1. Pear
LAUNCH Scale 2018
Navigating
The New Seed Landscape
Mar Hershenson, Managing Partner Pear VC
Pear

2. Pear
LAUNCH 20192
Partner @
We help build companies from 0 to 1

3. State of Early
Venture
3

4. Year 2003 2010 2019
# Funds 0 33 ~800
Number of Seed Funds

5. Not only 24x funds…

6. Pear
LAUNCH 20196
Source: SEC Form -D filings
… but also 4-20x bigger funds
I (y. 2004) II (y. 2007) III (y. 2011) IV (y. 2013) V (y. 2016) VI (y. 2019)
$200M
$100M
$85M
$35M
$7.4M
“Example Fund” size increase over Hme

7. Pear
LAUNCH 2019
Rounds have shifted
7
Source:Wing VC. Techcrunch. A quick look at how Series A and seed rounds have ballooned in recent years, fueled by top investors
2010 2019
Age of first institutional Seed 1y 2.5y
Total Seed raised before Series A $1.3M $5.6M
Series A size $5.1M $15.7M
% Companies with revenue at A 15% 82%

8. Pear
LAUNCH 2019
Getting to a Series A is a ~3.5 year Journey
8
$5.6M Raised
Before Series A
$250k-$750k
Pre-seed
$1-4M
[Seed Plus]
Pre-seed 2019 = Seed 2010 Seed 2019 = Series A 2010
Metrics in Seed round matter
$2-4M
Seed

9. Where do I have to
be to raise Seed and
A money?

10. Pear
LAUNCH 201910
Product Market Fit Stage : “0
“0 “0.5 “1
Valuable
product I can
sell
Idea stage.
No product
No
customers
Valuable
product my
team can
predictably sell
Source : Nikhyl Singhal, CPO at Credit Karma
Start-up journey has not changed

11. Pear
LAUNCH 2019
The round names have changed
11
Product Market Fit Stage : “0 to 1”
“0” “0.5” “1”
Series A
Seed
Series ASeedPre-Seed
2005
2010
2019
Series A

12. What are valuations at
each stage?

13. It depends

14. Pear
LAUNCH 201914
Source : Jason Calacanis Blog. The Valuation vs Traction Matrix

15. Pear
LAUNCH 2019
“Elite Status” Start-ups
15
Founder
Background
Hot Market Hype Location
Attended top university
Worked at high-growth
company
Second time founder
RPA
Crypto
AI ….
Big investor leading
YC
Famous founder
Silicon Valley!

16. Pear
LAUNCH 201916
“0” “0.5”
$3-6M
$10-20M
“1”
$30-50M
Typical Startup
Series ASeed/Seed +Pre-SeedTypical Startup
Elite Startup
$10-15M
$20-30M
$40-80M
Series ASeed/Seed +Elite Startup
Expected Round Valuation

17. Pear
LAUNCH 2019
Assumptions Forward
17
Average Start-up
No Bio/Deep Tech
Location: Silicon Valley

18. Pear
LAUNCH 2019
What matters most when*
18
Pre-seed Seed Series A Public
Team Traction Market Traction
Traction Team Traction Market
Market Market Team Team
1
2
3
* Caveat: Typical investors at each stage. A Series A investor will think market first at seed too (eg).

19. “0” stage, Pre-seed
19

20. Pear
LAUNCH 2019
!20
~$100k ~$750k
Friends, Family & Fools
Angels
Pre-seed Fund
Angels
Friends, Family & Fools
“Typical” Pre-seed Rounds

21. Pear
LAUNCH 2019
How to raise pre-seed from a fund
21
Pre-seed
Team*
- Emphasize “singular” achievements
- Show you can execute
- Attract complementary co-founders
Traction
- Demonstrate “MVP” (does not mean you need to code)
- Keep investors updated as you make progress (even if small)
Market Founder/CEO has ambition to build something big
1
2
3
* Assumes non-elite status start-up

22. “0.5” stage, Seed
22

23. Pear
LAUNCH 2019
!23
~$2M ~$4M
Seed Fund
Pre-seed Fund
Angels
Series A Fund
“Typical” Seed Rounds

24. Pear
LAUNCH 2019
Where do I have to be to raise seed
24
Seed
Traction
Proof of customer “love”
A few customers that cannot live without your product
Team
Core team is ready (Minimum Viable Team)
(especially engineering/product)
Market Founder/CEO has ambition to build something big
1
2
3
* Caveat: “On average”. Some investors ma

25. Pear
LAUNCH 201925
Test - when you reach “0.5”
When you are not changing your to acquire and retain a new customer
website
sales ppt
app

26. Pear
LAUNCH 201926
Specifics on traction at seed
Revenue
$ 0-200k ARR
(~10k MRR)
Product Stickiness Fanatic Customers
Growth Organic/Viral
Plan
Clear Plan to reach
$1.5-2M ARR in 18 months
Most Critical

27. Pear
LAUNCH 2019
Actual data and trends matter at seed
27
Engagement
DAUs/WAUs/MAUs
Frequency of use
30d/90d/120d Retention
Lengths of sessions
Customer Love
Organic growth
Reference accounts
Super-fans/addicted users
Sings of love (posts/emails…)

28. Pear
LAUNCH 2019
Product Market Fit Measurements
28
58%
0
15
30
45
60
Ini^al Q12017 Q2 2017 Q3 2017 Q4 2017
33%
22%
47%
56%
40% benchmark
Source : How Superhuman Built an Engine to find Product/Market Fit by Rahul Vohra

29. Pear
LAUNCH 201929
Why Retention Matters

30. LAUNCH Scale 2018
Pear
30
Cohort Analysis - Retention
Cohort
Size
0 1 2 3 4 5 6 7 8 9
110 Jan 100% 33% 21% 16% 14% 13% 12% 12% 10% 12%
186 Feb 100% 31% 21% 14% 13% 12% 11% 11% 9%
184 Mar 100% 29% 18% 16% 14% 12% 10% 9%
225 Apr 100% 35% 29% 22% 20% 17% 15%
231 May 100% 42% 37% 34% 24% 21%
209 June 100% 44% 37% 33% 25%
240 Jul 100% 42% 38% 31%
271 Aug 100% 45% 40%
248 Sep 100% 51%
243 Oct 100%
2,147 Total 100% 39% 30% 24% 18% 15% 12% 11% 10% 12%
Source: Diligence at Social Capital Part 2. Medium

31. Pear
LAUNCH 201931
Advice for “0” to “0.5”
“Experiment” Mentality
• hyp —> test —> measure —> new hyp
“Scrappy and Fast” Operations
• Build fast. Kill Features. Simplest MVP
Ignore “Fake” Signals
• Number Employees. Money Raised. Speaking engagements.

32. Pear
LAUNCH 2019
The “0” to “0.5” journey in steps
32
Vision/Idea Build
First
founder
driven sale
1 2 3
Repeat
founder
driven sale
4
Consumer Companies: 3) Launch to network 4) Organic growth/word of mouth expansion

33. Pear
LAUNCH 201933
Branch - “0” to “0.5” journey
Data driven PMF driven “
Photo App (CAC was high!) —>
Print SDK (no takers) —>
Deeplinking (customers inbound)
Duration:
15 months
Team:
4 co-founders
Cash spent:
$50k

34. “1” stage, Series A
34

35. Pear
LAUNCH 2019
!35
~$8M ~$20M
Series A Fund
Seed Fund
Series B Fund
Corporate Fund
“Typical” Series A rounds

36. Pear
LAUNCH 2019
From finding product fit to finding market fit
36
Iterate on formula until
finding customer love
Iterate on growth engine
until economics work
Focus on the revenue engine
Not the absolute revenue

37. LAUNCH Scale 2018
Pear
37
Myths on the Street
E-commerce
$500k-1M MRR
20% m-o-m growth
SaaS
$100k-200k MRR
100% y-o-y growth
Consumer
50k DAUs
25% m-o-m growth
Source: Equityzen blog
Marketplace
$500k-1M GMV
25% m-o-m growth

38. LAUNCH Scale 2018
Pear
Growth is not Enough
38

39. LAUNCH Scale 2018
Pear
39
SaaS Series A MRR-Valuation Correlation
0
45
90
135
180
20 35 50 65 80
MRR($M)
Post Money Valuation ($M)
Source: Thomas Tungunz, Redpoint
Revenue is not Enough

40. Pear
LAUNCH 201940
Test - when you reach “1”
If I hire 1 AE, I will close this $400k ARR new business in 6 months
If I spend $10k in ads, I will get 10k new users (or maybe no ad-spend is needed)

41. Pear
LAUNCH 2019
Where do I have to be to raise A?
41
Series A
Market Need to convince series A investors this is a $10B+ company
Traction Can demonstrate that is a scalable business with efficient growth
Team Core product team built. Initial growth hacking/sales team
1
2
3

42. Pear
LAUNCH 201942
Specifics on traction at Series A
Most Critical
Series A Round
Revenue
$0.5-4M ARR
(~$200k MRR)
Product Stickiness Net retention 80-150%
Growth
Efficient Growth Engine
(SE>1, LTV/CAC>3, default alive)
Plan Plan to 3-5x in 12/18 months

43. LAUNCH Scale 2018
Pear
43
Growth Quality
(Quick Ratio – Added MRR/lost MRR)
Source: Diligence at Social Capital Part 1. Medium

44. Pear
LAUNCH 201944
Sample Metrics for Series A SaaS Companies
Source: Bessemer. Consumer Series A Metrics
Cash Flow Efficiency - Net new ARR/Net Churn
CARR - Committed Annual Recurring Revenue
METRIC GOOD BETTER BEST
CARR
% Growth
50-100% 100-200% 200%+
CAC PAYBACK
Months
24 12-24 <12
CHURN
Monthly
1-3% <1% Net negative
CASH FLOW
EFFICIENCY
<1 ~1 >1

45. Pear
LAUNCH 201945
Advice for “0.5” to “1”
Focus on “Growth Engine” rather than “Abolute Growth”
• Replicatable and efficient growth are better than just growth
Measure “Growth Engine” Efficiency
• Use data to measure performance. Build sales & marketing ops teams.
Avoid “Fake” Growth
• Sales & marketing cost higher than net revenue. GMV vs. actual revenue.

46. Pear
LAUNCH 201946
Doordash - “0.5” to “1” journey
Duration:
10 months
Business model iterations:
First region to “1”
Second region to “0.5”
Extreme attention to metrics (LTV, CAC, Payback, Margin)
Team - Key hires:
Engineering. Operations Heads.
Cash spent:
< $2M

47. Summary
47

48. Pear
LAUNCH 201948
In Summary
Seed Round Series A Round
Revenue
$ 0-200k ARR
(~$10k MRR)
$0.5-4M ARR
(~$200k MRR)
Product Stickiness Fanatic Customers Net retention 80-150%
Growth Organic/Viral
Efficient Growth Engine
(SE>1, LTV/CAC>3, default alive)
Plan
Clear Plan to reach
$1.5-2M ARR in 18 months
Plan to 3-5x in 12/18 months

49. LAUNCH Scale 2018
Pear
49
“What gets measured, gets done”
Georg Rheticus, Astronomer 1514-1574

50. LAUNCH Scale 2018
Pear
50
Make an Ops Plan
Q1 Q2 Q3 Q4
Revenue $1M ARR
New Hires
Product
Cash @ end
$100k ARR
100 leads
1 Demand Gen 1 Sales
Rev 2.0
1 Customer Success
3 Engineers
MVP
1 Sales
1 QA Engineer
18 months 15 months 10 months 4 months6 months

51. Pear
LAUNCH 201951
Know your Northstar
Focus on building a large business that makes money

52. Pear
LAUNCH 2019
Contact: mar@pear.vc
52