Matthew Stotts’s intimate knowledge of venture capital firms and the way in which their partnerships take form and how their individual partners perform, provides founders with a wholly unique advantage in the capital formation process. He maps the dynamic investing landscape of today to a startup’s future potential and current business metrics, identifying the critical factors that accelerate fundraising while mitigating the risks of over communication or strategic errors that set back founders and close off optimal paths to growth.
THE DYNAMICS OF RAISING EQUITY
❏ Angels versus Devils (err...VCs)
❏ Where and why they invest
❏ A time-tested maxim
❏ seek $, get ?; ask ?, get $
❏ Offers versus Auctions
❏ Myth or Magic?
❏ We all have our favorites: Andy Bechtolscheim’s $100K to googol
Is your company’s story credible?
❏ Do you have awareness, buzz or cache?
❏ Is anyone telling your story? Any part of it?
❏ Have you built long-term relationships with investors?
❏ Are you a favor maker or a favor taker?
❏ Have you referred employees, advisors, agencies and other startups?
❏ Have you demonstrated expertise, drive or insane passion in anything?
❏ It actually doesn’t matter where. Why do iBanks hire NCAA athletes?
❏ Are you methodical?
❏ Having a process is a little like having “a policy:” people respect it.
Your “Intro” Slide Deck
❏ Build Two
❏ #1: The interest deck. A “leakable” version for friends and family
❏ #2: The investment deck for investors with traction numbers, stealth
customers, projections, etc.
❏ NO NDAs
❏ BIG FONTS
❏ BRIEF <10 Slides
❏ EXAMPLES: from 2004 and from 2017
MUST HAVES in rough order
1. Company Mission and Vision
2. Market Size and Scope
3. Customer Problem
4. Power Team
5. The Product
8. Use of Proceeds
The Fundraising Process
❏ Build a database of potential investors
❏ Screen by geography, stage, sector focus
❏ Filter out those with direct competitors in their portfolio
❏ If targeting VC firm, find appropriate partner or contact person
❏ Create a target list prioritized by best matched investors
❏ Develop a systematic outreach plan to tell your story
❏ Look for connections who can introduce
❏ Seek “warm” introductions from cold outreach to your target’s connections
❏ Schedule cluster of meetings with interested investors
❏ arrange pitch meetings; present business plan
❏ Schedule follow-on meetings, create auction dynamic, manage due
diligence, receive term sheets
❏ Execute share purchase agreement!!!
Building the Database
1. Search for whom?
a. Build an investor persona. (tip: also define their networks)
2. Where to search?
a. Crunchbase, LinkedIn, and Angel.co etc.
b. Equity crowd-funding sites like:
c. FundersClub, crowdfunder, Wefunder, Indiegogo, SeedInvest, Kickstarter, Gust,
Fundable.com, OurCrowd, CircleUp
i. Tip: trawl the comments looking for investors who’ve identified themselves
(esp. Kickstarter, Indiegogo)
d. Non-investment social media where investors self-identify: Medium, Quora and
3. Tools: LeadIQ or Lead411 can help you find emails for people you don’t know
A Systematic Outreach Plan
i. Cold Outreach v. Warm Intros
i. Persisting w/o pestering
ii. Tools (SOLO: Boomerang Top Inbox, ReBump, TEAMS: persist.iq,
iii. Tips and Tricks
1. Double opt-in
2. BCC you later
c. Signaling and Socializing your “deal” // Starting the Auction process
INTROS: Cold Outreach
COLD (from focused research)
❏ Suzie, I'm building a new company to go after grilled foods (a x$B
market in the US) and am stuck on an engineering question related
to sourcing raw materials. I think you may have solved a similar
problem with [Prior Company] or [Current Company], so I was hoping
we could talk briefly about what we're facing and hear your thoughts.
INTROS: Warm Intros (also double opt-in)
WARM (from an intro)
❏ Thanks Bill (to bcc). Suzie, I was so impressed your work at [Prior
Company] in part because I'm facing a similar problem with my
company [NewCo]. We're building a PRODUCT to go after the (a
$HUGE TAM) MARKET and I'm trying to choose a new vendor to
provide critical parts for our product. Would you be able to talk with
me briefly about your experience on the board at [Prior Company] - I
hope to glean a little bit from your experience to help us over this
INTROS: Following Up
We’re all busy. Following up can be helpful.
❏ Your goal is to be persistent but polite. If you don’t get an immediate
response follow-up in 2, 4 and 7 days. After that…
❏ A non-responsive cold contact is COLD. Try getting a warm intro.
❏ A non-responsive contact from a warm intro is BUSY. Get insight from your
intro. Did they double optin? If none, try again in 30 days. (add “SORRY”)
❏ Hit the reset button if you reach a major business milestone.
CAUTION: There are many cold-email marketers who have lots of
follow-up advice. THIS IS NOT THAT. Don’t copy them. THEY SUCK!
INTROS: Responding to Responses
How to read the tea leaves:
❏ 0 response = busy (see previous slide)
❏ Not Interested = NO.
❏ Too busy - NO.
❏ Not my space, sector, stage, expertise. = NO.
❏ Contact me when… (YES! - reach out when you hit that milestone)
❏ ?? what cryptic messages have you heard ??
Creating an Auction Process
At its most basic, effective fundraising is an auction in which multiple
investors bid for a place and a price to participate. Credibility (slide 9) and
scarcity create the optimal auction environment. Give yourself a timeline:
❏ Six months out prepare your database and know your TAM of investors
❏ 3-4 months prior to ideal fund close, reach contacts and outreach to
prospects seeking advice
❏ Remember seek $, get ?; ask ?, get $ (eventually, hopefully)
❏ 1-2 months out follow-up to investors/advisors with an update showing
how you have taken their advice or met their milestones
❏ When you get your first explicit investor interest (“I’d like to invest”) put
them off and tell them you have a number of people to talk with
❏ Work through the rest of your list repeating that you already have investor
interest and you’d like to meet to learn if they too are interested.
❏ Auction lets interested buyers negotiate; you don’t negotiate (as much).
Who are your key partners/suppliers?
What are the motivations for the partnerships?
What key activities does your value proposition
What are the most important activities needed to
manage distribution channels, customer relationships,
What core value do you deliver to the customer?
Which customer needs are you satisfying?
What type of relationship do target customers expect
you to establish?
How can you integrate that into your business in terms
of cost and format?
How many and which segments are you creating
Who is your most important customer?
What key resources does your value proposition
What resources are most important the most in
distribution channels, customer relationships, revenue
Through which channels do your customers want to be
Which channels work best? How much do they cost?
How can they be integrated into your and your
What are the costs (greatest to least) in your business?
Which key resources / activities are most expensive?
For what value are your customers willing to pay?
What and how do they recently pay? How would they
prefer to pay?
How much does every revenue stream contribute to the