Post on 07-Aug-2015
transcript
What is “Venture Capital”
Larger $ (>$2.5MM)
Early to Growth Stage
Scalable Opportunities
($100MM revenues in 5 yrs)
• VCs Invest “OPM” • Typically Not Seed • Minority Position • Preferred Stock • Veto not Control • Fixed fund life
Check out the Annotated NVCA Model Series A Term sheet
VC Terms Tech startup – Seed Stage Equity Priced (not a convertible debt round)
Modified from AVC Blog: www.avc.com
Milestone
Build Product Product Market Fit
Series A Expand Team Establish Market
Series B Penetrate Market
$100-800k $2-$5MM $15-$20MM
DO: Have a credible team. Most Investors Invest Foremost
in the Team
DO: Have a Robust Financial Model (era of the spreadsheet jockey)
DON’T: have a 35 Page Business Plan
DON’T: expect an NDA
DO: Have what the Investor wants to see
The Deck 20 Slides or Less
• Intro: Define the company, business, service or product in a single sentence. “We’re AirBNB for Office Space”
• Team: Identify a core group of talent that can execute on the next set of milestones. The further from revenues, the more team matters
• Opportunity: Establish the need for your company’s solution and the size of the market.
• Solution: Demonstrate how you will solve the problem and validate your differentiation.
• Competition: Identify your competitors, validate your differentiator. • Revenue Model: Explain how you will generate revenue, and • make future forecasts. • The Ask: Really just a reasonable idea of pre-money valuation
Canaan Partners Pitch Deck Workbook (I can send) Reid Hoffman’s Series B Annotated Pitch deck: http://reidhoffman.org/
linkedin-pitch-to-greylock/
Common Early Mistakes ! Cap Table Errors (too many investors; bad terms)
! Undocumented deals
! Paying for unnecessary legal documents (PPM, Closing Documents)
! Unrealistic expectations of valuation
! Appearing inflexible/uncoachable
! Failure to understand competitive landscape
! Failure to subject to vesting; unreasonable acceleration
! Putting a $ value on time
! Field of Dreams Business Model
Knowledge is Power
There is no good reason to make an out-of-market deal… Know what is market and customary
(don’t count on your lawyer to know)
Fred Wilson’s Blog & Archives: www.avc.com
Mark Suster: www.bothsidesofthetable.com
Brad Feld: www.feld.com/wp/