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Endeavor fundraising do's and don'ts
1. Do’s & Don’ts of Silicon Valley Fundraising
Ariel Poler @ariel
2. Ariel’s Background
Founder: IPRO (94), Topica (98) & TextMarks (06).
Board Member: Kana, LinkExchange, Freedom Financial, Odeo,
StumbleUpon, Scan, Strava, Returnly.
Investor: AdMob, Flixster, Slideshare, BrightRoll, Instructables,
VivaReal, Optimizely, Thumbtack, Viki, Vivareal, Kueski,
Change.org, Kongregate, LendingHome, NexTag, Thync,
Cornershop and 100 more…
Current focus: Human Augmentation.
Personal: From Venezuela. BS at MIT (math), MBA at Stanford.
Lives in San Francisco. Addicted to kitesurfing.
3. You can’t follow
all the advice that you get
Silicon Valley is very diverse and there are many
philosophies and approaches that co-exist here
Context is key
You must find the approach that works for you
Customize learnings to your situation
4. Who you pitch to is more
important than how you pitch
It is all about investor fit
Think about dating… Who cares about the restaurant
choice if there is no chemistry
5. Don’t focus on the checkboxes.
Investors want to be excited.
The first iPhone was terribly for phone calls
The Tesla Model X has silly doors
Freedom Financial was a service business...
6. Sell your company,
not your product
Do you have a compelling marketing plan?
Do you understand your unit economics?
How will you use your funds?
Show plenty of runway. 18-24 month is ideal.
7. Don’t try to solve investors “excuses”
Most investors do deals when they get excited. But they
don't like to say “I am not excited", so instead they use an
easy excuses, such as:
- You are too early
- The deal is too small
- I want to see more customers/revenues/technology
Be careful about trying to “solve” their excuses, because
once you do, they are likely to find others. Instead, figure
out how to get them excited. Or, better yet, focus on the
business.
Investors like to keep their options open.
8. Control the timing
of your financings
Once you have one term sheet, even a crappy one, you
have leverage
Three weeks or three months? Same outcome. Give
investors a deadline! I’ve seen deals done in a week
If you don’t have a term sheet, try to create some other
forcing function
Avoid a permanent state of fundraising. Focus on the
business and fundraise when you are ready
9. Buy Yourself Time
Always have plenty of runway – do round extensions if
necessary (and viable)
If you can’t raise more money, cut your burn. The
earlier you do it, the less painful it will be
10. Know how to ask for help
We have a very supportive culture in Silicon Valley.
We focus on relationships rather than transactions.
But, to get help, you must do your homework
Determine the right people to talk to
The appropriate topics you want to discuss
Help us help you…
Be Specific
Add value
11. Don’t believe everything you read
in blogs and books
Most success stories are made with 20/20 revisionist
hindsight
It often takes time, e.g. StumbleUpon and Twitter were
not overnight successes as some people think…
Hindsight gives great strategic vision. In most cases,
successes are built incrementally and with a lot of luck.
12. Silicon Valley Investors Like to
Uber to their Board Meetings
If you are not based in Silicon Valley, consider
fundraising in New York, Boston, London, etc.
Not much difference between Sacramento and Sao
Paulo
Once you are here, it doesn’t matter where you came
from
Moving to Silicon Valley is not always a good move
13. Leverage Your
Board of Directors
Diverse composition
You get what you put in
Forest from the trees. Continuity…
It is never too early to have a great board
14. Focus on direction & execution
over speed
Speed is overrated!
What good is going fast in the wrong direction?
The better you understand where you need to go, the
faster you can move
Move fast to determine the right direction! Then get
your execution right and step on it…
But, never stand still!
15. Take Risks.
But One at at time!
Make big bold bets. All of the most successful
entrepreneurs do!
Diversify over time: focusing on one thing at a time.
Don’t “hedge your bets”.
But, it is OK to experiment with different things for a
while until you decide what you want to focus on. Just
for a while…
16. Bonus: How I choose
my entrepreneurs?
Did I have fun during the meeting?
Do I want to have dinner with the entrepreneurs?
Will the project have a meaningful impact?
Is the business opportunity large enough?
Can I help?
17. Hire Slow & Fire Fast
The moment you start thinking someone might not be
working out, they aren’t
But letting someone go is difficult and painful for everyone,
so don’t cut corners when hiring.
Same goes for co-founders, service providers, and others.
Prioritize talent Over experience
Do thorough references!!! Or better yet, a trial period.
18. Do’s & Don’ts of Silicon Valley Fundraising
Ariel Poler @ariel