Raising startup capital pitch hacks class at general assembly sf september 20 2012 v ss


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How to build a killer investor presentation (aka "VC pitch deck") for raising venture capital. Part of a 3-part lecture series given at General Assembly in San Francisco by Nathan Beckord, Founder of VentureArchetypes and FounderSuite.com. Contains pitch hacks, pitch deck examples, pitch archetypes, and minimal viable pitch, as well as numerous tips and tricks.

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Raising startup capital pitch hacks class at general assembly sf september 20 2012 v ss

  1. 1. Raising Startup CapitalSession 1- The PitchNathan Beckord @startupventuresGeneral AssemblySan FranciscoSeptember 20, 2012
  2. 2. HELLO.General Assembly is a global network of campusesfor individuals seeking opportunity and education intechnology, business, and design founded in NYC.Follow us on Twitter at @GA_SF for the latest newson classes, courses, and events in San Francisco, anduse the hashtag #GASF to continue theconversation.Take a look at our course catalog atgeneralassemb.ly/sf for a list of classes currentlyoffered. Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 2 Nathan Beckord @startupventures Sept. 20, 2012
  3. 3. Hi. My name is...Nathan  Beckord,  CFA.    Principal,  www.VentureArchetypes.com • My  Job:  Startup  CFO,  Advisor,  and  BD  Guy • 100+  Startup  clients  over  the  past  eight  years • E.g.  Kickstarter,  Clicker,  Autonet,  Zerply,  GetHired,  etc. • Clients  have  raised  over  $98  million  in  seed  capital  and  achieved  5  exits • Example:  I  ran  financial  modeling  for  Clicker.com,  which  raised  2  rounds  of  VC   and  sold  for  $100m  in  3  years. • Previously:  Technology  ValuaXon  |  Investment  Banking  |  Venture  Capital • Chartered  Financial  Analyst  (CFA)  and  MBA Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 3 Nathan Beckord @startupventures Sept. 20, 2012
  4. 4. Why this matters From  VentureHack’s  “Pitching   Hacks”  PDF  /  Book:  h<p:// venturehacks.com/pitching Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 4 Nathan Beckord @startupventures Sept. 20, 2012What are we doing here? Ultimately, we are telling stories so we can successfully raise money at favorableterms and valuation.What form does our story take? In the form of our pitch.
  5. 5. The Full Pitch Package Written • A one sentence (or sentence fragment) tag line • A one or two paragraph email introduction to the business • A one-pager overview or teaser • A 2-3 page executive summary • a slide deck specifically designed to be handed out • A thoughtful, comprehensive business plan: either (a) a traditional 10-20 page written plan, or (b) a carefully prepared and annotated business model canvas • A finished (or prototype) marketing brochure Live • A one sentence description • A 30 second elevator pitch • A 5 minute quick pitch • A 15-20 minute angel/VC PowerPoint/Keynote pitch deck • A sub-15 minute foolproof product/site demonstration Online From  David  Rose’s  answer  on   Quora:  h<p://www.quora.com/ • A functional public web site Venture-­‐and-­‐Investor-­‐Pitches/ • A short video pitch What-­‐materials-­‐or-­‐soIware-­‐ should-­‐I-­‐use-­‐to-­‐pitch-­‐a-­‐VC • A dedicated, controlled access, investor-relations web site Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 5 Nathan Beckord @startupventures Sept. 20, 2012If you have nothing but time on your hands, here is the full list of pitch materials for you to work on...your TagLine, your Email Intro, your Teaser, your Exec Sum, Elevator Pitch, Business Plan, Pitch deck, Video, etc.This will pretty much cover every possible situation.But... youʼre busy startup founders-- so weʼre going to focus on the easiest to create, most commonly used,and most versatile option, the pitch deck.
  6. 6. What is this...‘pitch deck’ you speak of? Pitch  Deck  ≠  Business  Plan Pitch  Deck  =  Business  Plan Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 6 Nathan Beckord @startupventures Sept. 20, 2012So what is a pitch deck? In the “olden days,” i.e., like 4-5 years ago, we would draft an entire, thorough 20-30page business plan, which is a deep dive into the business, and is what weʼd send along in advance of ameeting, or use as leave behind. Then, weʼd distill that down to a super high level, crisp and simple, slidedeck to use during the live meeting.Now, no one reads or writes business plans anymore. Yet you still need something to send ahead, and thatwill be sent around the office of the VC, among the partnership. And it has to stand on its own and becomplete, and tell the entire story without your voice-over narration, so they can read it by themselves. So thepitch deck, in this context, is now the business plan.So essentially, you should have two different pitch deck—the deck for sending and circulating, and then whatyou show them in the office. The main difference is level of detail.Just a few tips for the deck youll be sending: i) make it small file size, ii) have a screen shot in lieu of demo; iii)avoid builds, iv) use white background; v) Use PDF if desired; vi) pack it full of pithy soundbites that the junioranalyst can plagiarize when she does her write up for the senior partners.
  7. 7. What is your “one thing?” “those  guys  were  killing  it-­‐-­‐  rocket  ship  trajectory  growth” “they  had  a  really  clever  solu9on  to  a  vexing  problem”   “I  don’t  remember  what  they  did,  but  the  team  was   bankable-­‐-­‐    A-­‐players  all  the  way!” Q:  what  makes  you  excepXonal?   Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 7 Nathan Beckord @startupventures Sept. 20, 2012So letʼs talk about how to build a pitch deck. We start by figuring out what is the single most unique,compelling piece of your story.Or, in other words, If you strip everything away...what will investors remember about you a week or two later?In short, what makes you exceptional?
  8. 8. Are you exceptional? “investors   are   trying   to   find   the   excep%onal   outcomes,   so   they   are   looking  for  something  excep9onal  about   the   company.   Instead   of   trying   to   do   everything   well   (trac9on,   team,   product,  social   proof,  pitch,  etc),  do  one   thing   excep%onal.     As   a   startup   you   have   to   be   excep9onal   in   at   least   one   regard.”                   -­‐-­‐Naval  Ravikant,  Angel  List Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 8 Nathan Beckord @startupventures Sept. 20, 2012Hereʼs a quote by Naval Ravikant of Angel list, on the importance of being exceptional in at least one area.
  9. 9. Let’s talk about... Pitch Archetypes From  Jason  Shen’s  blog  h<p:// www.jasonshen.com/2012/eleven-­‐ compelling-­‐startup-­‐pitch-­‐archetypes-­‐ with-­‐examples-­‐from-­‐yc-­‐companies/ Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 9 Nathan Beckord @startupventures Sept. 20, 2012Ok letʼs now look at a couple ways to frame your “one thing” and tell your story by way of several “pitcharchetypes”these archetypes are important, because how you frame your business and how you guide the discussion hasa big impact on how people react, what they retain and what message they will share with other investors.Excertped from the excellent blog at: http://www.jasonshen.com/2012/eleven-compelling-startup-pitch-archetypes-with-examples-from-yc-companies/
  10. 10. Archetype #1 Problem / Solution Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 10 Nathan Beckord @startupventures Sept. 20, 2012This is the classic Sequoia outline, and probably accounts for 85% of the decks out there. Youʼve found avaluable, rich pain point to solve. Painkiller vs. vitamin.Itʼs Classic, itʼs familiar, but itʼs not always as relevant to web 2.0...is there really a pain point solved by socialcheckins?Weʼll look at the outline in a few moments.
  11. 11. Archetype #2 Traction Story Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 11 Nathan Beckord @startupventures Sept. 20, 2012Traction-- “Pitching the numbers”...Iʼm a numbers guy, so this gets me excited.Here, we are focused on growth and rate of growth (slope of line) as way to validate your vision; what youʼreactually doing becomes secondary. e.g. Fab.comBonus points if you can demonstrate the LTV > CAC. Online retail, gaming, etc. Then pouring money inbecomes a no-brainer and it makes sense to dump as much in as you can profitably spend.As Paul Singh of 500S says, “Traction is the new intellectual property.” Thereʼs a direct correlation betweenthe strength of your traction story and the speed at which you raise funding.Further reading: http://betashop.com/post/14249821547/behind-the-scenes-how-fab-raised-40-million-with-aand http://www.slideshare.net/brendanbaker/how-to-communicate-traction-to-investors-with-brendan-baker-and-hiten-shah
  12. 12. Archetype #3 “X for Y” Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 12 Nathan Beckord @startupventures Sept. 20, 2012“X for Y”-- applying a proven model to a new market or application. You see this a lot now, and it can becombined with Problem / Solution.Here, X is the established model (e.g. Airbnb) and Y is the new market that the model is being applied to (dogboarding). DogVacay.Thus, X must be successful, Y must be large. The metaphors you use should also be well-known.Risk of overuse. A variation on this is what I call the Hollywood Pitch, which is a mashup of two differentscripts. “Jurrassic Park meets Dirty Dancing”
  13. 13. Archetype #4 “Scratched Your Itch” Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 13 Nathan Beckord @startupventures Sept. 20, 2012“Scratched your itch” (aka Personal Story)-- youʼve solved something that was vexing you. A lot of technicalcompanies get started this way, like Heroku or Dropbox or Github. Or, for example, Iʼm starting a companycalled FounderSuite.com ...Good if you know problem intimately + itʼs universal + VC has experienced itBad-- if too niche or specific.
  14. 14. Archetype #5 Crystal Ball Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 14 Nathan Beckord @startupventures Sept. 20, 2012Crystal Ball (aka Evolution next / skate to where the puck will be / connect the dots / converging trends)--Here, you walk investor through how a market has evolved, and where it will be. e.g. semantic web, cloud biz,mobile biz.Itʼs pretty compelling, as youʼre showing investors a peek into the future, and they love this stuff. So itʼs easierto get a meeting vs. some of the other formats. The harder part is convincing them you have the solution,<AND> you are flexible enough to execute around 1000 minefileds that are completely hidden...tech shifts,user behaviour, legislation, etc.
  15. 15. Archetype #6 Wouldn’t it be cool... Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 15 Nathan Beckord @startupventures Sept. 20, 2012Wouldnʼt it be cool if: describe something fun and interesting. Get investor to imagine with you...get a couplecool use cases / anecdotes.e.g. Zaarly, TaskRabbit: “Wouldnʼt it be cool if you could easily hire someone to wait in line at Apple store fornew iPhone?”Uber: Wouldnʼt it be cool is you could hail a taxi from your phone and watch it drive toward you?
  16. 16. More Pitch Archetypes Consumerification New Biz Model of Enterprise The Pivot Dream Team Breakthrough Service at Tech Scale Further  Reading:  hJp://www.jasonshen.com/2012/eleven-­‐compelling-­‐startup-­‐pitch-­‐archetypes-­‐with-­‐examples-­‐from-­‐yc-­‐companies/ Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 16 Nathan Beckord @startupventures Sept. 20, 2012New biz model: Taking leveraging existing tech, and innovating in how youʼre monetizing. E.g. Sunrun,GMAC, SquareConsumerifciation of Enterprise (Yammer, Asana, etc)...win by cheap software that continually gets better.Dream team: assembled scientists with rare knowledge. Or, team with mega homeruns....banking on historyrepeating itself.Service at scale-- Wave doing SMB accounting or 99Designs doing cheap design.Breakthrough Tech (w/bmodel): literally invented something that can be patented. A new solar film, or touchscreen interface.Pivot-- Weʼve tried several things, and now somethingʼs working. Twitter, PayPal. PayPal famously had 5pivots...cryptography for handheld devices, then a way to beam $$ among Palm Pilots, then emailing money,then they merged with an online bank, etc. The archetype is explaining what you did to run into a dead end,what you learned from that, and what new direction that set you off on.
  17. 17. Minimal Viable Pitch What  you’re  doing  (and  why) Who  you  are What’s  going  on  (tracXon  /  growth)   What  you  want  $  (and  why)   Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 17 Nathan Beckord @startupventures Sept. 20, 2012So now that Iʼve given you several different ways to frame it, here is the minimum set of information to cover inthe first meeting. I really want to drill into you the importance and value of keeping it short and simple.Minimal = elegance.Think of your first VC meeting as a first date... Keep in mind, this first meeting is really just a mutual-screeningprocess, to see if thereʼs mutual interest. in going on a second date.Plus, you only have an hour...so this “uber-minimal” approach-- just focusing on most important things-- helpsyou avoid “rat holes” that are very easy to fall into if you present too much info. Common ratholes are: i) toodeep into tech or product; ii) too much on competitive landscape.And then finally, when you tell investors upfront that there are only 5 slides as opposed to 30, youʼll instantlynotice increased engagement on the part of the potential investors; this is important.
  18. 18. MVP (minimal viable pitch) Message: What  you’re   More  people  than  ever  (78M!)  have  dogs.  They   ✓  Problem ✓  Market  size  &  Trends doing  &  why spend  $2bln/yr  pugng  dogs  in  kennels  but  it’s   ✓  SoluYon  /  Product expensive  &  dogs  hate  it.  We  are  “airbnb  for  dogs.” ✓  Clear  &  big  Vision Samir-­‐  VP  Engr,  prev.  @Adobe;  Samantha-­‐  Designer,   ✓  Solid  Team-­‐-­‐Hacker,       Hustler,  Designer Who  are  you prev.  @Apple,  NYU;  Stewart-­‐  Stanford  MBA;     ✓  Pedigree,  Experience ✓Peer  reference  /   Advisors:  Steve  Blank,  Andrew  Chen.   “social  proof” What’s  going   POC  in  SF,  NY,  Atlanta  (now);  Adding  3k  members  &   ✓  Thesis  Validated ✓  TracYon  /  Growth on   120  boarders  /  week  via  events,  AKC  partnership,   ✓  MarkeYng  Plan   select  GOOG  ads.    Avg.  booking  $55  x  7%  =  $3.85   ✓  Bus.  Model ✓  Momentum What  you   $4m  Series  A  @$16m  pre  to  hit  6  more  geo.  mkts ✓  Sensible  UOF ✓  Strong  Future  Vision want   Burning  $75k/mo.      Cash  Flow  B/E  @  2k  bookings  /   ✓  Economics  Scale ✓  Path  to  Profitability week  (2013).      LTV  >  CAC      ($145  vs.  $33). ✓  RealisYc  ValuaYon Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 18 Nathan Beckord @startupventures Sept. 20, 2012Here is a simple framework. Note that each of these could easily be a standalone slide, in 40 point font...add atitle, add a clever image or a supporting chart or diagram, and youʼre done. Killer MVP.To note, I intentionally did not include a competition slide, as that can be a rathole. Make them ask about it,make them bring it up. But def have a thoughtful analysis and appendix slide to answer.
  19. 19. Sequoia’s Outline 1. Company Purpose 6. Competition Define the company/business in a single declarative sentence. List competitors & competitive advantages 2. Problem 7. Product Describe the pain of the customer (or the customer’s customer). Product line-up (form factor, functionality, features, architecture, intellectual property). Outline how the customer addresses the issue today. Development roadmap. 3. Solution 8. Business Model Your company’s value prop. to make the customer’s life better. Show where your product physically sits. Pricing, Revenue model Provide use cases. Average account size and/or lifetime value Sales & distribution model Customer/pipeline list 4. Why Now Set-up the historical evolution of your category. Define recent trends that make your solution possible. 9. Team Founders & Management Board of Directors/Board of Advisors 5. Market Size Identify/profile the customer you cater to. Calculate the TAM (top down), SAM (bottoms up) and SOM. 10. Financials P&L, B/S, Cash flow Cap table, The deal Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 19 Nathan Beckord @startupventures Sept. 20, 2012Now letʼs match up the MVP we just did with Sequoiaʼs classic outline...our MVP nails almost everything onSequoiaʼs ten-slide deck outline.
  20. 20. 500 Startups’ Criteria Raising Startup Capital -- The Pitch GENERAL ASSEMBLY Nathan Beckord @startupventures Sept. 20, 2012And not only does it hit the highlights with Sequoia, but also with small funds like 500 Startups. Product /Solution, Biz model, distribution, traction and team.
  21. 21. And It Works! Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 21 Nathan Beckord @startupventures Sept. 20, 2012And it really works! Also, airBnBʼs simple deck http://tiffanyk.com/post/10611384492/the-original-airbnb-pitch-deck-honored
  22. 22. Show and Tell Time! Let’s take a look at a few decks... Acme  5-­‐Slider Airbnb  early  days Dress  Rush Speakeasy Everest CSS  Piffle Piccsy Popsurvey Manpacks Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 22 Nathan Beckord @startupventures Sept. 20, 2012First letʼs start with the minimalist theme. Hereʼs the 5-slide deck referenced in that TC post: http://www.slideshare.net/timyoung/magic-5663116Hereʼs another that is nice and bare bones--- AirBnB: http://tiffanyk.com/post/10611384492/the-original-airbnb-pitch-deck-honored Good: Problem / Solution and Market Sizing for a new, unknown market. Very simple,lots of whitespace.Some nice online design inspirations: http://investors.dressrush.com/ http://investors.getspeakeasy.com/http://investors.evr.st/ http://pitch.csspiffle.com/#intro http://piccsy.com/investors/ http://www.slideshare.net/DeckFoundry/popsurvey-deck http://www.slideshare.net/500startups/manpacks
  23. 23. But what about... (nuts & bolts) File  type? Format  /  Build? Length? Tone? Online? Angel  List? ConfidenKality? Data?  Room Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 23 Nathan Beckord @startupventures Sept. 20, 2012File type: PPT, Keynote, Prezi.Formatting: minimal. White background if it will be a printed / bplan version.Builds: as few as possible (they are distracting).Length: 5 slides for minimalist, 10-12 for Guy Kawasaki / Sequoia, and 15-25 with appendix for full plan (feelfree to go crazy in the appendix).Tone: Depends. Confident is good, without being cocky. Thoughtful / reflective / aware if youʼve pivoted.Serious if enterprise.Online: Use https://speakerdeck.com/, slideshare.com, or bit.ly Dressrush has an explanatory guide to doingthis: dressrush.tumblr.com/post/12506021124/dressrush-online-pitch-deck.Angel List: Absolutely. This is pretty much a requirement these days. In your deck, link through to your ALprofile.Confidentiality: Assume everything you send over will be shared. Sanitize as needed, or give them access todata room.Data room: Almost no one does this, but it can save you from 1000 emails asking for stuff that should havebeen put in a data room.
  24. 24. Presentation Hacks File  type? Friendly  Fire Format  /  Build? Performance Length? Memorize Audience  Tuning Tone? Don’t   Forget  the   ConversaKonal Online? ASK!   Laptop  Demo Angel  List? Live  Demo ConfidenKality? Early  Bird Sharing  Data? Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 24 Nathan Beckord @startupventures Sept. 20, 2012Early bird: arrive 10 minutes early, the VC will probably arrive 10 minutes late; donʼt be rattled.Live Demo: this usually occurs about half way through the deck, after youve established "what" and "why"and "who." Tips: be mindful of time (3 mins!) and dont get lost in product.Laptop demo-- assume the projector bulb burns out, Internet connectivity will fail, etc. Be ready to run a demooff your laptop if you can. Plus it creates a more intimate setting if youre sitting side-by-side, looking at yourscreen.And, be prepared to completely ad-lib it (w/o slides) by telling a story / conversation. This can be powerful.Tuning: Know your VC. were they finance guys? Sales guys? Founders or product guys? Who else havethey invested in?Memorize: practice it, hours per day, until it becomes conversational.Itʼs a Performance-- use movement, dramatic emphasis, walk around, use emotion, elongated pauses etc.Friendly fire: practice your pitch with your attorneys, friends, advisors, startup founders, c-list VCs.And finally, youʼre selling, youʼre asking for money. Go for the close! Ask for it!
  25. 25. First steps to get started (do it tonight!) Draw  or  storyboard  it  by  hand Or Dras  an  outline  in  Word  or  Pages Or Build  Xtles  and  headers  of  each  slide Or Find  an  exisXng  deck  and  modify  it.   Then... Add  simple  images  or  pictures  to  accompany  text Create  diagrams,  charts  that  support  the  slide  topic Sparingly  add  addiXonal  detail.    PracXce! Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 25 Nathan Beckord @startupventures Sept. 20, 2012Draw or storyboard it by hand.  Put the computer away and sit down at a clean, empty desk with 10-12 piecesof blank paper and a pen and simply draw rough diagrams for each slide.  This spurs creativity, and you canre-order the paper slides into the perfect storyline.  Then, fire up the MacBook and start creating a digitalversion.Draft an outline in a Word or Pages file. Begin with one of the standard pitch deck formats as suggested bySequoia or Guy Kawasaki (e.g., Problem / Solution / Team / Market - etc.) and then add one key concept that Iwant to convey on each slide as a sub-bullet. This forms the basis of the "story arc" that the deck will take, andthen add more color and detail to each later.Headers and titles: If the storyline is already pretty clear, then with a blank Keynote or PowerPoint build a setof 10-12 slides starting with just the headlines. In some cases, Ill also do a set of sub-titles, too. Then the restof the slide expands on these concepts, or better yet, represents them as images or diagrams.       Pull up an old deck: there are many, many good decks now online (see my Quora answer on the topic) andmany concepts can easily be recycled.  Just be sure to make the look, tone, and feel consistent to avoid"Frankenstein" decks.
  26. 26. KISS Raising Startup Capital -- The Pitch GENERAL ASSEMBLY 26 Nathan Beckord @startupventures Sept. 20, 2012
  27. 27. Raising Startup Capital -- The Pitch GENERAL ASSEMBLY27 Nathan Beckord @startupventures Sept. 20, 2012