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What VCs Are Looking For

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Recently I gave this presentation to a group of 325 entrepreneurs at Tech Coast Angels event in SoCal. The focus of the presentation was three-fold: 1. What motivates VCs. This will allow you to …

Recently I gave this presentation to a group of 325 entrepreneurs at Tech Coast Angels event in SoCal. The focus of the presentation was three-fold: 1. What motivates VCs. This will allow you to understand what drives them as you pitch to them so your interests are aligned. 2. What do they look for in promising entrepreneurs and teams and 3. How do they think of promising markets.

Once you understand this, you will be able to review your pitch and business to get most out of your interactions with VCs and your funding pitches.

Happy Entrepreneurship!

Published in: Business, Economy & Finance

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  • 1. Copyright VCs At Work Tarang ShahWhat’s Driving VCs?
  • 2. What do VCs Look for? Entrepreneur Market First First First identify First identify promising promising market Entrepreneur Look for Follow their lead promising team into promisingthan can execute market opportunity in that market
  • 3. What do VCs Look for?Billion Dollar Promising Successful Market Entrepreneur Startup
  • 4. Copyright VCs At Work Tarang ShahWhat do VCs Look for? Stage 0 Stage 1 Stage 2 Formation Build & Prove Grow & Scale Extended Team ??? Scalability (Sales, Business Model, Product Core Team Product/ Idea Product-Market Fit MarketCofounding Team Funding Type Seed Super Angel Series A Series B Series C Series D, E, F How Much? $50-500k $500k-2M $3-7M $7-25M $15M+ $25M+ Typical Valuation $1M $3-5M $5-10M $15M+ $50M+ $100M+ Dilution 25-40% 5-10%
  • 5. Copyright VCs At Work Tarang Shah Anatomy of Successful EntrepreneursBalanced Ego – Big ego to Real Visionary – Canpursue unconventional ideas Big & Bold Head see the whole companybut in-check ego to surround – “The World is beyond current productwith people smarter than him Not Enough” ; Big Ears – Listens Not afraid of non- actively and intently toAuthenticity – Product view consensus view customers and analyticsinformed by 10k hours oftinkering; deep experience that Passionate Disinterest –provides insights into the fine Passionate to seek out thenuances of market and customer truth but not biased about the outcome – highly objectiveIterative – Not afraid of failures Genuine & Avid Passion tobut like Edison enjoys discoveries High Integrity solve the problem and makethrough methodical trial and – Transparent a difference -> A Missionaryerrors and Trustworthy Personal Relevance to theExtremely Focused – breaking vision pain point being solved –into short-term metrics and single- motivation beyond makingmindedly pursuing it. money
  • 6. Copyright VCs At Work Tarang Shah Anatomy of Successful Cofounding Team HighComplementary Past Successful Proven Potential Skills (e.g. Working Chemistry Cofounding business, tech) Relationship Team
  • 7. Copyright VCs At Work Tarang Shah Anatomy of World Class Team Lift the quality Hire unfetteredHire for Cultural of team with passion without fit as much as each hire and ego & restrictionsfunctional skills fire of past learning Hire people who Fire promptly andHire People you can start adding amicably have worked value day 1 – No someone who iswith well before time for training not fitting well
  • 8. Identifying promising new marketsChanging Highly New SupportingCustomer Attractive Technology InfrastructureBehavior Market
  • 9. Identifying promising new marketsChanging Highly New SupportingCustomer Attractive Technology InfrastructureBehavior Market
  • 10. Identifying New Promising Markets ??? Netscape eBay Cisco Amazon Mobile 3Com Apple Internet Microsoft WANs LANs IBM Intel PCs Micro Computers ChipsTransistors 1950 1960 1970 1980 1990 2000
  • 11. What are some of the Emerging Platforms Today?Smartphone iPad/ Facebook Twitter Tablet PayPal Amazon ??? ???
  • 12. Making of New MarketsHorse Donkey Mule
  • 13. Disrupting Established Markets New New Lean MeanFat Cats Technology Cat Fat Telcos P2P Sharing SkypeBlockbuster Internet Netflix