How to Pitch a VC (Sept 2010)

How to Pitch a VC aka “ Startup Viagra ” (#pitchvc) Dave McClure 500 Startups , Master of 500 Hats SeedCamp Week - London, September 2010 dave@ 500startups.com / @DaveMcClure

Essential Elements of your Pitch
Elevator Ride (30-sec quick pitch)
The Money Shot (demo)
Size Matters (market)
Nice Number$ (customers + revenue)
SuperHeroes & RockStars (your team)
* note: the above are teaser images… they don’t really mean anything; they’re just here to capture your attention.

Pitch MY PROBLEM (not YOUR SOLUTION ) Post: “Your Solution is Not My Problem”

[Pardon The Blatant Commercial ]

Dave McClure
2001-2009:
Startup Investor: 500 Hats LLC, Founders Fund
Tech Marketing : PayPal, Simply Hired, Mint
Advisor, Angel Investor : 40+ Startups
Conf. Organizer : Web 2.0, O’Reilly, Startonomics
Stanford Visiting Lecturer : Facebook, Startup Metrics
80’s & 90’s:
Entrepreneur : Founder/CEO Aslan Computing (acq.)
Developer : Windows Apps / SQL DB Admin
User Groups : E-Commerce, Internet, Client-Server
Engineer : Johns Hopkins ‘88, BS Eng / Applied Math
GEEK, CODER, ENTREPRENEUR Blogger, Startup Advisor Internet Marketing, Angel/VC Investor

500 Hats Investments (13 deals, 2004-2008, ~$300K) 2004-2008: 13 deals, avg $25K results: 1 exit @ $170M (9x) , +3-7 future wins

Founders Fund Investments (43 deals, 2008-2010, ~$2.9M) Results : 8 raised seed rd $500K+ (+3 more break-even) Results : 1 small exit, 5 Series A/B rd @ $2M+ , (expect 5+ more) fbFund REV (Facebook Incubator) 22 deals ($850K) ~$15-75K FF Angel LLC 21 deals ($2M) ~$50-250K

500 Startups Investments (~40 deals, 2010, ~$3.5M) Q1-Q3 / 2010: 38 deals, avg $100K Wildfire Crave Tello AwayFind MyGengo Recurly Mogotix EcoMom Zencoder Crocodoc SayHired RevNetics AppBistro Foodspotting Medialets Rapportive TransFS SiteJabber Estately FlowTown OneForty Twilio Postling Plancast WePay OtherInbox Viikii Zozi Graphicly Networked Blogs

[How to Pitch a VC (or Angel)]

10 Slides to an Awesome Pitch
1. Elevator Pitch
2. The Problem
3. Your Solution
4. Market Size
5. Business Model ($)
6. Proprietary Tech
7. Competition
8. Marketing Plan
9. Team / Hires
10. Money / Milestones
Demo Goes Here Teaser Image Goes Here

10 Slides to an Awesome Pitch
1. Elevator Pitch
2. The Problem
3. Your Solution
4. Market Size
5. Business Model ($)
6. Proprietary Tech
7. Competition
8. Marketing Plan
9. Team / Hires
10. Money / Milestones
Demo Goes Here Teaser Image Goes Here Cu$tomer Testimonial$ “ This Shit Rocks .” The Money Shot: Demo Screen Shots Video Business Metrics (NOT Revenue Projections) AARRR!

1. The Elevator Pitch ( only 30 sec! )
Short, Simple, Memorable:
“ What , How , Why .”
3 key words or phrases
“ Mint.com is the free, easy way to manage your money online.”
No expert jargon… just KISS .
Remember to Have Fun 
(…. when you pitch ------> )

2. The Problem
What is The Problem ? … Make it Obvious .
“ Ouch . Yeah, I have that too…”
Who has it?
“ Painkiller not Vitamin ”
also see blog post:
“ Your SOLUTION is not my PROBLEM ”

3. Your Solution
Great Products & Companies do 1+ of 3 things:
Get You LAID (= sex)
Get You PAID (= money)
Get You MADE (= power)

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 your customers Happy
Does it better, different than anyone else
“ NICHE to WIN”
(Customer Case Study can also go here)

[ The Money Shot ]
http://Jing.com
http://ScreenCast.com
http://Flickr.com
http://YouTube.com
http://Scribd.com
http://SlideShare.com
Demo Screen Shots Video
PRACTICE! PRACTICE! PRACTICE!
demo will FAIL -- have a backup (screenshots, local video, interpretive dance)
expect to be interrupted

[ The Money Shot ]
http://Jing.com
http://ScreenCast.com
http://Flickr.com
http://YouTube.com
http://Scribd.com
http://SlideShare.com
Demo Screen Shots Video
PRACTICE! PRACTICE! PRACTICE!
demo will FAIL -- have a backup (screenshots, local video, interpretive dance)
expect to be interrupted
and remember :
The Script is NOT your Slides – The Script is the FACE of your Audience

4. Market Size
Bigger is Better
Top Down = someone else reported it
Forrester, Gartner, Your Uncle

4. Market Size
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

5. Business Model (How Do You Make Money?)
Describe Top 1-3 Sources of Revenue
Prioritize by Size or Potential
Common Revenue Models:
Direct : ecommerce, subscription, digital goods
Indirect : advertising, lead gen, affiliate

6. Proprietary Technology / Expertise
VCs *really* like unfair advantages:
BIG market lead
experienced team
“ superior” technology

7. Competition (why you’re better *or* different )
List *all* competitors
Show how you’re better …
… or at least different
if not better or different then
-> “NICHE TO WIN”

Better or Different . Funny! Shocking !!! Accepted Not Funny.

8. Marketing Plan
PR
Contest
Biz Dev
Direct Marketing
Radio / TV / Print
Telemarketing
Email
SEO / SEM
Blogs / Bloggers
Viral / Referral
Affiliate / CPA
Widgets / Apps
LOLCats
… how do you get customers & distribution ? lots of channels & decisions… choose a few :

8. Marketing Plan
PR
Contests
Biz Dev
Direct Marketing
Radio / TV / Print
Telemarketing
Email
SEO / SEM
Blogs / Bloggers
Viral / Referral
Affiliate / CPA
Widgets / Apps
… how do you get customers & distribution ? lots of channels & decisions… choose a few :
3 Things That Matter / To Measure :
Volume
Cost
Conversion

9. Team
People that get VCs Hot:
Geeks with deep tech experience
Entrepreneurs who have sold companies
Sales/Marketing who bring in customer$

10. Money, Milestones
How Much Money ?
3 Budgets: Small , Medium, Large
What will you do with Capital ?
New Hires (Build Product )
Mktg & Sales (Get Customers / $$$ )
Ops & Infrastructure ( Scale Up)

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

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
Aydin Senkut : Felicis Ventures blog
Mark Suster : Both Sides of the Table
VentureHacks.com
StartupCompanyLawyer.com

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http://www.seedcamp.com	8
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How to Pitch a VC (Sept 2010)

by Dave McClure on Sep 15, 2010

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