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Ask the VC: Raising Venture Capital


Published on

The truth behind what venture capitalists are looking for from Sean Foote (Co=Creation=Capital) and Gadiel Morantes (

Takeaways include:
- The difference between "buyer" vs "seller"
- The VC mindset
- What VCs are looking for
- The VC fundraising process
- Questions you need to be able to answer for VCs
and more!

Published in: Business
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Ask the VC: Raising Venture Capital

  1. 1. Ask the VC: Raising Venture Capital #AskTheVC Sean Foote Managing Director Co=Creation=Capital Gadiel Morantes Partner EGFS
  2. 2. 2
  3. 3. 3 What’s going on… • Introductions • Your questions • What you need to know about VCs…
  4. 4. • Who is the buyer and who is the seller? • Picking a VC • The VC mindset – how do these weirdos’ brains work? • What do VCs look for? • The VC process – why does it take so long? • What makes for a great VC meeting? • Lots of other questions you have… 3 What you need to know about VCs
  5. 5. Buyers and Sellers • A deal is a fundamental disagreement about value – Buyers think things are worth less, & tend to minimize price – Sellers think things are worth more & tend to maximize price • But, venture investing is not a zero sum game – A long-term relationship, like a marriage • Pick investors that suit you, know your space, invest at your stage, etc.
  6. 6. The VC mindset • VCs are rational • VC is not “risk capital” – The idea is to minimize risk and maximize outcomes of investments • VCs particularly care about your company if it: – Generates economic value – Provides good cocktail party conversation – Allows them to raise another fund
  7. 7. VCs *need* homeruns • To return 18% annual net to our investors, we need 30% annual gross return • 30% gross return is 5x in 5 years for the entire portfolio 7 Out of 10 companies • Half go bankrupt (5 * 0x) • 4 break even (4 * 1x) • 1 remainder must be 46x in 5 years If it takes 3 years longer, must be over 100x!
  8. 8. What do VCs look for? • Typical answer: a laundry list of business school type issues: – Great teams, defensible technology, market traction, large and growing markets, growth and revenues, limited competition, blah, blah, blah • Each investor seems to have a hot button, which changes over time • Each company has a hierarchy of risks from largest to smallest
  9. 9. VC funding is hard… • Currently, many momentum investors • And many angel investors – 20,000+ angel investments in 2014 – 1,200 VC investments • Implication: VC funding is still wicked hard, so… – Try to get VCs in seed rounds – Vet angels on their ability to do follow-on – Get to break even without VC investment
  10. 10. The VC Process
  11. 11. A great meeting is both an interview and a first date • Personal: Be yourself, be engaging – How you answer matters as much as what you answer • Prep: Be prepared • Positioning: You are an equal, not a buyer or a seller – Follow the lead – Ask questions
  12. 12. What you need to provide • What pain we solve • How we solve it • Why we are the right team to solve it • What we’ve done (so far) and will do (with your help) • Why we win vs competitors • The amount of revenue/profit/scale winning creates for our mutual benefit
  13. 13. Thank You and Q&A 13 Gadiel Morantes 415-234-3437 Follow us @EarlyGrowthFS Sean Foote 650-255-4134