Apidays New York 2024 - The Good, the Bad and the Governed by David O'Neill, ...
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Show Me the Money: Pitching and Fundraising for Tech Startups
1. To all who attended the
SMTM Session 2 on
Thursday @GA:
⢠Thanks! Hope you
enjoyed it and gained
something. Feedback
welcome.
⢠This document lives
online at
www.slideshare.com/th
omaswis
âShow Me the $$$$!ââŚSession 2: Pitching
***The next class I will
teach at GA is: SMTM 3:
Insiders View of Angel
Investing (11/19/2013)
http://bit.ly/1h1uFb7 ***
â˘
Email me at
Thomas@rosepaul.co
m. Connect with me on
LinkedIn/Twitter for
updates, etc. (Page 23
of this deck has my
details)
âŚ.Cheers, -TW
Learn from VCâs, Angels and Entrepreneurs:
What do INVESTORS love (and Hate!) to see in a Pitch?
General Assembly / RosePaul Investments Event
Tom Wisniewski
RosePaul Investments
Thursday, October 24th, 2013
2. Agenda
I. Kick-off and Introductions
II. Some Context and Background: Seed-Stage Fundraising
III. Guest Speaker Q&A: Investor Perspective
â˘
BREAK: Networking and Beverages
IV. Best Practices: Pitching and Communication
V. Guest Speaker Q&A: Founder Perspective
â˘
WRAP-UP: Networking and Beverages
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3. I. Kick-off and Introductions
a Start-Up of Sorts: âŚ. this class and the SMTM series.
ďŽ
Started out with a 1 hour class and 10 students @GA 2 years ago:
⢠Angels and Angel Groups.
ďŽ
It experienced: âProduct/Market Fitâ âGrowthâ âProduct Scope Creepâ âSeveral
Pivotsâ
ďŽ
âShow Me the Moneyâ series
⢠Simple formula:
1 part focused, actionable content
2 parts speakers, opinions and discussion
1 part networking
⢠Hate attending LAME classes and events
ďŽ
SMTM Session 1: Accelerators (July 2013)
ďŽ
SMTM Session 2: Pitching (Today!)
ďŽ
SMTM Session 3: Angel Investing (November: Tues, 11/19)
ďŽ
SMTM Session 4: [TBD Topic] (December: Tues, 12/17)
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4. Seminar Rationale: Why are we here?
What is the PROBLEM?
ďŽ The "1 in 100 get fundedâ ratio = REALITY.
⢠-----> Raising seed-stage money = TOUGH.
ďŽ Poor communication ----DRIVES----> the âDINGâ
ďŽ Feedback = LIES?!?
ďŽ Pitching = 10-page PowerPoint.
ďŽ *NO* shortage of pitch advice! = conflicting = WTF???
CHALLENGING
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5. However, we can change the ODDS.
Pitching = Learned ART (and Science)
SoâŚ.. what helps?
ďŽ Understand the basics of âGood Communicationâ
ďŽ Leverage other experience: Sales, Interviewing, Dating
ďŽ Review examples the good and the bad.
ďŽ Understand the rationale, the "whyâ
ďŽ Study. Practice. Pitch. Repeat.
Everyone can improve their pitch. Channel some energy and
become a "student" of the pitching
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6. Having received (and delivered!) a lot of good and BAD presentations, I have become
a student of the Pitch myselfâŚ
Tom Wisniewski: My background
ďŽ
Born in NYC; grew-up in Montclair, NJ
ďŽ
Physics and Philosophy major undergrad
(Clark University); MBA at Tuck School
(Dartmouth)
ďŽ
ďŽ
1st Job: Programmer at Morgan Stanley then
moved to Investment Banking
After B-school: joined a start-up management consulting firm Mitchell Madison
Group; focus on Strategy/Operations/IT for financial services, tech, outsourcing,
private equity/VC clients (1993 to 2000)
ďŽ
Walker Digital: helped set-up and run an early âinternet incubatorâ (2000)
ďŽ
Independent Advisor / Turn-arounds: Advised VC and PE Firms on portfolio
company strategy and new investments; joined the management team of two
companies
ďŽ
Currently:
⢠Early stage investor and advisor to start-ups
⢠Investor and advisor to VC and PE funds
⢠Member and director at New York Angels
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7. Additional Introductions
ďŽ Pedro Torres Picon, Founder, Quotidian Ventures
ďŽ Jacob Brody, Partner, MESA+ Ventures
ďŽ Peter Sullivan, Founder/CEO of JackPocket
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8. What would I like you to walk away with?
ďŽ Better understanding of pitching.
ďŽ A set of specific insights that will *change* your pitch.
ďŽ A âto-doâ list: starting point(s), actions, things to try.
ďŽ A set of recommended resources to consult and learn more
from.
ďŽ A few new relationships with others in the NYC startup/fundraising ecosystem: fellow entrepreneurs, investors, etc.
ďŽ Answers to specific questions about pitching that you might
have.
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10. II. Some Context and Background:
Seed-Stage Fundraising
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11. Context: Common Sources of Fundraising Capital
Earlier Stage
âYouâ
aka Bootstrapped
Later Stage
âSeedâ
Friends and
Family
Angel Investment
Venture Capital
âSeedâ VC
âTraditional Series Aâ VC
Round Size $:
⢠$10âs of K
to $100K
⢠$100âs of K
to $1M+
⢠$500K to
$1.5M
⢠$5M-$15M
Investment Size $:
$5K â $10âs of K
⢠$25K â $75K
⢠$250K-$750K
⢠$3M â $5M
Valuation (PreMon):
⢠< $1 M
⢠$1 â 5 M
⢠$5-10 M
⢠$10 â 25 M
Who/what are
they?
⢠People you already
know, that trust
you, and (maybe)
understand your
venture
⢠Experienced early stage
investors (individuals or a group)
⢠Accredited Investors.
⢠Angel investing is not their âjobâ;
may not be F/T endeavor
⢠E.g.: NY Angels, GoldenSeeds
⢠Firm with multiple professionals that
raises, invests and manages
individual funds (other peopleâs $)
⢠Working F/T (this is their jobâŚ)
⢠E.g.: Greycroft, RRE, Union Square
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12. Some Context: âVCâ Business Process and the â100 : 1â Ratio
Fundraising
Deal Sourcing
and Evaluation
Deal Structuring
and Execution
Portfolio
Management
âFinal Due
Diligence
and Legalâ
The âUniverseâ of
Companies
âScreeningâ
100 : 10
âEvaluation
(and Due
Diligence)â
10 : 3
3:1
âPortfolioâ
10âs of
Companies
1000âs : the â100â
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13. III. Guest Speaker Q&A: Investor Perspective
ďŽ Personal background and story?
ďŽ Firm background?
ďŽ Investment focus?
⢠Stage, investment size, sectors, etc.?
⢠Minimum threshold? (e.g. company generally needs to have xxx ?)
ďŽ Some recent investments?
ďŽ What do you like to see in a pitch?
ďŽ What are some âRed Flagsâ?
ďŽ Common mistakes generally?
ďŽ What are your âturn-onsâ with start-ups and pitches in particular?
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14. Tom Wisniewski: Investor Profile
ďŽ
Direct âAngelâ Investor in Companies
⢠$25K-250K investments; Typical valuations: $1-5 Million,
⢠Typical Stage: at least some âproductâ done, some customer/sales traction
⢠Sector focus: Opportunistic generally within internet/software space;
- fair amount of Saas B2B, and consumer âmarketplaceâ models, ecommerce enablers.
- NOT (or not much?): hardware, heathcare/pharma, cleantech
⢠NYC based: 50% investments in NYC area companies; total of ~80% NE overall (e.g
Boston, DC), 20% West Coast.
⢠Examples:
- Sociocast (social/behavioral big data analytics)
- LiveLook (Saas, live collaboration sales/service platform)
- Anvato (Ad insertion to live video streaming via proprietary machine vision)
- Moveline (Uber for the moving industry)
- Bizodo (Saas, paperwork automation; âAdobe 2.0â internet document sharing)
- Movio (Digital âRedBoxâ; content delivery via âlast 100 ftâ of wifi internet)
- HeTexted (Relationship advice forum generating content, media opportunities)
- Wanderu (Kayak for ground transportation)
- DealFlicks (a âPricelineâ or âHotel.comâ for movie theater tickets)
- iCharts (tool that enables engaging, sharable, embedible chart content)
ďŽ
Investor in Funds
⢠In addition to direct investments in start-ups, invest in VC and PE funds.
⢠Examples:
- Social Starts (Seed fund for start-ups leveraging the Social Web)
- Brooklyn Bridge Ventures (Charlie OâDonnellâs fund)
- Entrepreneurs Roundtable Accelerator (ERA Fund)
- Greycroft Partners (Venture Fund)
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16. Communication is CriticalâŚWhy?
ďŽ âFinding Diamonds in the Roughâ problem. There is no shortage of
supply: lots and lots of ideas, pitches, people, etc.
⢠The problem for investors is finding the âdiamondsâ.
ďŽ The âfirst minuteâ problem. If you loose someoneâs interest in the âfirst
minuteâ, you usually loose them.
⢠âFirst minuteâ = âfirst minuteââŚsometimes first 30 seconds!
⢠âFirst minuteâ = a conversation, a meeting, anything
⢠I need to quickly figure out whether I should âspendâ more time/effort with
you, or move on to something else.
ďŽ The â0 to 60â problem. Potential investors (or potential employees,
customers, etc.) usually start out knowing nothing about you or your venture.
⢠Getting someone âfrom 0 to 60 mphâ is very challenging: too much to say,
donât know where to start.
ďŽ A Pitch is a âSaleâ. You not just trying to âdescribeâ, you are âsellingâ. Easy
to tell people what you are doing; harder to get them to âbuyâ.
⢠You are selling your âproductâ to prospective âcustomersâ. Product = your
company and the opportunity it presents.
⢠You are interviewing for a ânew jobâ. You and your team = great fit forâŚ
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17. Principles of Communication: A Starting Point
To start, lets use a simple framework: Audience, Messages, Storyline, Goals, Situation.
ďŽ Audience. Who is the audience? Who are you selling to? âŚIf you donât
understand someone's âperspectiveâ you will be ineffective
⢠For example: âthey have 6 Saas investments vs. they canât spell Saasâ
⢠People generally understand things by association (to things *they* know).
ďŽ Messages. What points you are making? What is the single key thought you
are trying to impart with each page?
⢠âthe market is huge and growingâ is a message; a chart, some stats, some
explanation is what makes up the page
ďŽ Storyline. What is the narrative story you are building with the collection of
messages? Does the story flow well and get to your conclusions?
ďŽ Goals. What is the goal of this specific meeting?
⢠Unlikely it is getting a âcheckâ. Getting to the next step in the process.
ďŽ Situation. What the format of the pitch? What are the constraints?
⢠2 minute elevator pitch vs. 10 minute Power Point pitch vs. email
attachment
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18. The Communication Pyramid
Level of Detail in a
Document
Level of Detail in
Different
Documents
The Executive
Summary
1 page summary
First Page of Each
âChapterâ
10 âpage deck
Each Chapter
20 âpage deck
Each Chapter with
all the Back-up
20 page deck, +++
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19. âGoodâ Pitch Deck
From âTriple Playâ of VC Presentations by
Mark Suster (former entrepreneur, now VC)
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
ďŽ
Slide 1 â Team Bio
Slide 2 â 50k foot view of your company
Slide 3 â Problem Definition
Slide 4 â How do you solve the problem?
Demo Web Version and
a Demo Video Example
Slide 5 â Market Sizing
Slide 5 warning: (Market Sizing Pitfalls)
Slide 6 â Competition
Slide 7 â Customer Adoption / Traction
Slide 8 â Team
Slide 9 â Financial projections
Slide 10 â Use of Proceeds
Slide 11 â Fund raising process / Next steps
Appendix â Back-up slides
How to deal with the dreaded question of
valuation?
http://www.bothsidesofthetable.com/pitching-a-vc/
Adapted from â10 Slides to an Awesome
Pitchâ by Dave McClure, 500 Start-Ups
1. Elevator Pitch
2. The Problem
3. Your Solution (Demo Here!)
4. Market Size
5. Business Model ($)
6. Proprietary Tech
7. Competition
8. Marketing Plan
9. Team / Hires
10. Money / Milestones
http://www.slideshare.net/dmc500h
ats/how-to-pitch-a-vc-sept-2010
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20. V. Guest Speaker Q&A: Founder Perspective
ďŽ
Peter Sullivan Founder CEO of JackPocket
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21. Key Success Factors and Take-Awayâs
ďŽ Find Fit. Does this investor have âfitâ? Do they invest in ventures like
mine?
......if not, then move on. (or at least prioritize accordingly)
ďŽ Prepare! Donât be lazy; invest some time.
⢠Steve Jobs: 30 hours to develop, 30 hours of practiceâŚ30 minutes of
presentation.
⢠For example : âAudienceâ. What have they invested in? Recently?
What can you find out about their background? Interests? Hot
buttons?
- How? DuhâŚ.Google: Blogs, Quora, YouTube, CrunchBase; talk
to people they know, betterâŚtalk to those they have invested in.
ďŽ Pitch, Get Feedback, Revise. Repeat. No venture idea was built in
a vacuum. The ONLY way to develop business ideas is to share them,
solicit feedback, make adjustments, develop/refine/add andâŚ..DO IT
AGAIN!
⢠1 part âstudyingâ pitching, 1 part âdoingâ pitching, 10 parts repeating
bothâŚâŚthis is becoming a âstudentâ
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22. What would I like you to walk away with?
ďŽ Better understanding of pitching.
ďŽ A set of specific insights that will *change* your pitch.
ďŽ A âto-doâ list: starting point(s), actions, things to try.
ďŽ A set of recommended resources to consult and learn more
from.
ďŽ A few new relationships with others in the NYC startup/fundraising ecosystem: fellow entrepreneurs, investors, etc.
ďŽ Answers to specific questions about pitching that you might
have.
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23. SMTM coming upâŚâŚJoin us:
ďŽ SMTM Session 3:
â˘Angel Investing (November: Tues, 11/19)
âCurious about Angel Investing? Love to be a fly on the wall
to see how it really works?â
-
Who are these Angel Investors? Why do it?
Where do you find them? Why would you want to?
What are Angel Groups? How/why do the work?
What about AngelList, âSoper Angelsâ and Angel Funds?
How do Angel Investors differ?
What does the Angel Investment process look like?
ďŽ SMTM Session 4:
â˘[TBD Topic] (December: Tues, 12/17)
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24. Thanks!
Thomas Wisniewski
Contact Info
Email: thomas@rosepaul.com
LinkedIn: http://www.linkedin.com/in/thomaswis
Twitter: @thomaswis
This presentation: http://www.slideshare.net/Thomaswis/
New York Angels www.newyorkangels.com
New York Angels Educational Meetup: http://www.meetup.com/NY-Angels/
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26. II. Pitching to Prospective Investors
Sources of Investment: Seed Fundraising, Angels and VCâs
Earlier Stage
âYouâ
aka Bootstrapped
Later Stage
âSeedâ
Friends and
Family
Angel Investment
Venture Capital
âSeedâ VC
âTraditional Series Aâ VC
Round Size $:
⢠$10âs of K
to $100K
⢠$100âs of K
to $1M+
⢠$500K to
$1.5M
⢠$5M-$15M
Investment Size $:
$5K â $10âs of K
⢠$25K â $75K
⢠$250K-$750K
⢠$3M â $5M
Valuation (PreMon):
Stage (Pre-Round):
⢠Expected to
have:
⢠< $1 M
⢠$1 â 5 M
⢠$5-10 M
⢠$10 â 25 M
⢠An idea, initial/rough
b-plan
⢠Initial founders, key
advisors
⢠Path to ???
â˘
â˘
â˘
â˘
Detailed b-plan,
Key founders (bus & tech) full-time
Prototype/alpha done and tested,
Some piloting (paying?)
customers, some revenues?,
⢠All legal documentation in place,
board of directors
⢠Path to break-even or next funding
⢠Significant variation among firms
butâŚ. Angel req. +:
- Anchor clients on board, revenue
growth (B2B),
- Growing base of users, with strong
usage trends (B2C)
- âŚ..Growth potential! Credible
path to $100M Rev
⢠Donât Expect:
⢠$ Rev, Customers,
Minimum Viable
Product (MVP); full
legal documentation
⢠Income (e.g. cash flow positive);
all key management ; completely
developed business model (e.g.
understand it will change)
⢠Income (e.g. cash flow positive)
Who/what are
they?
⢠People you already
know, that trust
you, and (maybe)
understand your
venture
⢠Experienced early stage
investors (individuals or a group)
⢠Accredited Investors.
⢠Angel investing is not their âjobâ;
may not be F/T endeavor
⢠E.g.: NY Angels, GoldenSeeds
⢠Firm with multiple professionals that
raises, invests and manages
individual funds (other peopleâs $)
⢠Working F/T (this is their jobâŚ)
⢠E.g.: Greycroft, RRE, Union Square
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25
27. Given this landscape, how do I get to the pitch?
ďŽ
ďŽ
Who are the ârightâ investors? Where is there a âfitâ?
⢠Reality Check. âpeople invest in things that they understand and have experience withâ
- Target find Fit: Find investors that come from industries, sectors, business models
etc. that are same/similar to your venture and your customers
How to âgetâ a pitch meeting?
⢠Connect. The hard part.
- Avoid âcold-callsâ; look for âwarm introductionsâ
- Networking. Who do you know that knows them?
- Find them at an event. (Email sucks!)
ďŽ Really you should be thinkingâŚHow do I build a relationship first?
⢠Pitching by its very nature can be awkward. âThis guy wants something from me.â
⢠Most investors mean-well, and would like to helpâŚbut are busy
ďŽ Solution: Build a relationship before you need to pitch. OK, How?
⢠Give, donât Ask: what can you do for them?
⢠âAsk for advice, not moneyâ
⢠Debate / Discuss a topic, Ask opinion about X.
⢠Find ways to âshowâ rather than âtellâ:
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28. Common âFormsâ of Pitch Communication. What are they? Which should I use?
âDocumentâ
Simplistic Description
Common Situation/ Use
1-pager
â1 pager Exec Summary, Word
docâ
â˘
â˘
Email attachment or handout
Online platforms e.g. Gust, AngelList
Email Brief
âTeaser paragraph of text / bulletsâ
â˘
âIn the intro emailâ (w/ attachments)
Business Plan
â10-40 page Word docâ
â˘
â˘
Detailed discussions (similar use)
Stand-alone, due diligence
Pitch Deck
â10 page PowerPoint
presentationâ
â˘
â˘
â15 minute stand-up presentationâ
Email attachement
Long-Form Pitch
Deck
â20-40 page version of 10 pager;
PowerPoint presentationâ
â˘
â60-90 minute follow-up meeting with
smaller groupâ
Elevator Pitch
âNo document, just you talking for
60 secondsâ
â˘
Your quick intro after you meet
someone in person
âVideoâ Pitch
â10 minute video of your deck/
demo w/ you voiceâ
â˘
â˘
Email attachment
Online platforms e.g. Gust, AngelList
Due Diligence Docs
âAll the detailed spreadsheets,
data, etc. that back-up your pitchâ
e.g. Financial Projections, Sales
Funnel, Legal Docs
â˘
For detailed discussions with
interested investors, usually postterm-sheet
Online platforms e.g. Gust, AngelList
â˘
The Good News:
⢠you donât need to have all of them (maybe ever, certainly 1 or 2 to start is fine)
⢠much of the content, messages, storylines can be shared and reused
⢠Preparing thoughtful docs âŚâŚrefines your thinking and your venture.
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27
29. Who are these âAngelsâ? What do they look like?
ďŽ Experienced, successful entrepreneurs: frequently multiple exits
⢠Some from âtech-start-upsâ some from other businesses
⢠Usually some link to
ďŽ Successful âcorporateâ business people: CEO or CxO-types
ďŽ Older: most are in the 40-60 age group. But there are also notable angels
in their 20âs and 30âs e.g. newly minted start-up millionaires
ďŽ 3 â 10+ Angel Investments
ďŽ ~10% of investible capital in Angel Investments
ďŽ Differ *widely* in: Industry/Functional Experience, Investment Expience,
Interests, Target Sectors/Stage, Investment $, Risk Tolerance, personal
doâs/donâts and hot buttons.
ďŽ Lists? Not many. All are partial. AngelList? Gust? Other?
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30. NY Angels Profile
www.newyorkangels.com
ďŽ
Member Profile: ~80 investor/members; several early-stage funds; Member
backgrounds are generally representative of the tech / entrepreneurs / industries in NYC:
software, e-commerce, ad-tech, finance, media
ďŽ
Sector Focus: Internet, e-commerce, new-media, software; B2C and B2B. Mostly NYC
Area.
ďŽ
Stage. Mostly early stage (with some customers/revs), some seed stage (pre-revenue)
ďŽ
Valuations/ Investment Size: NYA pre-money valuations tend to range from $1M â 4M;
investments tend to range from $250K to $1M+;
⢠For larger rounds, NYA often leads the deal and helps find the rest of the capital by
sharing/syndicating the deal with other Angel Groups
ďŽ
Group Structure / Investment Decisions. NYA core structure is as a group of individual
investors. Individual investors âopt inâ to deals and make their own investment decisions.
⢠Typical member invests $25-50K in a deal.
⢠In addition to the core âopt-inâ model, NYA has just closed a small seed fund that will
operate in parallel (using a âdemocratic modelâ for investment decisions)
ďŽ
History/Background. NYA has invested $45M+ in 70+ companies.
⢠We are very active in the NYC entrepreneurial / early-stage ecosystem
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31. Variations on the Theme: Other Players
ďŽ
âSuper Angelâ (vs. Angels, Angel Groups). Sophisticated angel investor with a large portfolio
of early stage investments (30? 50?) and that is investing frequently (10 + per year). E.g. David
Rose, Fabrice Grinda
ďŽ
Microfund or Micro VC Fund. Small VC fund ($1-10 M) often run by a single person typically
making âangelâ size investments in early stage companies.
ďŽ
Seed Fund. VC fund focused on âseedâ (aka Angel) stage investments: often pre-revenue,
pre-product. Some VCâs that typically invest in âSeries Aâ rounds will reserve a portion of their
fund for seed investments: e.g. $250 â 750K investments at $1-5 Million valuations
ďŽ
Incubator/Accelerator. Entity that provides non-monetary support/services (in addition to $âs)
to early stage ventures. Typical support/services can include: space, IT infrastructure, shared
admin service, advice/feedback, introductions/networking. Public vs. private, independent vs.
captive. Examples: TechStars, ER Accelerator, DreamIT, Y-Combinator
ďŽ
Strategic Partner/Investor. Some operating companies will invest in ventures. Typically it is
in an industry/ sector / product-space similar to theirs (sometime with an eye toward potential
acquisition in the future)
ďŽ
Crowd Funding Platforms. Currently this is financing via donation or âpre-saleâ of products.
Equity financing under JOBS Act is TBD. Not obvious this will be a good match for most Tech
ďŽ
AngelList. Similar to an angel group, but without centralized control. More of a open
âmarketplaceâ of individual investors and ventures to facilitate funding.
ďŽ
Gust. Software platform that most angel groups utilize (and many small VCâs) to run their
investment process and connect angel groups together to share deals.
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32. Additional ThoughtsâŚ..
ďŽ
Lots of start-up advice out there. Lots about the art of fundraising.
⢠Huge volume of blogs, articles, Quora-posts, etc.
⢠WellâŚâŚ.thatâs good, right? Yes.
⢠But why doesnât it help?
- Overwhelming
- Conflicting
- Not specific
- Not enough context
- Itâs just advice, ideas, âŚ..not interactive, not experience.
⢠Need to understand the âwhyâ behind it all and adapt it to your venture, your situation.
ďŽ
Beware of simple answers, absolutes. As you are reading and listening to all these
opinions, data sources
⢠For any âfactâ âruleâ âtruthâ⌠if you donât understand how it is both true/false, you donât
really understand the point.
- Under what circumstances is this ârule for fundraisingâ âtrueâ? Where does it apply
well With whom?
- How and when is it not true (Or less true)?
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