Getting Investor Ready Mark MacLeod @startupcfo May 3, 2012
1. Plan AngelBootstrap Ready? yes Prep Roadshow no yes (seed) VC no Stop!
Investor Readiness... YOU KNOW: How much? Who from? (angel vs. VC) Why? (what for? Milestones?) YOU HAVE: Docs: Exec Summary, Pitch Deck, Basic Financials Deal team Pipeline
Angel vs. VC... Angel VC Micro / Seed VCs ??? Opportunity Size < $20M $ 100M 2 rounds As much as Capital needs max it takes Get to Invest in Finance Strategy Cashﬂow growth Positive
2. PrepareDocument Checklist: Executive Summary Pitch Deck Financial ModelBonus: Roadmap Competitive landscape Team Bios & hiring plan
Exec Summ1 - 2 pages maxSales documentOne purpose - get a meeting! http://www.docstoc.com/docs/120015412/Executive-Summary
Pitch Deck Ten Buckets Model 10 - 15 slides Sell, don’t explain How I evaluate pitches... Clear personalized problem statementhttp://www.startupcfo.ca/2011/04/the-vc-presentation-grader/ Evidence of domain expertise Known target customer with $ Can touch and feel the product Clear ask
Financials Baseline: Expense Plan (hires, customer acquisition, overhead) Months’ runway Better: 2 year model with key assumptions (monthly yr 1, quarterly yr 2) Examples: http://andrewchenblog.com/2009/01/19/how-to-create-a-profitable-freemium-startup-spreadsheet-model- included/ http://unstructuredventures.com/
Final Preparations Deal Team Lawyer Advisors / Mentors Pipeline Qualified list of investors that “fit” Path to get intros
3. Pitch! Tips✓ Be prepared - all docs & deal team ready✓ Roadshow - parallel, not serial✓ Running start - build relationships *before* pitching✓ Start early enough (3 - 6 months)✓ Target the right investors✓ At the right time✓ Build trust✓ All about traction...
Pitch Do’s and Don’ts DO!✓ Talk about yourself - we invest in people!✓ Summarize - make it easy & memorable✓ Be different / yourself!✓ Tell a story✓ Impress✓ Commit - full time effort!
Pitch Do’s and Don’ts DON’T!✓ Disagree with yourselves✓ Make me read✓ Read your own slides✓ Target everyone - 1% of a B users...✓ Be alone - no competition = no market✓ Avoid phone if possible✓ No agents / intermediaries
Demo DayBuild & qualify your pipelineDon’t re-pitchAsk questions - qualify!!!Filter out the posersBuild rapport
Day after demo day... Follow up immediately - presumptive close Build your pipeline - track everything Broadcast: Mentors, advisors, friends, lawyers Go for the “No” Love at 1st sight Get a lead $ first, then deal structure Be realistic on valuations
Angel List http://angel.co/ Great for finishing a round, not starting Go there when - you have a lead - 2/3 of round committed - traction (aka Social Proof)
Evaluating Investors... What do I want from this relationship?Have they walked the talk? What is their track record?Do they have deep pockets? Will they support me for futurefunding?Can they put together high quality investor syndicates?Can they help in building my organization?Can they improve my company’s profile and bring in highstandards of governance?Is the valuation fair for both sides?And, ABOVE ALL: Is there mutual respect and can the VC be mysounding board?
Common roadblocksNobody wants to lead Roll your own term sheet Convertible notePitching a note to investors that prefer equity Secure the $, then optimize the dealInvestors are dragging their feet Plan a catalyzing event (launch, key hire, event, etc) Build tractionConcerns over milestones Raise more or spend less