presents

AMBAR BHATTACHARYYA

@AmbarBh

NOTE: Advice in this deck is distributed by Ambar Bhattacharyya, and does not reflect the views of Bessemer Ventures.

How to Raise Money 101

• How venture firms work – roles, responsibilities, process, timelines

• The setup – how to get a meeting

• Delivering the pitch – what to say, what to avoid

• The follow-up – what to do after the initial pitch

• How to deal with an immediate “no”

• How to think about diligence

• Q&A

Agenda

Relevant characteristics of VC firms – identify your target

1. Size

2. Location

3. Round

4. Sector

5. Business model

VC Firm Characteristics…

• Partner?

• Vice President/Principal?

• Associate?

• Analyst?

• All of the above?

Understand everyone’s roles and responsibilities.

Who should I talk to?

• Investment champion

• Internal communications

• Monday meetings

• Types of decision-making processes

1. Seed rounds

2. VC rounds

What is the investment process like within a VC fund?

• Investment memos/presentations

• Q&A

• Valuation discussions

• Process

• Selling, selling, selling

Entrepreneurs have to give VCs the information become internal sales advocate of

your company even when you aren’t there.

What happens behind the scenes?

Where can I meet a VC?

Happen-Stance •  Conferences •  Office hours •  Panels •  Cold email

Warm Leads •  Through people you know •  Through people you meet •  Through trusted

entrepreneurs •  LinkedIn •  Facebook

• The pitch!

• No one reads business plans…but everyone flips through a 10-15 slide deck

• Tips

– Prepare 2 decks – short version (for use in initial pitch) and long version (for follow-on diligence or to call upon during Q&A)

– Know what your ‘ask’ is

Ok, so I got a meeting with a VC…now what?

SLIDE 1: WHAT WE’RE DOING Two sentences, 22 words, plain English. One buzzword, but used appropriately. Immediately conveys the idea.

SLIDE 2: TEAM 

SLIDE 3: THE PROBLEM

Plain English describes the problem and why current solutions are a pain in the ass.

SLIDE 4: THE SOLUTION

Clear description of what this product/service would allow me to do. Concise, but makes it intuitively obvious why this solution would offer real value.

SLIDES 5-8: 2 EXAMPLE PROBLEMS AND SOLUTIONS 

Very discrete real world illustrations of how I might experience the problem in the course of my life and how the app would solve it. In the absence of a demo, the slides describe how the app works and why I would like it.  

SLIDE 9: MARKET

Tell me what markets you’re going after, what the different segments are, and which ones you’ll target first and why. As well as who you will be competing against.

SLIDE 10: BUSINESS MODEL

Tell me how you think customers are willing to pay and how the business scales.

SLIDE 11: INVESTMENT OPPORTUNITY 

How much you want to raise and why?

SLIDE 12: USE OF PROCEEDS

And key milestones. Tell me how long the money will last without any revenue.

*Thanks to Mike Hirshland for the broad framework

What to say in your deck*

• Passion, passion, passion

• Know the details

• Describe customer/user pain point & and how you can solve it

• Talk up the team

• Show what you’ve tried that hasn’t worked - “lessons learned”

• Capital efficiency – who doesn’t love scrappiness?

• Demonstrate at least one thing that you’ve accomplished in this (or a past

business) that shouldn’t have been possible

• Urgency, urgency, urgency!

What to touch on with VCs…

• Not mentioning the competition (VCs know!).

• Use a hockey stick, but not a crazy one. What matters are margins at scale.

• Market sizes that are so large that they are unbelievable. What matters - market segments and different products.

• Use humor…but not too much.

• Your dedication to your other full-time job.

What to avoid talking about

VCs are notoriously bad at following up.

So how do you get them to prioritize you?

Recent wins

New data

Press

Competitor action

Create a sense of urgency, momentum - and scarcity!

The Follow-Up

• That is OK!

• This means “not now”, not “never”

• What can you do to keep in touch?

1. Quarterly updates

2. Bi-annual check-ins

3. Updates on other investors who are ‘engaging’ you

Raising money can be a multi-step process that takes time – you can use that for your advantage

What if they say no?

Diligence process

• Think in advance of what data they might want and arrange it in advance (model, web stats, cohort analysis, etc.)

• For questions that they don’t have answers to, have ways to find out quickly – and cheaply!

• It is a process, so managing it with care – over-communicate, spoon-feed, and be willing to listen

Always keep the ball moving forward

• If you get to a ‘no’, understand where the lack of comfort is.

• It’s not easy to get people to take a leap of faith now, but think back to the last slide – it can be overcome with time (baby steps)

If you get to a ‘yes’, congrats!

• Sign up for Negotiating Your Series A Term Sheet J

What if they are interested?

Course TitleCourse TitleINSTRUCTOR NAME