Fortune Favors the Bold
The Idea <ul><li>“Write what you know” </li></ul><ul><li>“Let’s do the big thing” </li></ul><ul><li>“What do you wish ther...
Two Types of Entrepreneurs <ul><li>Peter the Great divides the Jews </li></ul><ul><ul><li>Professionals </li></ul></ul><ul...
Don’t Worry About <ul><li>Having your plan forwarded to your enemies </li></ul><ul><li>Investor collusion </li></ul><ul><l...
Things They Like to Hear <ul><li>“We’re three nerds working in a trailer park” </li></ul><ul><li>“I don’t know” </li></ul>...
Things They Don’t Like to Hear… <ul><li>Patents </li></ul><ul><li>Special classes of shares </li></ul><ul><li>Man-years of...
Every Airplane Has Something Wrong With It <ul><li>Plumtree management team </li></ul><ul><ul><li>Misanthropic CEO </li></...
Presentation Suggestions <ul><li>Wiffy’s </li></ul><ul><li>10/20/30 </li></ul><ul><li>Make it a dialog </li></ul><ul><li>S...
The Premise (Example) <ul><li>Redfin is E-Trade for real estate. As the only geeks with MLS access, we can build the world...
Product <ul><li>JUST DEMO BABY! </li></ul>(Will it delight the 1st user?)
What To Do When You Have No Special Sauce <ul><li>Welcome to the club </li></ul><ul><li>But wait, you have: </li></ul><ul>...
Market: How Big Can It Be? <ul><li>Total ADDRESSABLE market </li></ul><ul><li>Back of the envelope calculations </li></ul>...
The Team <ul><li>Don’t be a lonely freak </li></ul><ul><li>At least one technical founder </li></ul><ul><li>Build it & sel...
Customer Validation    Higher Valuation <ul><li>What will open your customers’ wallets? </li></ul><ul><li>Whom will you s...
Financials <ul><li>P&L, balance sheet </li></ul><ul><ul><li>Hiring: ask CTO </li></ul></ul><ul><ul><li>Revenues: ask VP Sa...
Deal <ul><li>Get 18 months of cash </li></ul><ul><li>Most lead VC’s need to own 20% </li></ul><ul><li>Terms that matter </...
Parting Advice: Be a Street-Fighter <ul><li>Radical openness: the truth will set you free </li></ul><ul><li>Make the rules...
And If You Lose, Lose Nothing <ul><li>“Do the right thing.” </li></ul><ul><li>“The operative word is, I think, love” </li>...
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Some Advice on Raising VC

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A delivered by Glenn Kelman at an MIT Venture Forum on how to raise money... please excuse the canned PPT template.

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  • Some Advice on Raising VC

    1. 1. Fortune Favors the Bold
    2. 2. The Idea <ul><li>“Write what you know” </li></ul><ul><li>“Let’s do the big thing” </li></ul><ul><li>“What do you wish there was” </li></ul><ul><li>Wave the magic wand </li></ul><ul><li>Think about meaning, not money </li></ul>
    3. 3. Two Types of Entrepreneurs <ul><li>Peter the Great divides the Jews </li></ul><ul><ul><li>Professionals </li></ul></ul><ul><ul><li>Wheeler-Dealers </li></ul></ul><ul><li>You want to be both </li></ul><ul><li>“What’s your prediction for the fight?” </li></ul>
    4. 4. Don’t Worry About <ul><li>Having your plan forwarded to your enemies </li></ul><ul><li>Investor collusion </li></ul><ul><li>Getting diluted nearly unto death </li></ul><ul><li>Losing control, being humiliated, then fired </li></ul>
    5. 5. Things They Like to Hear <ul><li>“We’re three nerds working in a trailer park” </li></ul><ul><li>“I don’t know” </li></ul><ul><li>“I don’t have to be CEO” </li></ul><ul><li>“We’re going to pick the best partner” </li></ul>
    6. 6. Things They Don’t Like to Hear… <ul><li>Patents </li></ul><ul><li>Special classes of shares </li></ul><ul><li>Man-years of old technology </li></ul><ul><li>Transparent desire to get bought </li></ul>
    7. 7. Every Airplane Has Something Wrong With It <ul><li>Plumtree management team </li></ul><ul><ul><li>Misanthropic CEO </li></ul></ul><ul><ul><li>Sit-up champion </li></ul></ul><ul><ul><li>Marketing sex fiend </li></ul></ul><ul><li>Vision </li></ul><ul><ul><li>“ Search engine without a search engine” </li></ul></ul><ul><ul><li>Architect: Hosni Mubarak’s cousin </li></ul></ul>
    8. 8. Presentation Suggestions <ul><li>Wiffy’s </li></ul><ul><li>10/20/30 </li></ul><ul><li>Make it a dialog </li></ul><ul><li>Stand up </li></ul><ul><li>Be enthusiastic (keep it real) </li></ul><ul><li>First, answer the darn question </li></ul>
    9. 9. The Premise (Example) <ul><li>Redfin is E-Trade for real estate. As the only geeks with MLS access, we can build the world’s best real estate search. Then we can automate the transaction for better service at lower cost and lots of profits. </li></ul><ul><li>Keep it simple </li></ul><ul><li>Use real words </li></ul><ul><li>“ Explain it to me like I’m a two year-old…” </li></ul>
    10. 10. Product <ul><li>JUST DEMO BABY! </li></ul>(Will it delight the 1st user?)
    11. 11. What To Do When You Have No Special Sauce <ul><li>Welcome to the club </li></ul><ul><li>But wait, you have: </li></ul><ul><ul><li>Head start: “MOVE! MOVE! MOVE!” </li></ul></ul><ul><ul><li>No fear of big fat incumbents </li></ul></ul><ul><ul><li>Domain expertise </li></ul></ul>
    12. 12. Market: How Big Can It Be? <ul><li>Total ADDRESSABLE market </li></ul><ul><li>Back of the envelope calculations </li></ul><ul><li>Market-share at $100M should be < 20% </li></ul><ul><li>“ My f-ing ears are lying on the f-ing floor” </li></ul>
    13. 13. The Team <ul><li>Don’t be a lonely freak </li></ul><ul><li>At least one technical founder </li></ul><ul><li>Build it & sell it: no COO, BD </li></ul><ul><li>“Have they seen the good movie?” </li></ul><ul><li>“You want to win a World Series? Get me 9 guys in their contract year.” </li></ul>
    14. 14. Customer Validation  Higher Valuation <ul><li>What will open your customers’ wallets? </li></ul><ul><li>Whom will you sell it to? </li></ul><ul><li>Sales pipeline: get nitty-gritty </li></ul>
    15. 15. Financials <ul><li>P&L, balance sheet </li></ul><ul><ul><li>Hiring: ask CTO </li></ul></ul><ul><ul><li>Revenues: ask VP Sales </li></ul></ul><ul><li>Margins: what are the unit economics? </li></ul><ul><li>We are favorable to plan </li></ul><ul><li>The “oh shit” moment </li></ul><ul><li>Present plan to company first: can we do this? </li></ul>
    16. 16. Deal <ul><li>Get 18 months of cash </li></ul><ul><li>Most lead VC’s need to own 20% </li></ul><ul><li>Terms that matter </li></ul><ul><ul><li>Employee option pool </li></ul></ul><ul><ul><li>Liquidation preference </li></ul></ul><ul><li>Don’t take every penny off the table </li></ul>
    17. 17. Parting Advice: Be a Street-Fighter <ul><li>Radical openness: the truth will set you free </li></ul><ul><li>Make the rules: don’t try to act grownup </li></ul><ul><li>Speed kills: what don’t they want me to do? </li></ul><ul><li>Culture: everyone is a leader </li></ul>
    18. 18. And If You Lose, Lose Nothing <ul><li>“Do the right thing.” </li></ul><ul><li>“The operative word is, I think, love” </li></ul><ul><li>“There the fault lies all in the not-done, all in the diffidence that faltered.” </li></ul>

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