Venture Hacks - Good advice for startups. Best practices for raising a VC round Having raised a number of VC rounds personally and observed many more as an investor or friend, I’ve come to think there are a set of dominant best practices that entrepreneurs should follow. 1. Valuation: Come up with what minimum valuation you’d be happy with but never share that number with any investor. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Elements of a Strong Business Plan | General Catalyst Partners Napkin Think Force yourself to summarize your idea on the back of a cocktail napkin. Don’t submit your plan until you have this level of clarity. Team Who will occupy the leadership roles in your company, why are they the best players for the task at hand, and how will they go about building an agile, customer-focused culture? If you believe that an advisory board or governing board will help you grow your dream team, we may be able to help you find the right people. Pain What problem are you trying to solve? Solution Why is your solution superior to competitors, who are the key competitors, what differentiator will propel your solution to break through and achieve broad adoption? Customer Acquisition Too many early stage businesses fail to fully explain their methods and costs of acquiring customers. Business Model Show us the near and long-term value of a customer, how you earn revenue, and your growth projections over at least a three-year period. Capital Efficiency Financials Final Answer? Words
What To Look For In A Company Board At any company level, the board of directors has a direct impact on the organization’s product strategy, hiring, fundraising and much more. And startups have to be very selective in choosing board members who will advise the company in the right direction. In the big company realm, both the media and the company’s shareholders have questioned Yahoo’s board, which continues to employ a floundering Carol Bartz as CEO and supports a bizarre product and business strategy. As we saw with HP, even huge, established companies need to make changes in board structure as a company’s strategy shifts. The fact is that the board plays an extremely important role in some of the major events for any company with shareholders. Lightbank partner Paul Lee echoes this thought, telling me that entrepreneurs have to be “very careful” about how they put their board together. In later stage companies, it makes sense to add seasoned execs who have run a successful companies in the role of the “CEO Coach.”
365 Days, $10 Million, 3 Rounds, 2 Companies, All With 5 Magic Slides Editor’s note: The following is a guest post by Socialcast founder Tim Young detailing how he raised 3 rounds totaling $10M in VC money in a year’s time with a 5-slide deck. This was originally published at “Knowledge Is Social.” “I have a short five-slide deck to share that provides a solid framework for understanding our business.” Since moving to San Francisco a little over a year ago, I have spent every day helping to build Socialcast and about.me. During this time, I have raised more than $10 million combined over 3 funding rounds for both Socialcast and about.me. Convincing venture capitalists to invest in two startups in less than 365 days was a challenging task, but one that quickly taught me the dos and don’ts of raising money. Stop using the projector for initial meetings Most of my initial venture partner meetings ended up in a conference room. Understanding an investor’s perspective Every venture partner has his or her own ideal approach to learning about your business. 1. 2.
Class 8 Notes Essay Peter Thiel’s CS183: Startup - Class 8 Notes Essay Here is an essay version of my class notes from Class 8 of CS183: Startup. Errors and omissions are mine. Bruce Gibney, partner at Founders Fund, gave the lecture these notes are based on. Class 8 Notes Essay—The Pitch I. One of the most important things to remember when thinking about pitching is that there are huge numbers of pitches in the world. Conceptually, pitching sounds easy. But it’s not that easy. Humans are massively cognitively biased in favor of near-term thinking. Before you pitch you should have a clear goal in mind. First, you need to raise the right amount of capital. Second, higher valuations aren’t always in your interest. Your subsidiary goal should be to keep control of your enterprise. II. It’s always important to understand your audience. One of the most important things to understand is that, like all people, VCs are different people at different times of day. III. A. Eventually you will talk to senior partners.
Waiting for the Accelerator Bubble to Pop Since Paul Graham launched Y Combinator in 2005, the field of startup incubators and accelerators has exploded in the U.S. and overseas, with new entries emerging in all manner of oddball shapes and sizes, from a 80,000-square-foot space in San Jose, Calif., dedicated to tech companies hoping to do business in China, to a program that offers entrepreneurs cash to develop their business in Chile. There are accelerators for green tech, health tech, ed tech, the cloud, and every other tech flavor du jour, and accelerators everywhere from Baton Rouge to Durham, N.H., as cities across the country lay claim to the title of the Silicon Valley of [insert industry here]. There’s Unreasonable at Sea, a 100-day program on an ocean liner, which encourages entrepreneurs to “combat the greatest challenges of our time” while sailing among ports in 13 countries. The result is that venture capitalists have begun to predict that accelerators are going to fail. There are already signs of paring back.
Nat Turner (Thoughts on best ways to manage a VC round) We spent too much time raising money at Invite. Raising money when running a startup is extremely distracting, because every minute you’re fundraising you’re not working on your product. Sometimes I like to think about what else we could have done at Invite if we didn’t spend probably a third of our company’s lifespan fundraising, either full-time or part-time. However, the flip-side is that if you’re building a startup there’s a pretty damn good chance that you’re going to need to raise money. Know what you want before you start the process. I hope this helps.