Stanford Entrepreneur Trek 2009

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Presentation I gave to students at Stanford back in 2009 on Entrepreneurship and fundraising.

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Stanford Entrepreneur Trek 2009

  1. 1. Know Persuasion Know and Your Your Risk v Audience Business Reward h"p://www.flickr.com/photos/11266609@N00/2872069583/
Presenter: Steen Andersson Co-Founder & Vice President (steen.andersson@5thfinger.com) 5thfinger
  2. 2. Know Your Audience•  The pitch starts well before the meeting…•  Tim Draper’s Blog•  Try: –  Getting introduction (not a cold call) –  Research other similar investees of that VC –  Research articles written by VC himself –  Speak to colleagues of VC about the individual’s " view on your type of business – develop objection management –  Understand the specific vs global hot buttons – network effect, etc. 5thfinger
  3. 3. Know Persuasion Know and Your Your Risk v Audience Business Rewardh"p://www.flickr.com/photos/11266609@N00/2872069583/
 5thfinger
  4. 4. Know Your Business•  Know more than the VC•  My good friend went to…•  Try: –  Finding a confident one liner on each direct and indirect competitor – “XYZ is great at this but their platform is not gear to do this”" “We just hired X from their sales team and we learnt Y” –  Be able to talk to all parts of your business model –  Understand and have a position on all the risk areas – have an elevator pitch around the risks they will ask: “what are the key risks? ” 5thfinger
  5. 5. Know Persuasion Know and Your Your Risk v Audience Business Rewardh"p://www.flickr.com/photos/11266609@N00/2872069583/
 5thfinger
  6. 6. Risks vs Rewards and Persuasion•  Understand the risk profile & stage of the investor –  Seed <$1M –  Series A [5i] $5M (or now $500K?) –  Series B $10M - $25M –  Series C (Mezzanine) $X – growth•  Mantra: Bring Risks Forward –  Most entrepreneurs focus on building a business around what is easy or what is working, without addressing the ‘hard’ questions. This a big risk for investors. Burn lots of cash building a product before realizing that the revenue model is flawed. –  Example – Genentech & Tom Perkins 5thfinger
  7. 7. Risks vs Rewards and Persuasion•  Key areas of risk for investor:Area I would hesitate raising funding Examples of how to bring before… forward risk Having at least one reputable customer testimonial – Talk about the sales strategy moving forwardSales & Marketing Strategy Beta Ok. (specifically) and how you will quickly know if there are going to be any road smashes. Having proven that the core challenges have been In the product dev plan, showing that any risksTechnology Risk nailed. remaining will be tackled upfront will win you points/ respect. Find A grade people who you can motivate about your If you can test the team by giving them a very toughManagement Execution Risk idea and have them agree (on paper ideally) to join you challenge up front and then supporting them to nail it, once your funding is closed. that will help give the VCs comfort that this risk is minimized. Speak to potential clients and get in writing their Get these customers to become paid customers asMarket Risk interest in you product in development. soon as possible. Demonstrate that you understand the competitive Go up against these competitors on clients to find outCompetitors landscape. why they 5thfinger
  8. 8. Risks vs Rewards and Pursuasion•  Danger areas – pre-empt!•  List out ALL possible objections and have responses: –  You can’t scale that! -> motivated partners, network effects –  The technology is not protectable -> first to market & speed –  The clients are hard to reach -> clever channel management –  Your team is inexperienced -> brilliant with networks of support•  In business, I honestly believe its not what you say but how you say it. •  This runs true with pitching, but VCs are too sharp for you to bullshit. You need to speak with confidence and with good material. 5thfinger
  9. 9. Recommended Reads... 5thfinger
  10. 10. thanks Steen Andersson Co-Founder steen.andersson@5thfinger.com 415-294-5194New York Office San Francisco Office Sydney Office+1 646 578 8202 +1 415 294 2040 +61 2 8307 7888 5thfinger

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