How to Pitch a VC (Sept 2010)

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Slides from my talk "How to Pitch a VC (aka Startup Viagra)", at SeedCamp Week, London, Sept 2010.

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  • Cool slides ! thank you
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  • stunning
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  • Favorite slide-> the money shot.

    Great tips for how to pattern your startup into a package investors can instantly comprehend.
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How to Pitch a VC (Sept 2010)

  1. 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
  2. Essential Elements of your Pitch <ul><li>Elevator Ride (30-sec quick pitch) </li></ul><ul><li>The Money Shot (demo) </li></ul><ul><li>Size Matters (market) </li></ul><ul><li>Nice Number$ (customers + revenue) </li></ul><ul><li>SuperHeroes & RockStars (your team) </li></ul>* note: the above are teaser images… they don’t really mean anything; they’re just here to capture your attention.
  3. Pitch MY PROBLEM (not YOUR SOLUTION ) Post: “Your Solution is Not My Problem”
  4. [Pardon The Blatant Commercial ]
  5. Dave McClure <ul><ul><li>2001-2009: </li></ul></ul><ul><ul><li>Startup Investor: 500 Hats LLC, Founders Fund </li></ul></ul><ul><ul><li>Tech Marketing : PayPal, Simply Hired, Mint </li></ul></ul><ul><ul><li>Advisor, Angel Investor : 40+ Startups </li></ul></ul><ul><ul><li>Conf. Organizer : Web 2.0, O’Reilly, Startonomics </li></ul></ul><ul><ul><li>Stanford Visiting Lecturer : Facebook, Startup Metrics </li></ul></ul><ul><ul><li>80’s & 90’s: </li></ul></ul><ul><ul><li>Entrepreneur : Founder/CEO Aslan Computing (acq.) </li></ul></ul><ul><ul><li>Developer : Windows Apps / SQL DB Admin </li></ul></ul><ul><ul><li>User Groups : E-Commerce, Internet, Client-Server </li></ul></ul><ul><ul><li>Engineer : Johns Hopkins ‘88, BS Eng / Applied Math </li></ul></ul>GEEK, CODER, ENTREPRENEUR Blogger, Startup Advisor Internet Marketing, Angel/VC Investor
  6. 500 Hats Investments (13 deals, 2004-2008, ~$300K) 2004-2008: 13 deals, avg $25K results: 1 exit @ $170M (9x) , +3-7 future wins
  7. 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
  8. 500 Startups Investments (~40 deals, 2010, ~$3.5M) Q1-Q3 / 2010: 38 deals, avg $100K Wildfire Crave Tello AwayFind MyGengo Recurly Mogotix EcoMom Zencoder Crocodoc SayHired RevNetics AppBistro Foodspotting Medialets Rapportive TransFS SiteJabber Estately FlowTown OneForty Twilio Postling Plancast WePay OtherInbox Viikii Zozi Graphicly Networked Blogs
  9. [How to Pitch a VC (or Angel)]
  10. 10 Slides to an Awesome Pitch <ul><li>1. Elevator Pitch </li></ul><ul><li>2. The Problem </li></ul><ul><li>3. Your Solution </li></ul><ul><li>4. Market Size </li></ul><ul><li>5. Business Model ($) </li></ul><ul><li>6. Proprietary Tech </li></ul><ul><li>7. Competition </li></ul><ul><li>8. Marketing Plan </li></ul><ul><li>9. Team / Hires </li></ul><ul><li>10. Money / Milestones </li></ul>Demo Goes Here Teaser Image Goes Here
  11. 10 Slides to an Awesome Pitch <ul><li>1. Elevator Pitch </li></ul><ul><li>2. The Problem </li></ul><ul><li>3. Your Solution </li></ul><ul><li>4. Market Size </li></ul><ul><li>5. Business Model ($) </li></ul><ul><li>6. Proprietary Tech </li></ul><ul><li>7. Competition </li></ul><ul><li>8. Marketing Plan </li></ul><ul><li>9. Team / Hires </li></ul><ul><li>10. Money / Milestones </li></ul>Demo Goes Here Teaser Image Goes Here Cu$tomer Testimonial$ “ This Shit Rocks .” The Money Shot: Demo Screen Shots Video Business Metrics (NOT Revenue Projections) AARRR!
  12. 1. The Elevator Pitch ( only 30 sec! ) <ul><li>Short, Simple, Memorable: </li></ul><ul><ul><li>“ What , How , Why .” </li></ul></ul><ul><li>3 key words or phrases </li></ul><ul><ul><li>“ Mint.com is the free, easy way to manage your money online.” </li></ul></ul><ul><li>No expert jargon… just KISS . </li></ul><ul><li>Remember to Have Fun  </li></ul><ul><li>(…. when you pitch ------> ) </li></ul>
  13. 2. The Problem <ul><li>What is The Problem ? … Make it Obvious . </li></ul><ul><ul><li>“ Ouch . Yeah, I have that too…” </li></ul></ul><ul><li>Who has it? </li></ul><ul><li>“ Painkiller not Vitamin ” </li></ul><ul><li>also see blog post: </li></ul><ul><li>“ Your SOLUTION is not my PROBLEM ” </li></ul>
  14. 3. Your Solution <ul><li>Great Products & Companies do 1+ of 3 things: </li></ul><ul><ul><li>Get You LAID (= sex) </li></ul></ul><ul><ul><li>Get You PAID (= money) </li></ul></ul><ul><ul><li>Get You MADE (= power) </li></ul></ul>
  15. 3. Your Solution <ul><li>Great Companies do 1+ of 3 things: </li></ul><ul><ul><li>Get you LAID (= sex) </li></ul></ul><ul><ul><li>Get you PAID (= money) </li></ul></ul><ul><ul><li>Get you MADE (= power) </li></ul></ul><ul><li>Describe why your Solution: </li></ul><ul><ul><li>Makes your customers Happy </li></ul></ul><ul><ul><li>Does it better, different than anyone else </li></ul></ul><ul><ul><ul><li>“ NICHE to WIN” </li></ul></ul></ul><ul><ul><ul><li>(Customer Case Study can also go here) </li></ul></ul></ul>
  16. [ The Money Shot ] <ul><li>http://Jing.com </li></ul><ul><li>http://ScreenCast.com </li></ul><ul><li>http://Flickr.com </li></ul><ul><li>http://YouTube.com </li></ul><ul><li>http://Scribd.com </li></ul><ul><li>http://SlideShare.com </li></ul>Demo Screen Shots Video <ul><li>PRACTICE! PRACTICE! PRACTICE! </li></ul><ul><li>demo will FAIL -- have a backup (screenshots, local video, interpretive dance) </li></ul><ul><li>expect to be interrupted </li></ul>
  17. [ The Money Shot ] <ul><li>http://Jing.com </li></ul><ul><li>http://ScreenCast.com </li></ul><ul><li>http://Flickr.com </li></ul><ul><li>http://YouTube.com </li></ul><ul><li>http://Scribd.com </li></ul><ul><li>http://SlideShare.com </li></ul>Demo Screen Shots Video <ul><li>PRACTICE! PRACTICE! PRACTICE! </li></ul><ul><li>demo will FAIL -- have a backup (screenshots, local video, interpretive dance) </li></ul><ul><li>expect to be interrupted </li></ul><ul><li>and remember : </li></ul><ul><li>The Script is NOT your Slides – The Script is the FACE of your Audience </li></ul>
  18. 4. Market Size <ul><li>Bigger is Better </li></ul><ul><li>Top Down = someone else reported it </li></ul><ul><ul><li>Forrester, Gartner, Your Uncle </li></ul></ul>
  19. 4. Market Size <ul><li>Bigger is Better </li></ul><ul><li>Top Down = someone else reported it </li></ul><ul><ul><li>Forrester, Gartner, Your Uncle </li></ul></ul><ul><li>Bottom Up = calculate users/usage/rev$ </li></ul><ul><ul><li>Avg Txn = $X </li></ul></ul><ul><ul><li>Y customers in our market </li></ul></ul><ul><ul><li>Avg customer buys Z times per year </li></ul></ul><ul><ul><li>Market Size = $X * Y * Z annually = a big friggin’ # </li></ul></ul><ul><ul><li>Market growing @ 100+% per year </li></ul></ul>
  20. 5. Business Model (How Do You Make Money?) <ul><li>Describe Top 1-3 Sources of Revenue </li></ul><ul><ul><li>Prioritize by Size or Potential </li></ul></ul><ul><li>Common Revenue Models: </li></ul><ul><ul><li>Direct : ecommerce, subscription, digital goods </li></ul></ul><ul><ul><li>Indirect : advertising, lead gen, affiliate </li></ul></ul>
  21. 6. Proprietary Technology / Expertise <ul><li>VCs *really* like unfair advantages: </li></ul><ul><ul><li>BIG market lead </li></ul></ul><ul><ul><li>experienced team </li></ul></ul><ul><ul><li>“ superior” technology </li></ul></ul>
  22. 7. Competition (why you’re better *or* different ) <ul><li>List *all* competitors </li></ul><ul><li>Show how you’re better … </li></ul><ul><li>… or at least different </li></ul><ul><ul><li>if not better or different then </li></ul></ul><ul><ul><li>-> “NICHE TO WIN” </li></ul></ul>
  23. Better or Different . Funny! Shocking !!! Accepted Not Funny.
  24. 8. Marketing Plan <ul><li>PR </li></ul><ul><li>Contest </li></ul><ul><li>Biz Dev </li></ul><ul><li>Direct Marketing </li></ul><ul><li>Radio / TV / Print </li></ul><ul><li>Telemarketing </li></ul><ul><li>Email </li></ul><ul><li>SEO / SEM </li></ul><ul><li>Blogs / Bloggers </li></ul><ul><li>Viral / Referral </li></ul><ul><li>Affiliate / CPA </li></ul><ul><li>Widgets / Apps </li></ul><ul><li>LOLCats </li></ul>… how do you get customers & distribution ? lots of channels & decisions… choose a few :
  25. 8. Marketing Plan <ul><li>PR </li></ul><ul><li>Contests </li></ul><ul><li>Biz Dev </li></ul><ul><li>Direct Marketing </li></ul><ul><li>Radio / TV / Print </li></ul><ul><li>Telemarketing </li></ul><ul><li>Email </li></ul><ul><li>SEO / SEM </li></ul><ul><li>Blogs / Bloggers </li></ul><ul><li>Viral / Referral </li></ul><ul><li>Affiliate / CPA </li></ul><ul><li>Widgets / Apps </li></ul>… how do you get customers & distribution ? lots of channels & decisions… choose a few : <ul><li>3 Things That Matter / To Measure : </li></ul><ul><ul><li>Volume </li></ul></ul><ul><ul><li>Cost </li></ul></ul><ul><ul><li>Conversion </li></ul></ul>
  26. 9. Team <ul><li>People that get VCs Hot: </li></ul><ul><li>Geeks with deep tech experience </li></ul><ul><li>Entrepreneurs who have sold companies </li></ul><ul><li>Sales/Marketing who bring in customer$ </li></ul>
  27. 10. Money, Milestones <ul><li>How Much Money ? </li></ul><ul><ul><li>3 Budgets: Small , Medium, Large </li></ul></ul><ul><li>What will you do with Capital ? </li></ul><ul><ul><li>New Hires (Build Product ) </li></ul></ul><ul><ul><li>Mktg & Sales (Get Customers / $$$ ) </li></ul></ul><ul><ul><li>Ops & Infrastructure ( Scale Up) </li></ul></ul>
  28. Financing <ul><li>Raised $200K Seed round Jan 08 @ $1M valuation </li></ul><ul><ul><li>angel investors: Ron Conway, Larry Page, Bill Gates </li></ul></ul><ul><ul><li>built initial prototype; functional use with 1000 customers </li></ul></ul><ul><li>Seeking $500K-$1M Series A round @ $2.5M valuation </li></ul><ul><ul><li>already closed $300K </li></ul></ul><ul><ul><li>meetings with 5 other VCs in next 2 weeks </li></ul></ul><ul><ul><li>targeted closing in 4 weeks </li></ul></ul><ul><li>Use of Proceeds / Product Roadmap / Goals </li></ul><ul><ul><li>$300-500K: hire 2-3 engineers, 1 marketing / sales, .5 PT customer support </li></ul></ul><ul><ul><li>$200-500K: marketing campaigns & customer acquisition </li></ul></ul><ul><ul><li>get to 25K customers, $1M revenue by end of year </li></ul></ul><ul><ul><li>estimated break-even in Q4 / 09 @ $100K / month </li></ul></ul>
  29. Additional Resources <ul><li>Dave McClure : </li></ul><ul><ul><li>Startup Metrics for Pirates ( AARRR !) </li></ul></ul><ul><ul><li>ZapMeals Sample Pitch Presentation </li></ul></ul><ul><ul><li>Master of 500 Hats Blog: “Greatest Hats” (top blog posts) </li></ul></ul><ul><li>Steve Blank : 4 Steps to Epiphany, Customer Development Methodology </li></ul><ul><li>Eric Ries : StartupLessonsLearned </li></ul><ul><li>Sean Ellis : Startup-Marketing.com </li></ul><ul><li>Andrew Chen : AndrewChenBlog.com </li></ul><ul><li>Brad Feld, Jason Mendelson : AskTheVC.com </li></ul><ul><li>Aydin Senkut : Felicis Ventures blog </li></ul><ul><li>Mark Suster : Both Sides of the Table </li></ul><ul><li>VentureHacks.com </li></ul><ul><li>StartupCompanyLawyer.com </li></ul>

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