This document provides advice for entrepreneurs on raising venture capital. It discusses that venture capitalists are buyers looking to minimize price while entrepreneurs are sellers looking to maximize price. It recommends choosing investors that understand your industry and stage of business. Venture capitalists seek high returns known as "homeruns" to provide returns for their investors. They look for great teams tackling large markets with defensible technologies and growth potential. The venture capital process is competitive, so entrepreneurs should get investors early and prove their business can reach break even without venture funding. Successful venture capital meetings involve being prepared, engaging personally, and positioning the entrepreneur's business as solving pains through a winnable solution.

1. Ask the VC:
Raising Venture
Capital
#AskTheVC
Sean Foote
Managing Director
Co=Creation=Capital
Gadiel Morantes
Partner
EGFS

2. 2

3. 3
What’s going on…
• Introductions
• Your questions
• What you need to
know about VCs…

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
www.CoCreationCapital.com

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. 5www.CoCreationCapital.com

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
6www.CoCreationCapital.com

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. 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
8www.CoCreationCapital.com

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
9www.CoCreationCapital.com

10. The VC Process
10www.CoCreationCapital.com

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
11www.CoCreationCapital.com

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
12www.CoCreationCapital.com

13. Thank You and Q&A
13
Gadiel Morantes
415-234-3437
contact@earlygrowthfinancialservices.com
www.earlygrowthfinancialservices.com
Follow us @EarlyGrowthFS
Sean Foote
650-255-4134
sean@cocreationcap.com
www.cocreationcapital.com