



Now letʼs match up the MVP we just did with Sequoiaʼs classic outline...our MVP nails almost everything on
Sequoiaʼs ten-slide deck outline.
500 Startups’ Criteria




                         Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
                         Nathan Beckord @startupventures        Sept. 20, 2012



And not only does it hit the highlights with Sequoia, but also with small funds like 500 Startups. Product /
Solution, Biz model, distribution, traction and team.
And It Works!




                        Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
               21       Nathan Beckord @startupventures        Sept. 20, 2012



And it really works! Also, airBnBʼs simple deck http://tiffanyk.com/post/10611384492/the-original-airbnb-pitch-
deck-honored
Show and Tell Time!

                               Let’s take a look at a few
                                        decks...
                                                             Acme	
  5-­‐Slider
                                                            Airbnb	
  early	
  days
                                                               Dress	
  Rush
                                                               Speakeasy
                                                                 Everest
                                                                CSS	
  Piffle
                                                                  Piccsy
                                                               Popsurvey
                                                                Manpacks

                         Raising Startup Capital -- The Pitch            GENERAL ASSEMBLY
                22       Nathan Beckord @startupventures                 Sept. 20, 2012



First letʼs start with the minimalist theme. Hereʼs the 5-slide deck referenced in that TC post: http://
www.slideshare.net/timyoung/magic-5663116

Hereʼs another that is nice and bare bones--- AirBnB: http://tiffanyk.com/post/10611384492/the-original-airbnb-
pitch-deck-honored Good: Problem / Solution and Market Sizing for a new, unknown market. Very simple,
lots of whitespace.

Some nice online design inspirations: http://investors.dressrush.com/ http://investors.getspeakeasy.com/
http://investors.evr.st/ http://pitch.csspiffle.com/#intro http://piccsy.com/investors/ http://www.slideshare.net/
DeckFoundry/popsurvey-deck http://www.slideshare.net/500startups/manpacks
But what about... (nuts & bolts)
                            File	
  type?
                                Format	
  /	
  Build?
                                                   Length?
                                                                Tone?
                                                                   Online?
                                                                        Angel	
  List?
                                                                          ConfidenKality?
                                                                                       Data?	
  Room
                         Raising Startup Capital -- The Pitch       GENERAL ASSEMBLY
                23       Nathan Beckord @startupventures            Sept. 20, 2012



File type: PPT, Keynote, Prezi.

Formatting: minimal. White background if it will be a printed / bplan version.

Builds: as few as possible (they are distracting).

Length: 5 slides for minimalist, 10-12 for Guy Kawasaki / Sequoia, and 15-25 with appendix for full plan (feel
free to go crazy in the appendix).

Tone: Depends. Confident is good, without being cocky. Thoughtful / reflective / aware if youʼve pivoted.
Serious if enterprise.

Online: Use https://speakerdeck.com/, slideshare.com, or bit.ly Dressrush has an explanatory guide to doing
this: dressrush.tumblr.com/post/12506021124/dressrush-online-pitch-deck.

Angel List: Absolutely. This is pretty much a requirement these days. In your deck, link through to your AL
profile.

Confidentiality: Assume everything you send over will be shared. Sanitize as needed, or give them access to
data room.

Data room: Almost no one does this, but it can save you from 1000 emails asking for stuff that should have
been put in a data room.
Presentation Hacks
                            File	
  type?                                       Friendly	
  Fire
                                Format	
  /	
  Build?                   Performance
                                                   Length?         Memorize
                                                           Audience	
  Tuning
                                                             Tone?                               Don’t	
  
                                                                                               Forget	
  the	
  
                                                  ConversaKonal
                                                           Online?                                 ASK!	
  
                                         Laptop	
  Demo               Angel	
  List?
                                  Live	
  Demo                          ConfidenKality?
                          Early	
  Bird                                           Sharing	
  Data?
                         Raising Startup Capital -- The Pitch      GENERAL ASSEMBLY
                24       Nathan Beckord @startupventures           Sept. 20, 2012



Early bird: arrive 10 minutes early, the VC will probably arrive 10 minutes late; donʼt be rattled.

Live Demo: this usually occurs about half way through the deck, after you've established "what" and "why"
and "who." Tips: be mindful of time (3 mins!) and don't get lost in product.

Laptop demo-- assume the projector bulb burns out, Internet connectivity will fail, etc. Be ready to run a demo
off your laptop if you can. Plus it creates a more intimate setting if you're sitting side-by-side, looking at your
screen.

And, be prepared to completely ad-lib it (w/o slides) by telling a story / conversation. This can be powerful.

Tuning: Know your VC. were they finance guys? Sales guys? Founders or product guys? Who else have
they invested in?

Memorize: practice it, hours per day, until it becomes conversational.

Itʼs a Performance-- use movement, dramatic emphasis, walk around, use emotion, elongated pauses etc.

Friendly fire: practice your pitch with your attorneys, friends, advisors, startup founders, c-list VCs.

And finally, youʼre selling, youʼre asking for money. Go for the close! Ask for it!
First steps to get started (do it tonight!)
                                  Draw	
  or	
  storyboard	
  it	
  by	
  hand
                                                                  Or
                              Dras	
  an	
  outline	
  in	
  Word	
  or	
  Pages
                                                                  Or
                          Build	
  Xtles	
  and	
  headers	
  of	
  each	
  slide
                                                                  Or
                            Find	
  an	
  exisXng	
  deck	
  and	
  modify	
  it.	
  
                                                                 Then...

                Add	
  simple	
  images	
  or	
  pictures	
  to	
  accompany	
  text
              Create	
  diagrams,	
  charts	
  that	
  support	
  the	
  slide	
  topic
                       Sparingly	
  add	
  addiXonal	
  detail.	
  	
  PracXce!
                          Raising Startup Capital -- The Pitch         GENERAL ASSEMBLY
                25        Nathan Beckord @startupventures              Sept. 20, 2012



Draw or storyboard it by hand.  Put the computer away and sit down at a clean, empty desk with 10-12 pieces
of blank paper and a pen and simply draw rough diagrams for each slide.  This spurs creativity, and you can
re-order the paper slides into the perfect storyline.  Then, fire up the MacBook and start creating a digital
version.

Draft an outline in a Word or Pages file. Begin with one of the standard pitch deck formats as suggested by
Sequoia or Guy Kawasaki (e.g., Problem / Solution / Team / Market - etc.) and then add one key concept that I
want to convey on each slide as a sub-bullet. This forms the basis of the "story arc" that the deck will take, and
then add more color and detail to each later.

Headers and titles: If the storyline is already pretty clear, then with a blank Keynote or PowerPoint build a set
of 10-12 slides starting with just the headlines. In some cases, I'll also do a set of sub-titles, too. Then the rest
of the slide expands on these concepts, or better yet, represents them as images or diagrams.       

Pull up an old deck: there are many, many good decks now online (see my Quora answer on the topic) and
many concepts can easily be recycled.  Just be sure to make the look, tone, and feel consistent to avoid
"Frankenstein" decks.
KISS




       Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
 26    Nathan Beckord @startupventures        Sept. 20, 2012
Raising Startup Capital -- The Pitch   GENERAL ASSEMBLY
27   Nathan Beckord @startupventures        Sept. 20, 2012

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Raising startup capital pitch hacks class at general assembly sf september 20 2012 v ss

  • 1. Raising Startup Capital Session 1- The Pitch Nathan Beckord @startupventures General Assembly San Francisco September 20, 2012
  • 2. HELLO. General Assembly is a global network of campuses for individuals seeking opportunity and education in technology, business, and design founded in NYC. Follow us on Twitter at @GA_SF for the latest news on classes, courses, and events in San Francisco, and use the hashtag #GASF to continue the conversation. Take a look at our course catalog at generalassemb.ly/sf for a list of classes currently offered. Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 2 Nathan Beckord @startupventures Sept. 20, 2012
  • 3. Hi. My name is... Nathan  Beckord,  CFA.    Principal,  www.VentureArchetypes.com • My  Job:  Startup  CFO,  Advisor,  and  BD  Guy • 100+  Startup  clients  over  the  past  eight  years • E.g.  Kickstarter,  Clicker,  Autonet,  Zerply,  GetHired,  etc. • Clients  have  raised  over  $98  million  in  seed  capital  and  achieved  5  exits • Example:  I  ran  financial  modeling  for  Clicker.com,  which  raised  2  rounds  of  VC   and  sold  for  $100m  in  3  years. • Previously:  Technology  ValuaXon  |  Investment  Banking  |  Venture  Capital • Chartered  Financial  Analyst  (CFA)  and  MBA Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 3 Nathan Beckord @startupventures Sept. 20, 2012
  • 4. Why this matters From  VentureHack’s  “Pitching   Hacks”  PDF  /  Book:  h<p:// venturehacks.com/pitching Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 4 Nathan Beckord @startupventures Sept. 20, 2012 What are we doing here? Ultimately, we are telling stories so we can successfully raise money at favorable terms and valuation. What form does our story take? In the form of our pitch.
  • 5. The Full Pitch Package Written • A one sentence (or sentence fragment) tag line • A one or two paragraph email introduction to the business • A 'one-pager' overview or teaser • A 2-3 page executive summary • a slide deck specifically designed to be handed out • A thoughtful, comprehensive business plan: either (a) a traditional 10-20 page written plan, or (b) a carefully prepared and annotated 'business model canvas' • A finished (or prototype) marketing brochure Live • A one sentence description • A 30 second elevator pitch • A 5 minute 'quick pitch' • A 15-20 minute angel/VC PowerPoint/Keynote pitch deck • A sub-15 minute foolproof product/site demonstration Online From  David  Rose’s  answer  on   Quora:  h<p://www.quora.com/ • A functional public web site Venture-­‐and-­‐Investor-­‐Pitches/ • A short video pitch What-­‐materials-­‐or-­‐soIware-­‐ should-­‐I-­‐use-­‐to-­‐pitch-­‐a-­‐VC • A dedicated, controlled access, investor-relations web site Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 5 Nathan Beckord @startupventures Sept. 20, 2012 If you have nothing but time on your hands, here is the full list of pitch materials for you to work on...your Tag Line, your Email Intro, your Teaser, your Exec Sum, Elevator Pitch, Business Plan, Pitch deck, Video, etc. This will pretty much cover every possible situation. But... youʼre busy startup founders-- so weʼre going to focus on the easiest to create, most commonly used, and most versatile option, the pitch deck.
  • 6. What is this...‘pitch deck’ you speak of? Pitch  Deck  ≠  Business  Plan Pitch  Deck  =  Business  Plan Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 6 Nathan Beckord @startupventures Sept. 20, 2012 So what is a pitch deck? In the “olden days,” i.e., like 4-5 years ago, we would draft an entire, thorough 20-30 page business plan, which is a deep dive into the business, and is what weʼd send along in advance of a meeting, or use as leave behind. Then, weʼd distill that down to a super high level, crisp and simple, slide deck to use during the live meeting. Now, no one reads or writes business plans anymore. Yet you still need something to send ahead, and that will be sent around the office of the VC, among the partnership. And it has to stand on its own and be complete, and tell the entire story without your voice-over narration, so they can read it by themselves. So the pitch deck, in this context, is now the business plan. So essentially, you should have two different pitch deck—the deck for sending and circulating, and then what you show them in the office. The main difference is level of detail. Just a few tips for the deck you'll be sending: i) make it small file size, ii) have a screen shot in lieu of demo; iii) avoid builds, iv) use white background; v) Use PDF if desired; vi) pack it full of pithy soundbites that the junior analyst can plagiarize when she does her write up for the senior partners.
  • 7. What is your “one thing?” “those  guys  were  killing  it-­‐-­‐  rocket  ship  trajectory  growth” “they  had  a  really  clever  solu9on  to  a  vexing  problem”   “I  don’t  remember  what  they  did,  but  the  team  was   bankable-­‐-­‐    A-­‐players  all  the  way!” Q:  what  makes  you  excepXonal?   Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 7 Nathan Beckord @startupventures Sept. 20, 2012 So letʼs talk about how to build a pitch deck. We start by figuring out what is the single most unique, compelling piece of your story. Or, in other words, If you strip everything away...what will investors remember about you a week or two later? In short, what makes you exceptional?
  • 8. Are you exceptional? “investors   are   trying   to   find   the   excep%onal   outcomes,   so   they   are   looking  for  something  excep9onal  about   the   company.   Instead   of   trying   to   do   everything   well   (trac9on,   team,   product,  social   proof,  pitch,  etc),  do  one   thing   excep%onal.     As   a   startup   you   have   to   be   excep9onal   in   at   least   one   regard.”                   -­‐-­‐Naval  Ravikant,  Angel  List Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 8 Nathan Beckord @startupventures Sept. 20, 2012 Hereʼs a quote by Naval Ravikant of Angel list, on the importance of being exceptional in at least one area.
  • 9. Let’s talk about... Pitch Archetypes From  Jason  Shen’s  blog  h<p:// www.jasonshen.com/2012/eleven-­‐ compelling-­‐startup-­‐pitch-­‐archetypes-­‐ with-­‐examples-­‐from-­‐yc-­‐companies/ Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 9 Nathan Beckord @startupventures Sept. 20, 2012 Ok letʼs now look at a couple ways to frame your “one thing” and tell your story by way of several “pitch archetypes” these archetypes are important, because how you frame your business and how you guide the discussion has a big impact on how people react, what they retain and what message they will share with other investors. Excertped from the excellent blog at: http://www.jasonshen.com/2012/eleven-compelling-startup-pitch- archetypes-with-examples-from-yc-companies/
  • 10. Archetype #1 Problem / Solution Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 10 Nathan Beckord @startupventures Sept. 20, 2012 This is the classic Sequoia outline, and probably accounts for 85% of the decks out there. Youʼve found a valuable, rich pain point to solve. Painkiller vs. vitamin. Itʼs Classic, itʼs familiar, but itʼs not always as relevant to web 2.0...is there really a pain point solved by social checkins? Weʼll look at the outline in a few moments.
  • 11. Archetype #2 Traction Story Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 11 Nathan Beckord @startupventures Sept. 20, 2012 Traction-- “Pitching the numbers”...Iʼm a numbers guy, so this gets me excited. Here, we are focused on growth and rate of growth (slope of line) as way to validate your vision; what youʼre actually doing becomes secondary. e.g. Fab.com Bonus points if you can demonstrate the LTV > CAC. Online retail, gaming, etc. Then pouring money in becomes a no-brainer and it makes sense to dump as much in as you can profitably spend. As Paul Singh of 500S says, “Traction is the new intellectual property.” Thereʼs a direct correlation between the strength of your traction story and the speed at which you raise funding. Further reading: http://betashop.com/post/14249821547/behind-the-scenes-how-fab-raised-40-million-with-a and http://www.slideshare.net/brendanbaker/how-to-communicate-traction-to-investors-with-brendan-baker- and-hiten-shah
  • 12. Archetype #3 “X for Y” Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 12 Nathan Beckord @startupventures Sept. 20, 2012 “X for Y”-- applying a proven model to a new market or application. You see this a lot now, and it can be combined with Problem / Solution. Here, X is the established model (e.g. Airbnb) and Y is the new market that the model is being applied to (dog boarding). DogVacay. Thus, X must be successful, Y must be large. The metaphors you use should also be well-known. Risk of overuse. A variation on this is what I call the Hollywood Pitch, which is a mashup of two different scripts. “Jurrassic Park meets Dirty Dancing”
  • 13. Archetype #4 “Scratched Your Itch” Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 13 Nathan Beckord @startupventures Sept. 20, 2012 “Scratched your itch” (aka Personal Story)-- youʼve solved something that was vexing you. A lot of technical companies get started this way, like Heroku or Dropbox or Github. Or, for example, Iʼm starting a company called FounderSuite.com ... Good if you know problem intimately + itʼs universal + VC has experienced it Bad-- if too niche or specific.
  • 14. Archetype #5 Crystal Ball Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 14 Nathan Beckord @startupventures Sept. 20, 2012 Crystal Ball (aka Evolution next / skate to where the puck will be / connect the dots / converging trends)-- Here, you walk investor through how a market has evolved, and where it will be. e.g. semantic web, cloud biz, mobile biz. Itʼs pretty compelling, as youʼre showing investors a peek into the future, and they love this stuff. So itʼs easier to get a meeting vs. some of the other formats. The harder part is convincing them you have the solution, <AND> you are flexible enough to execute around 1000 minefileds that are completely hidden...tech shifts, user behaviour, legislation, etc.
  • 15. Archetype #6 Wouldn’t it be cool... Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 15 Nathan Beckord @startupventures Sept. 20, 2012 Wouldnʼt it be cool if: describe something fun and interesting. Get investor to imagine with you...get a couple cool use cases / anecdotes. e.g. Zaarly, TaskRabbit: “Wouldnʼt it be cool if you could easily hire someone to wait in line at Apple store for new iPhone?” Uber: Wouldnʼt it be cool is you could hail a taxi from your phone and watch it drive toward you?
  • 16. More Pitch Archetypes Consumerification New Biz Model of Enterprise The Pivot Dream Team Breakthrough Service at Tech Scale Further  Reading:  hJp://www.jasonshen.com/2012/eleven-­‐compelling-­‐startup-­‐pitch-­‐archetypes-­‐with-­‐examples-­‐from-­‐yc-­‐companies/ Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 16 Nathan Beckord @startupventures Sept. 20, 2012 New biz model: Taking leveraging existing tech, and innovating in how youʼre monetizing. E.g. Sunrun, GMAC, Square Consumerifciation of Enterprise (Yammer, Asana, etc)...win by cheap software that continually gets better. Dream team: assembled scientists with rare knowledge. Or, team with mega homeruns....banking on history repeating itself. Service at scale-- Wave doing SMB accounting or 99Designs doing cheap design. Breakthrough Tech (w/bmodel): literally invented something that can be patented. A new solar film, or touch screen interface. Pivot-- Weʼve tried several things, and now somethingʼs working. Twitter, PayPal. PayPal famously had 5 pivots...cryptography for handheld devices, then a way to beam $$ among Palm Pilots, then emailing money, then they merged with an online bank, etc. The archetype is explaining what you did to run into a dead end, what you learned from that, and what new direction that set you off on.
  • 17. Minimal Viable Pitch What  you’re  doing  (and  why) Who  you  are What’s  going  on  (tracXon  /  growth)   What  you  want  $  (and  why)   Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 17 Nathan Beckord @startupventures Sept. 20, 2012 So now that Iʼve given you several different ways to frame it, here is the minimum set of information to cover in the first meeting. I really want to drill into you the importance and value of keeping it short and simple. Minimal = elegance. Think of your first VC meeting as a first date... Keep in mind, this first meeting is really just a mutual-screening process, to see if thereʼs mutual interest. in going on a second date. Plus, you only have an hour...so this “uber-minimal” approach-- just focusing on most important things-- helps you avoid “rat holes” that are very easy to fall into if you present too much info. Common ratholes are: i) too deep into tech or product; ii) too much on competitive landscape. And then finally, when you tell investors upfront that there are only 5 slides as opposed to 30, youʼll instantly notice increased engagement on the part of the potential investors; this is important.
  • 18. MVP (minimal viable pitch) Message: What  you’re   More  people  than  ever  (78M!)  have  dogs.  They   ✓  Problem ✓  Market  size  &  Trends doing  &  why spend  $2bln/yr  pugng  dogs  in  kennels  but  it’s   ✓  SoluYon  /  Product expensive  &  dogs  hate  it.  We  are  “airbnb  for  dogs.” ✓  Clear  &  big  Vision Samir-­‐  VP  Engr,  prev.  @Adobe;  Samantha-­‐  Designer,   ✓  Solid  Team-­‐-­‐Hacker,       Hustler,  Designer Who  are  you prev.  @Apple,  NYU;  Stewart-­‐  Stanford  MBA;     ✓  Pedigree,  Experience ✓Peer  reference  /   Advisors:  Steve  Blank,  Andrew  Chen.   “social  proof” What’s  going   POC  in  SF,  NY,  Atlanta  (now);  Adding  3k  members  &   ✓  Thesis  Validated ✓  TracYon  /  Growth on   120  boarders  /  week  via  events,  AKC  partnership,   ✓  MarkeYng  Plan   select  GOOG  ads.    Avg.  booking  $55  x  7%  =  $3.85   ✓  Bus.  Model ✓  Momentum What  you   $4m  Series  A  @$16m  pre  to  hit  6  more  geo.  mkts ✓  Sensible  UOF ✓  Strong  Future  Vision want   Burning  $75k/mo.      Cash  Flow  B/E  @  2k  bookings  /   ✓  Economics  Scale ✓  Path  to  Profitability week  (2013).      LTV  >  CAC      ($145  vs.  $33). ✓  RealisYc  ValuaYon Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 18 Nathan Beckord @startupventures Sept. 20, 2012 Here is a simple framework. Note that each of these could easily be a standalone slide, in 40 point font...add a title, add a clever image or a supporting chart or diagram, and youʼre done. Killer MVP. To note, I intentionally did not include a competition slide, as that can be a rathole. Make them ask about it, make them bring it up. But def have a thoughtful analysis and appendix slide to answer.
  • 19. Sequoia’s Outline 1. Company Purpose 6. Competition Define the company/business in a single declarative sentence. List competitors & competitive advantages 2. Problem 7. Product Describe the pain of the customer (or the customer’s customer). Product line-up (form factor, functionality, features, architecture, intellectual property). Outline how the customer addresses the issue today. Development roadmap. 3. Solution 8. Business Model Your company’s value prop. to make the customer’s life better. Show where your product physically sits. Pricing, Revenue model Provide use cases. Average account size and/or lifetime value Sales & distribution model Customer/pipeline list 4. Why Now Set-up the historical evolution of your category. Define recent trends that make your solution possible. 9. Team Founders & Management Board of Directors/Board of Advisors 5. Market Size Identify/profile the customer you cater to. Calculate the TAM (top down), SAM (bottoms up) and SOM. 10. Financials P&L, B/S, Cash flow Cap table, The deal Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 19 Nathan Beckord @startupventures Sept. 20, 2012 Now letʼs match up the MVP we just did with Sequoiaʼs classic outline...our MVP nails almost everything on Sequoiaʼs ten-slide deck outline.
  • 20. 500 Startups’ Criteria Raising Startup Capital -- The Pitch GENERAL ASSEMBLY Nathan Beckord @startupventures Sept. 20, 2012 And not only does it hit the highlights with Sequoia, but also with small funds like 500 Startups. Product / Solution, Biz model, distribution, traction and team.
  • 21. And It Works! Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 21 Nathan Beckord @startupventures Sept. 20, 2012 And it really works! Also, airBnBʼs simple deck http://tiffanyk.com/post/10611384492/the-original-airbnb-pitch- deck-honored
  • 22. Show and Tell Time! Let’s take a look at a few decks... Acme  5-­‐Slider Airbnb  early  days Dress  Rush Speakeasy Everest CSS  Piffle Piccsy Popsurvey Manpacks Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 22 Nathan Beckord @startupventures Sept. 20, 2012 First letʼs start with the minimalist theme. Hereʼs the 5-slide deck referenced in that TC post: http:// www.slideshare.net/timyoung/magic-5663116 Hereʼs another that is nice and bare bones--- AirBnB: http://tiffanyk.com/post/10611384492/the-original-airbnb- pitch-deck-honored Good: Problem / Solution and Market Sizing for a new, unknown market. Very simple, lots of whitespace. Some nice online design inspirations: http://investors.dressrush.com/ http://investors.getspeakeasy.com/ http://investors.evr.st/ http://pitch.csspiffle.com/#intro http://piccsy.com/investors/ http://www.slideshare.net/ DeckFoundry/popsurvey-deck http://www.slideshare.net/500startups/manpacks
  • 23. But what about... (nuts & bolts) File  type? Format  /  Build? Length? Tone? Online? Angel  List? ConfidenKality? Data?  Room Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 23 Nathan Beckord @startupventures Sept. 20, 2012 File type: PPT, Keynote, Prezi. Formatting: minimal. White background if it will be a printed / bplan version. Builds: as few as possible (they are distracting). Length: 5 slides for minimalist, 10-12 for Guy Kawasaki / Sequoia, and 15-25 with appendix for full plan (feel free to go crazy in the appendix). Tone: Depends. Confident is good, without being cocky. Thoughtful / reflective / aware if youʼve pivoted. Serious if enterprise. Online: Use https://speakerdeck.com/, slideshare.com, or bit.ly Dressrush has an explanatory guide to doing this: dressrush.tumblr.com/post/12506021124/dressrush-online-pitch-deck. Angel List: Absolutely. This is pretty much a requirement these days. In your deck, link through to your AL profile. Confidentiality: Assume everything you send over will be shared. Sanitize as needed, or give them access to data room. Data room: Almost no one does this, but it can save you from 1000 emails asking for stuff that should have been put in a data room.
  • 24. Presentation Hacks File  type? Friendly  Fire Format  /  Build? Performance Length? Memorize Audience  Tuning Tone? Don’t   Forget  the   ConversaKonal Online? ASK!   Laptop  Demo Angel  List? Live  Demo ConfidenKality? Early  Bird Sharing  Data? Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 24 Nathan Beckord @startupventures Sept. 20, 2012 Early bird: arrive 10 minutes early, the VC will probably arrive 10 minutes late; donʼt be rattled. Live Demo: this usually occurs about half way through the deck, after you've established "what" and "why" and "who." Tips: be mindful of time (3 mins!) and don't get lost in product. Laptop demo-- assume the projector bulb burns out, Internet connectivity will fail, etc. Be ready to run a demo off your laptop if you can. Plus it creates a more intimate setting if you're sitting side-by-side, looking at your screen. And, be prepared to completely ad-lib it (w/o slides) by telling a story / conversation. This can be powerful. Tuning: Know your VC. were they finance guys? Sales guys? Founders or product guys? Who else have they invested in? Memorize: practice it, hours per day, until it becomes conversational. Itʼs a Performance-- use movement, dramatic emphasis, walk around, use emotion, elongated pauses etc. Friendly fire: practice your pitch with your attorneys, friends, advisors, startup founders, c-list VCs. And finally, youʼre selling, youʼre asking for money. Go for the close! Ask for it!
  • 25. First steps to get started (do it tonight!) Draw  or  storyboard  it  by  hand Or Dras  an  outline  in  Word  or  Pages Or Build  Xtles  and  headers  of  each  slide Or Find  an  exisXng  deck  and  modify  it.   Then... Add  simple  images  or  pictures  to  accompany  text Create  diagrams,  charts  that  support  the  slide  topic Sparingly  add  addiXonal  detail.    PracXce! Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 25 Nathan Beckord @startupventures Sept. 20, 2012 Draw or storyboard it by hand.  Put the computer away and sit down at a clean, empty desk with 10-12 pieces of blank paper and a pen and simply draw rough diagrams for each slide.  This spurs creativity, and you can re-order the paper slides into the perfect storyline.  Then, fire up the MacBook and start creating a digital version. Draft an outline in a Word or Pages file. Begin with one of the standard pitch deck formats as suggested by Sequoia or Guy Kawasaki (e.g., Problem / Solution / Team / Market - etc.) and then add one key concept that I want to convey on each slide as a sub-bullet. This forms the basis of the "story arc" that the deck will take, and then add more color and detail to each later. Headers and titles: If the storyline is already pretty clear, then with a blank Keynote or PowerPoint build a set of 10-12 slides starting with just the headlines. In some cases, I'll also do a set of sub-titles, too. Then the rest of the slide expands on these concepts, or better yet, represents them as images or diagrams.        Pull up an old deck: there are many, many good decks now online (see my Quora answer on the topic) and many concepts can easily be recycled.  Just be sure to make the look, tone, and feel consistent to avoid "Frankenstein" decks.
  • 26. KISS Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 26 Nathan Beckord @startupventures Sept. 20, 2012
  • 27. Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 27 Nathan Beckord @startupventures Sept. 20, 2012