Founder: IPRO, Topica, Textmarks & Best of Angel.
Board Member: Kana, LinkExchange, Freedom Financial, Odeo,
StumbleUpon, LOLapps, Scan, Strava.
Investor: AdMob, Flixster, Slideshare, Xobni, RockYou, Outright,
BrightRoll, Instructables, Causes, VivaReal, Optimizely, Rally,
Thumbtack, Viki, Pantheon, ApartmentList, Mashery,
StumbleUpon, Kongregate and NexTag.
Personal: MIT (math), Stanford (mba), San Francisco (home).
Silicon Valley is Another Planet
It is not the US. It is not California. It does include San
Company formation, financing, growth and sale have
Tons of talent and resources – but even more demand for
it - so you have to fight and pay up for it (salaries, rents,
Kitesurf with Larry Page. Have lunch with Mark
Zuckerberg. See a movie with Jack Dorsey. It is difficult to
absorb during a short visit…
Seed Valuations & Terms
• Most seed deals are convertibles with a cap, many are
priced with simple Series Seed terms.
• Some seed valuations are stratospheric ($15-20MM). On
average most seed deals are valued in the $4-$6MM
range. The amount of money raised can have (and should
have) a big impact on valuation
• Common to have no lead and a rolling close
• It is becoming more common to extend seed rounds
multiple times – and do follow on convertibles with higher
It is not a Black and White distinction
between Angels, VCs, Private Equity
There are many shades of Grey...
-Full time professional angels.
-Angels with funds.
-VCs that focus on seed investments.
-VCs that participate in seed rounds.
-VCs with Private Equity growth funds
What matters most is the individual, not the firm!
Do your homework to identify the best possible people.
BTW, “Signaling” risks are exaggerated
On "average", It takes 6 Months...
But averages are often meaningless
"Hot deals" are done in a few weeks, sometimes a few
Many deals never get done.
And somehow the average is 6 months...
The best thing you can do to increase the odds of a
successful financing is to move your business forward. Be
careful about spending tons of time fundraising.
"You are too early” and other excuses
Most investors do deals when they get excited. But they don't
like to say “I am not excited", so instead they use an easy
excuses, such as:
- You are too early
- The deal is too small
- I want to see more customers/revenues/technology
Be careful about trying to solve address their excuses, because
once you do they are likely to find others. Instead, figure out
how to get them excited.
Investors like to keep their options open.
Tips for Pitching
Who you pitch to is the most important thing
Don’t confuse product pitches (or sales pitches) with
Key points often overlooked
Customer acquisition strategy
It is not about checking boxes. It is about getting the
International Companies have better
chances of fundraising elsewhere
• Silicon Valley is the only region with too many good deals.
Investors elsewhere HAVE TO invest outside their region,
but we don't. So the bar is much higher...
• So non Silicon Valley companies might be better of
fundraising in places such as London, New York or Boston.
• Of course, a few Silicon Valley investors do invest abroad,
but the bar is higher and the choices scarce
You can’t literally follow all
the advise that you get
There are many ways of building companies
You must find the approach that works for you
Advise should help you gain insights and to experiment
It is the same for competitive athletes…
Don’t believe what you Read
Most success stories are made with 20/20 revisionist
It often takes time, e.g. StumbleUpon and Twitter were
not overnight successes as some people think…
20/20 Hindsight gives great strategic vision. Realistically,
successes are built incrementally.
So, don’t obsess over your world domination vision. Just
make sure you have a vision for a small success – from which
you will be able to build a larger one. To use a baseball
analogy, start by getting to 1st
Speed is overrated!
What good is going fast in the wrong direction?
The better you understand where you need to go, the
faster you can move
But, never stand still!
If you have money you will spend it… Get it when you
know how to use it
Risk is your friend
Make big bold bets. All of the most successful
Use time to diversify: focusing on one thing at a time
But it is OK to experiment with different things for a
while until you decide what you want to focus on. But
just for a while…
Take advantage of opportunities -
but be careful about where you
Started with consumer analytics
Followed customers to traffic auditing
Became World leader Web traffic auditor
That turned out to be a lousy business!
Make sure you enjoy the road
People, product, learning, fun…
Hire Slow & Fire Fast
The moment you start thinking someone might not be
working out, he/she most likely isn’t
But letting someone go is difficult and painful for everyone,
so…, take your time hiring.
Same goes for co-founders, service providers, and others.
Talent Over Experience
References!!! Or better yet, a trial period.
Focus on your most
important market from the
Be careful about starting with the “local” market as a
stepping stone to a larger market... You might get stuck
there and never quite make it to the larger markets
If you want to be a global player, focus on a large
market from the start
How to choose my
Did I have fun during the meeting?
Do I want to have him over for dinner?
Is the opportunity & market large & worthwhile?
Will the project have a meaningful impact?
Can I help?
Help me Help You
Do your homework
The right people to talk to
The topics you want to discuss
A particular slide catching your eye?
Clipping is a handy way to collect important slides you want to go back to later.