An insider view on the us funding landscape, and hacking the silicon valley fund raising process (18 feb 2014)
An Insider View On The
US Funding Landscape
and hacking the Silicon Valley fund-raising process
Yaw Shin Yeo
18 February 2014
• Senior investment manager with Infocomm Investments (IIPL)
• Relocated to the Valley in late 2011 to launch and oversee all of IIPL’s
activities in the US. Responsible for IIPL’s US investments.
• Previously led the MOF technology team that oversee the central
government infrastructure and IT operations
2013 : $29.2 Billion in 3,354 Deals
Stable dollar ﬂow; more seed deals"
2013 marked the fifth straight year of record deal levels behind the continued surge in seed
venture capital deals. Venture capital funding increased in each successive quarter of 2013,
hitting a six-quarter high in Q4’13.
2013 : M&As decreased by 5%
while IPOs went up"
2013 was an active one for U.S. venture capital-backed IPOs, topping 2012’s IPO tally by
55%. Healthcare firms get credit for driving the IPO boom. There was no upward momentum
in venture-backed M&A, which dropped by 5% on a year-over-year basis.
Note: Venture-backed IPOs in this report covers public offerings of companies headquartered in the U.S. 2013 saw 81 total
IPOs with at least one U.S. VC investor that trade on U.S. exchanges.
New York Startup Scene is Rising
with ~50% increased yoy funding"
New York saw its venture capital funding amount accelerate nearly 50% on a year-over-year
basis boosted by notable rounds to startups including Quirky, AppNexus and Fab. California
and Mass. funding levels in 2013 remained mostly consistent from a year ago.
• General investor fatigue in some Consumer sectors? Social.
E-Commerce. Travel. Music. TV. Gaming.
• Pendulum is swinging to Enterprise and hardware. "
SaaS. Online-to-Ofﬂine. EdTech. Security. Wearables. Virtual
Reality. Connected Devices. Robotics. Big Data. Internet of
Things. Drones. Bitcoin. Marketplaces.
Bifurcation of venture : micro-VCs and billion dollar funds.
VCs are out fund-raising. Fresh capital inﬂows?
Corporate venturing is returning.
Wall Street joining the fray.
This is all very
how do I raise
Photo Credits : Andrew Magill
Do you really need venture money?"
• Many sources of capital :
Keeping a day job
Friends and Family
• Bloomberg. Broadcom. SAS Institute. Viber.
Venture Economics 101"
• The VC’s promise – Raise money from LPs (pension,
endowment, SWFs) to invest in startups (of a speciﬁc
stage and geography) and generate 15-20% IRR over a
• $300M fund is expected to return $1.2 Billion at 15% IRR
• The typical VC batting average:
– 6 breakeven or failed
– 3 minor exits returning 2-3x
– 1 breakout success
• “Go Big or Go Home” mentality
So, what does this mean for me?"
• With money comes obligations.
• Two reasons for VC money (Chris Dixon):
– Going for the billion dollar opportunity
– Raising money is absolutely necessary or will
signiﬁcantly accelerate growth
• VC is a “local” business – most of them are not allowed to
invest in international startups unless the founders are
prepared to re-locate.
• There are a few exceptions. Look for Southeast Asia track
record or pan-Asia (not China) investment strategy.
Are you sure
you still want
Finding the Investors"
• Hustle. Hustle. Hustle. Work your network.
• Don’t cold-email.
• Referral sources : Lawyers? Recruiters? VCs? Portfolios?
Entrepreneurs? Corporate executives?
• Don’t take VC intros from VCs who rejected you.
• Never tell the VCs who else you are talking to.
• Find the right partner. That matters more than the ﬁrm.
• Be speciﬁc when you ask for referrals.
• Do your homework. Make a list.
• Have some practice meetings at the start.
Evaluating the VCs"
Early stage? Growth stage?
Reputation of the ﬁrm and individual
Always reference check. Don’t go in blind!
Getting the VC to Commit"
Social Proof. Validation. Momentum. Scarcity. Urgency.
• Line meetings up within a short timeframe.
• Show commitments if you have them in the bag.
• Validation. If there are people who the VCs know and are
willing to vouch for you, mention them.
• Create buzz. Have your existing investors and advisers talk
you up. Ride on your PR. Stand out from the crowd.
• Having an inside champion is powerful. Find a new partner
or hungry principal that’s looking to close his ﬁrst deal.
Goal : Get to that ﬁrst termsheet.
One last slide…"
Think of it as a sales process. Sell the opportunity.
Don’t just pitch the idea. Pitch yourself.
Be thick skin. Get used to “No”s.
Remember the odds. It’s not the batting average that
matters. You just need one homerun.
• Read your legal docs. Don’t outsource to your lawyer.
• It’s not done till the money is in the bank.
• Don’t raise party rounds. Fewer investors (3-5) better than
too many (15-20).