Insights from The Entrepreneurial Bible of Venture Capital

1. Essential Advice for
Entrepreneurs
Building Startups
Insights from
The Entrepreneurial
Bible of Venture
Capital
Avidan Rudansky
Analyst @ Maccabee Ventures

2. Start Me Up!
Timing: One of the best times to start a business is when you are a student
(undergraduate or graduate): access to free consulting from faculty and
students, potential customers, integrating academic coursework and knowledge
into your startup, unique marketing opportunity
Just Do It: Today it’s never been easier to launch a new company and raise
funds. Companies used to have to put tens of thousands of dollars together to
cover the costs of servers and software licenses. As technological innovation has
skyrocketed (i.e. cloud computing – AWS), the cost of starting a new company
has fallen considerably. Today it can cost less than $5,000 to launch a beta
version of a website or mobile app!
Angels: Carve out a piece of your fund-raising round (i.e. Pre-Seed, Seed, Series
A) to include angels (in a SPV) who can add strategic value
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3. Angels, Accelerators, and Incubators
Benefits: Angel investments provide needed financial support and lucrative
networking opportunities without demanding much in return. This stands in
stark contrast to venture capitalists, who usually demand enough shares in a
start-up to allow them to influence company decision-making.
Accelerators: Places that host 3-month programs and then move on to the
next cohort of startups. Push startups to move quickly and focus on speed.
Startups typically get a small amount of funding in exchange for 5-15% of
their equity. (e.g. Y Combinator)
Incubators: Places where multiple startups rent office space and have access
to some shared à la carte services. These companies benefit from the
symbiosis and energy of being around other startups. Incubators encourage
their startups to keep renting office space.
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4. Raising Angel Funding
Valuation: Don’t raise angel funding at too high of a valuation – it makes it
more difficult to raise capital from a VC, specifically an up-round.
Networking: Go to industry and networking events, find a way to get
introduced to a VC by someone they know. Most deals that VCs invest in
come through people they already know.
Convertible Notes: To avoid severe dilution a cap should placed on the
convertible note – a cap is a ceiling on the valuation at which the (angel)
round of debt will convert to equity. It guarantees that the angel will own a
minimum amount of equity at the time that the priced round closes.
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5. The Team Means Everything
Management: The three most important things in entrepreneurship
are management, management, management. A startup’s success
depends on a dynamic, strong and balanced management team.
The 5 Archetypes:
1. Visionary
2. Technologist
3. Salesman/marketer
4. Money person
5. Mentor
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6. Common Pitfalls
Marketing: Don’t pour too much money into marketing early on. Start-ups
should grow by creating a compelling product that fills a market niche.
Market Research: True innovation is found when your start-up can identify a
need that the market doesn’t even realize yet. Market research will only get
you so far; your idea needs to address not what people think they want
today but anticipate what they’ll need tomorrow.
Planning: An innovative concept alone won’t guarantee success, however.
You also need a plan for getting your concept to the right customers.
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7. Have Your Sh*t in Order
Time: Venture capitalists are busy people. To secure needed financing,
don’t waste the precious time they grant you. Have all your materials
ready before you meet to make a good impression.
Basic Materials:
• Executive Summary (1-2 pages)
• Pitch Deck (10-15 pages) – PDF format
• Financial Model (Excel or Google spreadsheet)
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8. The Pitch
Versions: Use a quick, 30-second version at networking events, but
have ready an in depth, two-minute version for people who want to
know more. Prepare a 15-20 minute version for potential investors who
want to know everything.
Communication: Keep it short. Don’t confuse potential investors by
mincing words. They want to know what makes you uniquely you, so
don’t rely on generalities to describe your idea. Avoid buzzwords, such
as “disruptive lean start-up.” Don’t forget the financial info.
Storytelling: Learn how to tell a good story. Your investors want to be
persuaded, so hone your speaking skills and bring your idea to life.
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