Startup Viagra: How to Pitch a VC

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  • + dannyrobinson Danny Robinson 2 weeks ago
    Awesome. Would have loved to add this to our group @bootuplabs. has that been blocked?
  • + sykwon sykwon 2 weeks ago
    Awesome slide deck. Very crisp and vivid.
  • + wmclaxton Bill Claxton 3 months ago
    This stuff should be Viagra for startups. Great presentation.
  • + AmitRanjan Amit Ranjan 7 months ago
    Great preso... my first comment from a blog embed , hope this works fine
  • + dmc500hats Dave McClure 7 months ago
    v1.1 posted 3/28/09; made a few minor updates & added some resource links
  • + ekokkonen Erik Kokkonen 7 months ago
    best. presentation. ever.
  • + martinsellingzoe Martin Smith 8 months ago
    Great helpful comment by David Rose. My last pitch did not get funded, would have been much better prepared with Dave McClure’s and David Rose’s help. Pitching VC is like anything in life. What is supposed to be happening is happening. I may not succeed next time, or the time after that, but I will be more prepared thanks to the two D’s. Thanks for sharing guys.
  • + DavidSRose David S. Rose 8 months ago
    This is hysterically funny, but more than that, it is *right* on target. Dave McClure knows whereof he speaks, and this should be mandatory viewing for anyone seriously seeking angel or venture funding.

    As someone who coaches hundreds of money-seeking entrepreneurs each year, I can tell you from the trenches that Dave hits the nail on the head. After you pick yourself off the floor from laughing, take to heart all the points he’s making, but more than that, try to understand WHY he’s making them. The sexual analogies aren’t just to be a wiseass; they’re completely accurate. I have seen venture pitches with endings that were nearly orgasmic, as investors whipped out their checkbooks on the spot. And if you’re worth your salt as an entrepreneur, you should aspire to get to that point yourself.

    Don’t be distracted by the amateurish graphics and text in this presentation; that’s not what Dave is teaching (for how to handle the look and feel of a presentation, see Garr Reynolds’ PresentationZen.com and his book of the same name). Instead, look past the humor to understand the aspects of human nature that will drive investors to fund your vision.

    For further reading, I’ve compiled a short list of the best books on how to pitch, available at rose.vc/readings. And although it’s probably suicidal for anyone to try to follow ’the Dave Barry of Venture Pitching’, here’s a link to a 10 minute quickie lesson on the subject that was shot several years ago at TED.

    Good luck with your fundraising!
  • + martinsellingzoe Martin Smith 8 months ago
    Great presentation. I’ve pitched VC and wish I had Dave’s candor, eloquence and good advice BEFORE those presentations. I am just sorry I am no where near SF as I would have been glued to a seat at his presentation today. Great job Dave and thanks. Martin (@scenttrail)
  • + rashmi Rashmi Sinha 8 months ago
    Really enjoyed this presentation in person - and love the slides as well.

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Startup Viagra: How to Pitch a VC - Presentation Transcript

  1. How to Pitch a VC or… Startup Viagra: How to Pitch a VC (click here for video of this talk) Dave McClure, Founders Fund, Master of 500 Hats Startonomics Beijing, 06/12/09 dave@foundersfund.com / dave@500hats.com @DaveMcClure on Twitter
  2. Startups: 2 Sexy 4 Milan? Essential Elements of a Hot VC Pitch • Love in an Elevator (30-second quick pitch) • The Money Shot (live demo, screen shots, video) • Size Matters (market size, bottom up / top down) • Nice Package (customer$, metric$ UP & to the RIGHT) • Superheros & Rock Stars (your team) * note: the above are teaser images… they don’t really mean anything; they’re just here to capture your attention.
  3. 10 Erogenous VC Zones Teaser Image Goes Here 1. Elevator Pitch 6. Proprietary Tech 2. The Problem 7. Competition 3. Your Solution Money Shot 8. Marketing Plan 4. Market Size Goes Here 9. Team / Hires 5. Business Model 10. Money / Milestones The Money Shot: Business Demo Metrics Cu$tomer Screen Shots (NOT Revenue Testimonial$ Video Projections) “This Shit Rocks.”
  4. 1. The Elevator Pitch The 30-second quickie, for when you don’t have time for lots of VC lovin’ • Short, Simple, Memorable: “What, How, Why.” – “We’re X for Y” is ok if 1) it’s true 2) X & Y are well-known • Max 3 key words / phrases, 2 sentences. – “SlideShare is the world’s largest community for sharing presentations. – “TeachStreet is a place to teach or learn anything.” – “Mint.com is the free, easy way to manage your money online.” • Logo and/or Image ok but not rqd • No “Inside Baseball” lingo – make it easy for non-experts to understand. • Smile. It’s ok to have fun when you pitch 
  5. “ZapMeals is an online meal order & delivery service matching hungry consumers with great local food preparers.” “We’re eBay for takeout orders.”
  6. 2. The Problem • What is The Problem? Make it Obvious. – “Ouch. Yeah, I have that too…” • Who has it? How Many? How do you know? – stats, examples, research, links. • “Painkiller not Vitamin” – Vitamins are great, but you NEED painkillers. BAD. (note: Viagra is not a Vitamin)
  7. Problem: Great Fast Food… Isn’t Either. Preparers Consumers • Is there a market for my cooking? • Tough to find good fast food • Restaurants have high startup • What’s the best / cheapest / costs fastest place to order from? • Delivery is tough to do fast, • It’s been 30 minutes – where’s warm, & well my order?
  8. 3. Your Solution • Great Companies do 1+ of 3 things: – Get you LAID (= sex) – Get you PAID (= money) – Get you MADE (= power) • Describe why your Solution: – Makes customers very happy – Does it better, different than anyone else – Remember “NICHE to WIN” (Customer Case Study can also go here)
  9. [ The Money Shot ] • http://JingProject.com Demo • http://ScreenCast.com • http://Flickr.com Screen Shots • http://YouTube.com • http://Scribd.com Video • http://SlideShare.com • if you’re doing live demo: PRACTICE! PRACTICE! PRACTICE! • expect demo to FAIL – in multiple, interesting ways -- how will u handle it? • always have a backup (screenshots, local video, interpretive dance) • expect to be interrupted by VCs (Pitchus Interruptus) – multiple times. and remember: • Get Your Partner Off FIRST (watch for O-Face). You Can Come Later (or Never).
  10. Example Demo / Screen Shot
  11. no idea what this is, but 4. Market Size it looks really fucking impressive, doesn’t it? up & to the right. • Bigger is Better • Top Down = someone else reported it – Forrester, Gartner, Your Uncle • Bottom Up = calculate users/usage/rev$ – Avg Txn = $X – Y customers in our market – Avg customer buys Z times per year – Market Size = $X * Y * Z annually = a big friggin’ # – Market growing @ 100+% per year note: “top down” and “bottom up” have nothing to do with giving VCs hard-ons. Get your mind out of the gutter.
  12. Online Takeout Orders: Market $ize Top Down • $511 Billion spent dining out annually – source: National Restaurant Association, 2006 (http://www.restaurant.org/) Bottom up: • 100M people eat out every day • Today ~4% of meals ordered online (= 4M/day) • In 5 years 20% of meals ordered online (=20M/day) • Average takeout order cost is $12 • Available Total Market Size: – today = ~$50M daily, ~$20B annually – in future = $250M daily, $100B annually look: more info porn! damn that looks good, doesn’t it?
  13. 5. Business Model (How Do You Plan to Make Money?) • Describe Top 1-3 Revenue Sources – Prioritize by Size, Growth, and/or Potential – Cite current market activity / customer behavior as proof • Show How You Get to Break-even (or Profitable) – Ideally, on the current round of funding you’re raising • Common Revenue Models – Direct: ecommerce, subscription, digital goods, brands – Indirect: advertising, lead gen, affiliate / CPA • See Andrew Chen presentation: • Revenue: The Internet Wants to Be Free, but You Need to Get Paid
  14. ZapMeals: 3 Ways We Make Money • Transactional: – charge a 15% food prep fee (min $1) – charge a 15% food delivery fee (min $1) • Advertising: – charge small preparers by click-thru (SEM for food) – charge larger preparers for premium / sponsored listings • Supplies, Equipment, Insurance: – provide supplies, education for ZapMeals preparers – free licensing to ZapMeals preparers who buy $250 eqpmt – insure against food inspection issues via large group again, up & to the right.
  15. 6. Proprietary Tech / Expertise (What is your Unfair Advantage?) • VCs *really* like unfair advantage – big market lead – experienced team – ex-Google PhDs – core / “breakthrough” tech – “defensible” IP / patents – “exclusive” partnership – great sales/marketing – balls of steel
  16. don’t know what it means, but it sounds really cool. if you take this approach, be sure your audience isn’t smarter than you are. Proprietary Technology • ZapMeals has developed a proprietary least-cost routing & matching algorithm for ordering & delivery • Our Secret Sauce:”Search by Takeout Time” – estimated food preparation time (historical) – delivery distance (how far away – delivery provider (on-time record) – delivery stats real-time via GoogleMaps (+ GPS)
  17. 7. Competition (+ why they all suck, why you’re different, yellow, better) • List all top competitors – (especially top ones; we’ll find them anyway) • Say how you’re better, or at least different – If not better or different -> “NICHE TO WIN” – position(-ing) matters • 2-axis graph is trite, but still useful – see next page for example • useful comparisons / differentiation: – simple vs complex – value vs cheap (tougher to prove tho) – cheap vs expensive (but careful you don’t race to bottom) – consumer vs enterprise – open vs proprietary (in this case, open usually better… but not always)
  18. again, We’re Better, Different. up & to the right. (and You Suck.) Funny! Accepted Shocking !!! Not Funny.
  19. 8. Marketing Plan Ok, so your product / technology rocks, but… … how do you get customers / distribution? lots of channels, lots of decisions… choose a few: • PR • Email • Contest • SEO / SEM • Biz Dev • Blogs / Bloggers • Direct Marketing • Viral / Referral • Radio / TV / Print • Affiliate / CPA • Dedicated Sales • Widgets / Apps • Telemarketing • LOLCats 3 Things That Matter / To Measure : ● Volume ● Cost ● Conversion
  20. Marketing Plan • Online – Partner with notable foodie bloggers – Adwords Campaigns to regional west coast metros – Generate SEO traffic via food listing pages • Offline – Distribution Partnership with CA Restaurant Assoc. (700 in SF) – Contest for Best Ethnic Restaurants (10 x 10 winners, prizes) – PR stunt / TV spot for “Fastest Food Delivery in San Francisco” (sorry, this is a crappy example… I’ll update this later… meanwhile check out Sean Ellis or Steve Blank)
  21. 9. Team People that Get VCs all Hot & Bothered • Geeks with deep technical background • Entrepreneurs who have sold companies • Sales/Marketing who Make it Rain Also Identify: • Key Hires you Need but *Don’t* Have, and… • … you’ve got candidates lined up in those areas • ... ready to hire as soon as you close funding • … or at least job descriptions / est. salary
  22. 10. Money, Milestones • How Much Money Raised / Now Raising? – Show 3 Budgets: Small, Medium, Large – Show how you’ve got “Small” already lined up – Show “Optionality”, Competitive Interest (if poss.) • What Will you Do with the Capital? – Key Hires (Build Product) – Marketing & Sales (Drive Revenue) – CapX, Ops Infrastructure (Scale Up) • Map Out Achievable Milestones with Non-Linear Increase in Value – Show what will get you to next milestone (product, customers, hires) – Show how the capital you have is more than adequate – Show substantial UPTICK in value when milestone is achieved • functional product • initial customers / revenue • break-even or profitable
  23. Financing • Raised $200K Seed round Jan 08 @ $1M valuation – angel investors: Ron Conway, Larry Page, Bill Gates – built initial prototype; functional use with 1000 customers • Seeking $500K-$1M Series A round @ $2.5M valuation – already closed $300K – meetings with 5 other VCs in next 2 weeks – targeted closing in 4 weeks • Use of Proceeds / Product Roadmap / Goals – $300-500K: hire 2-3 engineers, 1 marketing / sales, .5 PT customer support – $200-500K: marketing campaigns & customer acquisition – get to 25K customers, $1M revenue by end of year – estimated break-even in Q4 / 09 @ $100K / month
  24. [ Startup Metrics ] • Startup Metrics for Pirates
  25. Happy Ending? Good, Now it’s Time for a Smoke… • Close with a Bang • Leave ‘em Wanting More • Show Interest in next date • Leave them a Memento – educate them on market report – send link to private beta – “oh, and One More Thing...”
  26. Additional Resources • Dave McClure: – Startup Metrics for Pirates (AARRR!) – ZapMeals Sample Pitch Presentation – Master of 500 Hats Blog: “Greatest Hats” (top blog posts) • Steve Blank: 4 Steps to Epiphany, Customer Development Methodology • Eric Ries: StartupLessonsLearned • Sean Ellis: Startup-Marketing.com • Andrew Chen: AndrewChenBlog.com • Brad Feld, Jason Mendelson: AskTheVC.com • VentureHacks.com • StartupCompanyLawyer.com

+ Dave McClureDave McClure, 8 months ago

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