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Getting investor ready
- 1. Getting Investor Ready Mark MacLeod @startupcfo May 3, 2012
- 3. 1. Plan Angel Bootstrap Ready? yes Prep Roadshow no yes (seed) VC no Stop!
- 4. Investor Readiness... YOU KNOW: How much? Who from? (angel vs. VC) Why? (what for? Milestones?) YOU HAVE: Docs: Exec Summary, Pitch Deck, Basic Financials Deal team Pipeline
- 5. Angel vs. VC... Angel VC Micro / Seed VCs ??? Opportunity Size < $20M $ 100M 2 rounds As much as Capital needs max it takes Get to Invest in Finance Strategy Cashflow growth Positive
- 6. 2. Prepare Document Checklist: Executive Summary Pitch Deck Financial Model Bonus: Roadmap Competitive landscape Team Bios & hiring plan
- 7. Exec Summ 1 - 2 pages max Sales document One purpose - get a meeting! http://www.docstoc.com/docs/120015412/Executive-Summary
- 8. Pitch Deck Ten Buckets Model 10 - 15 slides Sell, don’t explain How I evaluate pitches... Clear personalized problem statement http://www.startupcfo.ca/2011/04/the-vc-presentation-grader/ Evidence of domain expertise Known target customer with $ Can touch and feel the product Clear ask
- 9. Financials Baseline: Expense Plan (hires, customer acquisition, overhead) Months’ runway Better: 2 year model with key assumptions (monthly yr 1, quarterly yr 2) Examples: http://andrewchenblog.com/2009/01/19/how-to-create-a-profitable-freemium-startup-spreadsheet-model- included/ http://unstructuredventures.com/
- 10. Final Preparations Deal Team Lawyer Advisors / Mentors Pipeline Qualified list of investors that “fit” Path to get intros
- 11. 3. Pitch! Tips ✓ Be prepared - all docs & deal team ready ✓ Roadshow - parallel, not serial ✓ Running start - build relationships *before* pitching ✓ Start early enough (3 - 6 months) ✓ Target the right investors ✓ At the right time ✓ Build trust ✓ All about traction...
- 12. Pitch Do’s and Don’ts DO! ✓ Talk about yourself - we invest in people! ✓ Summarize - make it easy & memorable ✓ Be different / yourself! ✓ Tell a story ✓ Impress ✓ Commit - full time effort!
- 13. Pitch Do’s and Don’ts DON’T! ✓ Disagree with yourselves ✓ Make me read ✓ Read your own slides ✓ Target everyone - 1% of a B users... ✓ Be alone - no competition = no market ✓ Avoid phone if possible ✓ No agents / intermediaries
- 14. Demo Day Build & qualify your pipeline Don’t re-pitch Ask questions - qualify!!! Filter out the posers Build rapport
- 15. Day after demo day... Follow up immediately - presumptive close Build your pipeline - track everything Broadcast: Mentors, advisors, friends, lawyers Go for the “No” Love at 1st sight Get a lead $ first, then deal structure Be realistic on valuations
- 16. Angel List http://angel.co/ Great for finishing a round, not starting Go there when - you have a lead - 2/3 of round committed - traction (aka Social Proof)
- 17. Evaluating Investors... What do I want from this relationship? Have they walked the talk? What is their track record? Do they have deep pockets? Will they support me for future funding? Can they put together high quality investor syndicates? Can they help in building my organization? Can they improve my company’s profile and bring in high standards of governance? Is the valuation fair for both sides? And, ABOVE ALL: Is there mutual respect and can the VC be my sounding board?
- 18. Common roadblocks Nobody wants to lead Roll your own term sheet Convertible note Pitching a note to investors that prefer equity Secure the $, then optimize the deal Investors are dragging their feet Plan a catalyzing event (launch, key hire, event, etc) Build traction Concerns over milestones Raise more or spend less